The autonomous-driving sector just endured a day that tech and automotive giants may well look back on the way Wall Street recalls March 16, 2008.

Whereas the day Bear Stearns collapsed was an epochal event in the global financial crisis, when flawed assumptions about the value of mortgages pushed banks to the brink — and some over the precipice — October 26, 2022, will go down as the date that seismic consequences emerged from years of faulty presumptions about driverless-vehicle technology.

First came the shock that Argo AI, the startup Ford and Volkswagen had each seeded with multibillion-dollar investments, was shutting down. Within hours, Reuters reported that Tesla’s self-driving claims are under criminal investigation. A person familiar with the matter told Bloomberg that Justice Department prosecutors in Washington and San Francisco have been probing statements by the electric-car company and its executives since last year.

It’s difficult to come up with two more polar-opposite approaches to a mission one Ford executive said October 26 will be harder than putting a man on the moon.

Elon Musk put a target on Tesla’s back in 2016 by starting to charge thousands of dollars for what the company calls Full Self-Driving (FSD) capability. Six years later, the CEO acknowledges the system still isn’t “feature complete,” and cautions customers to expect two steps forward and one step back.

By contrast, Argo CEO Bryan Salesky emphasized the need for safe and limited deployments of test vehicles and close partnerships with cities and stakeholders that its driverless cars would share the road with.

Neither the scorched-earth nor the nice-guy method is working.

Tesla is the subject of two defect investigations by the National Highway Traffic Safety Administration and is headed for the first of several potential trials over crashes blamed on Autopilot, its driver-assistance system.

California accused the company in August of misleading consumers, and a Golden State resident who sued last month is proposing class-action status for his claims that Musk has been stringing the public along with perpetual promises that the company is on the cusp of perfecting the technology.

Fans of the world’s richest man have gotten accustomed to frequent posts from the soon-to-be Twitter owner about new iterations of FSD beta software beaming to their vehicles. After Musk tweeted October 21 about a next major release coming soon, one follower replied with relief, writing that he’d been hesitant to use the latest version of FSD after his Tesla veered toward an oncoming car.

Ford thought when it first invested in Argo five years ago that it would be able to broadly market cars capable of going driverless in certain conditions by 2021. Now, the automaker has concluded it needs to invest in driver-assistance technology that’s more achievable in the near term. Its decision to switch gears led VW to walk away, too, according to people familiar with the matter, and Argo was unable to attract new investors.

The $2.7 billion impairment recorded on its investment in Argo dragged Ford to an $827 million net loss last quarter. VW, which reports earnings October 28, announced an almost identical injection in the startup in 2019.

“The team we have at Argo has been working on what I consider to be the hardest technical problem of our time," said Doug Field, who Ford hired away from Apple’s car project last year. “It's harder than putting a man on the moon.”

This is a world away from what car and tech leaders were saying when driverless-car hype was at its peak. McKinsey predicted just three years ago that global revenue generated by autonomous vehicles could reach $1.6 trillion annually by the end of this decade. The head of General Motors-owned startup Cruise similarly talked in early 2020 of a trillion-dollar addressable market. Chris Urmson, who said while at Google that the goal was for his son to never need a driver’s license, sent out a memo to staff at his cash-strapped startup Aurora Innovation last month laying out options including cost cuts and even a potential effort to sell to Apple or Microsoft.

Argo is arguably the most substantial casualty within the self-driving space to date, though it isn’t the first. San Francisco-based Zoox sold to Amazon in 2020, and Uber cut bait with its self-driving unit months later, offloading it to Aurora. Early in 2021, GM’s Cruise acquired Voyage, a startup that had been trying the narrow use case approach to autonomy, operating in Florida retirement communities.

When GM reported quarterly results this week, analysts pressed Cruise CEO Kyle Vogt about the state of autonomy. He argued companies that are deploying and expanding now have game, and are distinguishing themselves from those that don’t.

“We're seeing increased separation between the companies operating commercial driverless services, and those that are still stuck in the trough of disillusionment,” Vogt said. “What's happening here is that the companies with the best product have pulled ahead and are accelerating.”

Time will tell just how far along GM and Cruise will get in building a viable business. The unit aiming for $1 billion revenue by 2025 lost $497 million in the most recent quarter, bringing its total deficit this year to $1.4 billion.

Ford CEO Jim Farley is skeptical the industry is anywhere close. “Profitable, fully autonomous vehicles at scale are a long way off,” he said October 26. “And we won’t necessarily have to create that technology ourselves.”