Ford takes $2.7B hit on Argo shutdown, shifts its bet to driver assist tech • TechCrunch
As the drumbeat of third-quarter earnings continued, we learned more about the state of global supply chains, the global consumer’s appetite for big-ticket merchandise and the future of self-driving technology.
This afternoon’s bell, Ford beat Wall Street analysts’ revenue estimates of $36.25 billion, According to Yahoo Financewith Q3 2022 car top line from $37.2 billionand total revenue of $39.25 billion, up 10% despite lingering supply chain issues. The company’s adjusted earnings per share also came in ahead of expectations.
However, the financial news was soon weighted at least in terms of comments by the company’s choices regarding autonomous vehicle technology. TechCrunch broke the news earlier on Wednesday that Argo AI, a self-driving company that Ford has been an investor in, It is closed.
Ford V earnings report, She writes that it is shifting capital spending from Tier 4 autonomous systems developed by Argo AI to its in-house developed “L2+/L3” advanced driver assistance technology.
“So it’s a taking who – which investment And the state He. She from the direction of a Business where we Think we will You have a big return in The near term relatively to me One this Going to me You have a long John Lawler, Ford’s chief financial officer, said during the investor call on Wednesday.
Jim Farley, Ford’s CEO, even went so far as to say “Profitable, fully autonomous vehicles on a large scale are out of reach and we won’t necessarily have to create this technology for ourselves.”
“Don’t expect the song” Aha! He said during a call with investors. “Developing Tier 2 hardware and software beyond what Blue Cruise can do today, and ultimately enabling our customers to travel in very large optical drives or operating fields with their eyes out of the way will turn them back into a single commodity that is more valuable in our modern time.”
However, the abandonment of the Argo AI investment had a material impact on the company’s profitability in the quarter. To get off the trade, Ford had to incur $2.7 billion “pre-tax non-cash double” on its Argo stake. That pushed the company’s GAAP results into negative territory for the three-month period.
Notable is the huge loss before taxes, as well as the shift to focus on lower-level driver assistance technologies.
The company had some good news to report, apart from its best results and earnings: profitability. According to the auto company, Ford expects 2022 to generate $11.5 billion in earnings before interest and taxes. Free cash flow forecasts for this year are also up, with Ford forecasting $9.5 billion to $10.0 billion worth of material in 2022. (Ford’s third-quarter profit of $1.8 billion was above its own forecast.)
The news of Argo’s solution doesn’t come until a month after the company’s official date Robotaxi launched on Lyft in Austin Using a fleet of Ford Escape Hybrids. Last month, Argo too Launched an ecosystem of products and services intended to support commercial delivery and robotics operations. It is not clear what will happen with these services now, and Argo did not respond to TechCrunch in a timely manner.
Ford’s view could mean that investments in expensive — and seemingly far-fetched — self-driving technology could mean a dearth of future deals from big car companies to small, tech-heavy independent companies. And the waning of optimism could affect suppliers to those companies – lidar concerns and its ilk.
Last week at TechCrunch Disrupt, Founder and CEO of Rivian RJ Scaringe We shared the same sentiments with Farley, saying that fully autonomous vehicles would be difficult to achieve and scale. He said Rivian will follow the level 2 and level 3 systems that are in cars now and are getting better and better every day.
Ford isn’t the only company struggling with its self-driving ambitions; Tesla is said to be in trouble with the US government over its self-driving technology. The US Department of Justice is It is reported that the investigation The company regarding its “autopilot” capabilities, Tesla’s advanced driver assistance system that CEO Elon Musk has boldly claimed can pilot himself in certain scenarios.
Correction: A quote from John Lawler was incorrectly attributed to Doug Field in an earlier version of this article.