In September 2022, Ford-Volkswagen funded autonomous vehicle (AV) startup, Argo AI declared the launch of a product line for commercial delivery and robotaxi operations. In October 2022, it stated that Lyft’s ride-hailing fleet in Austin (Texas) would be deploying Argo AI’s autonomous driving (AD) technology in Ford Escapes. Later that month came the unexpected news that the company was shutting down after a five-year run.
Fast forward to March 2023, when Ford announced that it would be setting up Latitude AI, a subsidiary company, that would continue to focus on advanced driver assist systems (ADAS) and AD technology. The difference this time was that the company would focus on more viable, near-term objectives like L2+ hands-off driving and L3 eyes-off driving applications. It would continue to focus on private vehicle ownership and put commercial applications in autonomous driving, including robotaxis, on the backburner.
What explains this switch from L4 (fully automated driving in controlled environments) to hands-off and eyes-off systems? What made Ford willing to turn away from the $1 billion investment it had made in Argo AI over a five-year period beginning in early 2017?
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Despite some high-profile collaborations, acquisitions, and massive investments—Ford-Volkswagen in Argo, GM in Cruise, Intel in Mobileye, Apple in Drive.ai, Woven Planet Holdings in Lyft Level 5, Waymo, Stellantis and Amazon in Zoox, among others—AV technology failed to keep to its initial promise of commercialization by 2021. The industry is still working on a strategy to make robotaxis a viable and profitable business.
Indeed, after a particularly frenzied 2013-2018 period when start-ups were popping up at a furious rate, consolidation kicked in. With losses mounting, market ready products still some distance away, and investor funds drying up, OEMs were compelled to recalibrate.
Against this backdrop, OEMs had to reconsider their business strategies and redirect investments. The diversion of resources from the development of L4 automated technology to hands-off and eyes-off driving stems from the automotive industry’s conviction that there exists tremendous growth potential for such solutions. Currently, there is evident consumer appetite for hands-off and eyes-off driving, underpinned by the prospect of relieving driver anxiety and stress on the roads, improving safety, and enhancing the overall driving experience.
Following the success of its BlueCruise hand-off driving technology (L2+) in North America, Ford has determined that while there is opportunity for L4, the journey to realizing such fully driverless capabilities will take much more time, money, and effort. More immediately, there are profits to be made from the demand for hands-off and eyes-off driving applications, globally. Ford offers BlueCruise on subscription and might adopt the feature-on-demand model, giving it an opportunity to tap into alternative revenue models.
Ford’s realignment synchronizes with current trends where OEMs have established subsidiaries targeting ADAS and AD development. For example, Zenseact, a subsidiary of Volvo/Geely group; Cariad, a subsidiary of the VW Group, BMW CAR IT, a subsidiary of the BMW Group and Cruise, a subsidiary of GM.
As competition in the AD space intensifies, speed is of the essence in order to capture first-mover advantage. Accordingly, Latitude AI will build on the existing platform of Ford’s BlueCruise hands-free highway driving technology to enhance it to other environments and conditions and extend it to other vehicles in the line up.
With Latitude AI, Ford is wagering on L3 eyes-off driving and automated parking functions being the future. The bet may take a while to pay off since there are still considerable technological and regulatory challenges to be overcome. But when it does pay off, Ford will be well positioned to rake in massive profits.
With inputs from Amrita Shetty, Senior Manager – Communications & Content