Ford’s $1 Billion Idea: Investing in a Small but Mighty Driverless Vehicle Start-Up

By: Tierney Brannigan February 16, 2017
Ford is making a $1 billion bet on AI technology.
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Earlier this month, the automobile industry witnessed an alliance that tells an alternate version of the David and Goliath story. Argo AI, a four-man-team artificial intelligence (AI) start-up, received a $1 billion investment from Ford, one of the largest automakers in the world.

The $1 billion will be dispersed over the course of 5 years and allows Ford to choose two of Argo AI’s five board members. With an investment so large, why didn’t Ford just acquire Argo AI altogether? The answer lies in Argo AI’s equity.

Building the Dream Team

“We’ll be able to recruit that top talent with competitive compensation packages that you see in a start-up,” Raj Nair, Ford’s CTO, said in a recent press conference.

As an increasing amount of automakers hop on the self-driven bandwagon, the pressure is on to be one of the first to license universal autonomous vehicle technology. Similar to other autonomous vehicle studies, the atmosphere of the research into this evolving technology is, for the most part, collaborative.

“Our view [is that], in the future, there will be a number of players that will have systems,” Ford CEO Mark Fields told Recode in an interview. “There won’t be just one winner. But at the same time we can offer that to other companies where it doesn’t compromise our competitive advantages. We think that’s a great opportunity to get even more scale and create some value for the companies.”

Ford’s willingness to share future insights does not, however, preclude their goal of becoming a leader in the world of autonomous vehicles. Nair said strengthening Ford’s position as one of the foremost players in the driverless car industry is one of the greatest advantages to teaming up with Argo AI.

Funding a Small Company’s Big Ambitions

Ford’s enthusiasm for the partnership is matched by Argo AI’s CEO and cofounder, Bryan Salesky.

“We have a very deep respect for Ford and the technical team that Raj and his group have built,” Salesky said to members of the press. “They’re very aligned with us in how we see the technology progressing and how the technology needs to be developed.”

Salesky and Peter Rander, COO and cofounder of Argo AI, created the company late last year. Prior to founding Argo AI, both Salesky and Rander were leaders on self-driving research teams with Google and Uber, respectively.

Though Argo AI is still in its infancy, the start-up already plans on hiring 200 employees by the end of this year. The teams of roboticists and engineers will work at Argo AI’s sites in Pittsburgh (headquarters), the Bay Area, and Detroit.

The sole focus of Argo AI is to perfect the design and function of self-driving vehicles. Now, with Ford’s support, Argo AI is taking its first steps towards getting their ideas out onto the road.

“We understand the societal benefits. . .enabled by self-driving cars, such as safety, efficiency, affordability, and most importantly, mobility for all,” Salesky said.

Uniting Brains and Brawn

The staggering $1 billion investment solidifies the confidence both companies feel in combining the flexibility and brains of Argo AI with the resources and industry brawn of Ford.

“It’s an open collaboration that’s really unlike any other that we’ve seen in the industry,” Nair said. “[We’re] combining the benefit and speed of a start-up with Ford’s strengths and ability to scale technology.”

A major prelude to the investment in Argo AI was the development of Ford Smart Mobility LLC. The objective of Ford Smart Mobility is to find solutions to transportation problems in an increasingly populated world. One such solution is a SAE Level 4 driverless vehicle rideshare service, which Ford expects to have fully commercialized by 2021.

“We’ll be the lead on the autonomous vehicle platform, the hardware platform, the system integration and manufacturing to scale,” Nair said. “While Argo AI, we ensure, can stay focused on the virtual driver system…the so-called brain of the autonomous vehicle.”

With a unified focus on providing people with safe and convenient modes of transportation, Ford and Argo AI’s partnership will be one to watch.

“We think that automation is going to define the automobile in the next decade and we also believe that autonomous vehicles will have a significant impact on society, as Ford’s moving assembly line did 100 years ago,” said Fields.

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