Ford announced plans today to invest $1 billion over the course of five years into a new, previously unheard of artificial intelligence startup called Argo AI. The company, which has operated in secret out of its Pittsburgh headquarters for months, was founded by Bryan Salesky, a multi-year veteran of Google’s self-driving team, and Peter Rander, who led autonomous efforts at Uber up until September 2016. Ford’s goal is to tap into Argo AI’s expertise to help establish the car company as a leader in the autonomous space.
The deal effectively means Ford is buying Argo and taking a majority stake in the company, though Ford is framing the deal as an investment instead of an acquisition. “From an accounting standpoint, [Argo AI] is a subsidiary,” said Ford CEO Mark Fields today at an event in San Francisco. “But in terms of how they’re operating and how we’re structuring the board, this gives them a lot of independence.” For instance, Ford and Argo plan to use equity in the startup as a recruiting incentive to lure engineers away from joining competitors.
As part of the partnership, Argo AI will help Ford develop the autonomous system for a self-driving vehicle the car company plans to put on the road by 2021. “Argo AI’s initial focus will be solely and exclusively to support Ford’s efforts to bring our autonomous vehicle to the marketplace,” Fields said. He added that a focus for Argo and Ford down the line may include licensing out the self-driving system to other companies. (Argo AI could also explore an initial public offering, if Ford’s plans to commercialize and license its software pan out.) This effort is similar to one launched by Volvo last year, in which the Swedish car maker partnered with automative safety supplier Autoliv to develop and license self-driving software.
Ford may be one of the largest American companies, but it does not have pockets as deep as Apple and Google. That makes this $1 billion investment a significant push to own the expertise of some of the robotics world’s brightest and most experienced self-driving experts. It’s in line with Ford’s recent strategy, which has seen the American car company pour money into autonomous hardware and software. Last year, Ford joined with Chinese search giant Baidu to invest $150 million in Velodyne, the makers of leading LIDAR sensors, to make the essential hardware cheaper to produce.
An arms race is already underway between the auto and tech industries to own the knowledge and know-how around bringing self-driving cars out of the research phase and into the market. Competitive hybrid companies like Tesla are aggressively updating its Autopilot software. Meanwhile, Alphabet Inc.’s new Waymo division is ramping up commercial efforts and Uber is testing a self-driving ride-hailing service.
Ford clearly does not want to see Silicon Valley outbid it for top talent. And because autonomous vehicles require extensive knowledge of computer vision, robotics, machine learning, and other complex fields, the talent pool is relatively narrow. (Both Salesky and Rander are alumni of the Carnegie Mellon National Robotics Engineering Center, the Pittsburgh-based academic division from which Uber poached a hefty chunk of its self-driving team.) So by scooping up Argo, Ford is staking out a strong position in the industry that may give it an edge over tech companies.
“We founded [Argo AI] with the intent and the vision to see self-driving vehicles be made available and at scale,” Salesky said at the Ford event. “In order to do that you really need the scale and know-how of a company like Ford.” Ford declined to answer questions about the size of Argo’s team, but Salesky said he hopes his company will expand to more than 200 people by the end of the year.