Wait, so they killed the 550 person AV startup they were funding, took 2.7B loss, and 4 months later hired those same 550 people to resume the same work? Something looks seriously wrong here.
I get that HR and leadership are hard, but this seems far fetched.
It's not like the name was a significant part of their product and they'd now have to spend a similar amount to get to a similar stage in their research and development, is it?
Maybe I’m the mug, but that seems wasted money.
When you are burning billions, the costs listed above seem to be treated as a rounding error.
This could have been entirely driven by business considerations.
If Argo.ai wasn't going in the direction they need for Fords products they could either get full control or kill it and hire the engineers. The latter might be more risky but is probably cheaper than buying, reorganising and making people redundant.
The 2.7B was already spent - they've just moved it from 'investment' to 'losses' in their accounting
And you can also hire those engineers back probably with a discount given the current environment.
A financial investment does have a P&L impact when the value demonstrably changes (either a new funding round, a bankruptcy, or some other event that defines a new share price). The most clear examples of this are in investment-based companies like Berkshire-Hathaway and Softbank, where quarters with billions of dollars of profit will be followed by quarters with billions of dollars of losses (despite very little cash actually moving in/out of the company).
Ford, for whatever reason, figured that this startup wasn't worth what they paid (or that the structure wasn't the right one for their long term goals) and took the full P&L hit all at once (in a way that is easy to explain to Wall Street, since nobody likes ambiguous zombie investments living on the balance sheet).
Operationally, they thought there was still value in the idea, so they directly hired the 550 people (closer to a $150mn/year cost) and that will now manifest as an ongoing cost on their P&L. Arguably, if Ford sees their work as core to Ford's future, then Ford should employ them directly and keep the costs on the P&L, so weirdly, this may be a signal that Ford is taking their work more seriously.
They were trying to solve L4/L5 using an all out approach that wasn't aiming to scale for personal ownership (yet, actually in the Argo shutdown letter, Ford essentially states they were shut down for not having a path to personal ownership in a workable timeline)
They're now aiming to solve L3 primarily for personal vehicles.
To reform it in computing terms they're going from a "vertical scaling" approach to "horizontally scaling" approach
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This is like Cruise vs GM's awkwardly named "Super Cruise":
Cruise exist outside of GM and is trying to solve L4/L5 by leveraging resources that won't scale to individual ownership for a long time
"Super Cruise" is an L2 product already in vehicles you can buy today.
"Ultra Cruise" builds on that product in newer GM vehicles, expanding where it works.
After that you'll expect some basic L3 functionality like Mercedes' new Drive Pilot
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There's honestly some interesting subtext to this. When Argo launched, it's almost certain Ford wanted that tech to go into their vehicles at some point.
But organizationally, having Argo let them "hire" people who would not work at Ford due to their stuffy corporate nature. It also let them work on a more exciting problem than "enhanced cruise control".
I talked with engineers on BlueCruise (the in house L2 product) and it seems Ford is slowly getting better about being able to compartmentalize and shield innovation from the general malaise of traditional auto manufacturing culture
Latitude.Ai sounds like Ford having found a way to tie a quick moving business unit to themselves and hopefully not scare everyone off
The obvious reason is that VW either (a) doesn't want to sell it or (b) wants to retain IP.
I’m picturing some coked out Ford exec screaming at his vp of finance “do we or do we have enough money to buy VW??!”
All of that is reflected in VWs share price. Without all this ‘socialism’ VW could probably easily buy Ford itself, maybe even GM.
Ah, answering my own question, it seems to be called "circular ownership" and while it can sometimes occur from a long history of mergers and acquisitions (Samsung seems to be such a case), its generally a tax dodge or to mask ownership? At least, the top hits I see are all talking about it as a classic way to obscure oligarch ownership and things.
Genuinely curious who actually gets to make the decisions.
sometimes corporate leadership like to do petty things like this at huge cost
They wrote off 7.3B because of Rivian and still no one got fired.
What huge cost?
Ford could have done that.
So:
1) they get a tax rebate
2) they get a large marginal rebate on their loss
3) they end up with the business anyway, possibly while making a net profit because
4) there are state level incentives for taking on those 550 workers.
They’re just working the corporate welfare system, like all the others.
With this maneuver, Ford gets the essential part of the company, and also gets to write off 2.7B of goodwill from their books which is all tax deductible. What's not to like.
Argo’s website says they had 2000+ employees. So this new subsidiary is 1/4 the size.
https://web.archive.org/web/20230119113422/https://www.argo....
The future:
[pandemonium as cars randomly crash everywhere]
Microsoft Car. Powered by Bing. “Where do you want to go today?”
Without being too spoilerly... yea.
> “Step out of the vehicle please.”
> “Yes sir.”
> I made sure he could see my body cam, made it prominent in the field of view for his body cam, so there’d be an obvious question later, if no footage was available from my point of view.
As this was paired with an ethics class, there are questions to be considered about AI driving (and the corresponding instructor's opinions on those questions - don't vote on it right away as the javascript messes up the graphics for the rest of the page since the backend server isn't there anymore)