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Argo AI, the Strip District-based autonomous vehicle startup backed by $1 billion from Ford Motor Co. and Volkswagen AG, announced Wednesday that it will shut down

“In coordination with our shareholders, the decision has been made that Argo AI will not continue on its mission as a company,” the company said in a statement. “Many of the employees will receive an opportunity to continue work on automated driving technology with either Ford or Volks­wagen, while employment for others will unfortunately come to an end.”

Argo AI, which had already announced layoffs in July, told its more than 2,000 employees (about 800 of whom are based in Pittsburgh) about the decision during an all-hands meeting on Wednesday.

Ford reported on Wednesday that Argo had failed to attract new investors and that Ford executives don’t expect fully autonomous vehicles to be profitable any time soon and instead will focus on driver-assist systems.

Argo is one of several autonomous vehicle operations out of Pittsburgh, including Aurora, Motional, the joint venture between Aptiv and Hyundai, and Waymo (Google’s self-driving car company). 

The shutdown could have far-reaching effects on the industry in Pittsburgh and across the country. Here’s what media outlets and experts are saying about it. 

Photo by Jennifer Baron.

TechCrunch: Ford, VW-backed Argo AI is shutting down

Employees were told they would receive a severance package that includes insurance and two separate bonuses — an annual award plus a transaction bonus upon the deal close with Ford and VW. All Argo employees will receive these. For those who are not retained by Ford or VW, they will additionally receive termination and severance pay, including health insurance. Several people told TechCrunch that it was a generous package and that the founders of the company spoke directly to its more than 2,000 employees.

MarketWatch: Ford reins in hopes for self-driving cars as Argo AI shuts down

Executives described hurdles with building out technology and auto fleets, as well as the vast infrastructure of non-technological services, to turn a profit on self-driving cars. And they said the talents of the staff they have today would be better spent on less sophisticated driver-assistance systems.

The Verge: Argo AI, driverless startup backed by Ford and VW, is shutting down

For its part, Volkswagen said it was refocusing its efforts on its autonomous driving software subsidiary, Cariad. “Especially in the development of future technologies, focus and speed count,” VW CEO Oliver Blume said in a statement. “Our goal is to offer our customers the most powerful functions at the earliest possible time and to set up our development as cost-effectively as possible.”

Forbes: Ford Says Argo AI, Its Self-Driving Venture With Volkswagen, Is Shutting Down

“It looks like a two-horse race now between Waymo and Cruise,” said Grayson Brulte, whose consultancy Brulte & Co. advises companies on autonomous technology and mobility. “At this point, it’s healthy that the industry is consolidating.”

The challenge of creating commercially viable autonomous vehicles has turned out to be far more complex than advocates for the technology anticipated.

E.W. Niedermeyer, author and host of the autonomous car podcast The Autonocast, tweeted a thread about the possible aftermath of Argo’s closure. 

Argo AI shutting down is a massive turning point for the entire driving automation technology sector. A seismic event.

— E.W. Niedermeyer (@Tweetermeyer) October 26, 2022

Many Argo employees are now looking for work on LinkedIn, including Argo People Planning and Analytics professional Richard Rosenow, who asked his followers to keep an eye out for opportunities for his whole team.

Ford CEO Jim Farley tweeted that he hopes many of those laid off can join Ford in other capacities. 

I have the greatest respect for the team at @ArgoAI & what they’ve accomplished. I’m excited we’re going to bring in many of these brilliant people to @Ford to help us create a terrific L3 BlueCruise system that enables our customers to travel w/o their eyes on the road.

— Jim Farley (@jimfarley98) October 26, 2022

Cristina Holtzer is NEXTpittsburgh's Digital Editor. When she’s not laughing too hard at TikTok, Crissy can be found working on her novel or playing the Sims. Read her work in Everyday Health, The Kitchn, Pittsburgh Magazine, Inc and more.