Ford Motor Company (NYSE:F) has performed a U-turn on full self-driving and will wind down its Argo AI business, leading to a loss in the past quarter and a warning that profits for the year will be at the low end of guidance.
A day after calling time on the Fiesta, Britain's best-selling car, the Detroit car-maker took a US$2.7bn non-cash charge related to Argo, a joint venture with Volkswagen AG after the pair decided that “profitable, fully autonomous vehicles at scale are a long way off and we won’t necessarily have to create that technology ourselves,” Ford chief executive Jim Farley said.
Farley noted in a tweet that the company’s reduced investment in Argo would lead to it refocusing its efforts and transferring some of the staff from Argo to work on its BlueCruise project, which does not replace drivers but allows them to be “hands-free”.
Doug Field, the former Apple and Tesla engineer who leads Ford's advanced technology arm, said the work Argo was doing was “what I consider to be the hardest technical problem of our time. It’s harder than putting a man on the moon to create an L4 robotaxi that can operate in a dense urban environment, safely, and navigate to its destination.”
Ford’s decision has led VW to also walk away from the project, with the pair unable to find new investors for Argo AI.
VW said it will stop investing in Argo and plans to focus its automated driving efforts on its existing partnerships with Bosch and Horizon Robotics in China.
Ford reported a US$1.8bn net profit for the third quarter on US$39.4bn in revenue, compared to a US$930mln loss a year ago on US$35.7bn revenue.
The impairment related to Argo led to Ford’s US$827mln net loss for the quarter.
It gave guidance for operating profit of US$11.5bn for the year, which would be at the low end of the company’s guidance and around 15% higher than last year.
This performance would imply 10% growth in shipments, significantly higher earnings in North America and aggregate profitability in the rest of the world, and assumes “continued strong pent-up demand and orders for Ford’s newest products, persistent strength in pricing and continuation of a strong dollar”.
Ford raised the target for full-year free cash flow to US$9.5bn-US$10bn from US$5.5bn-US$6.5bn on the strength in its automotive business, including restructured businesses in regions outside of North America.