Ford Takes Smart Approach to $1 Billion AI Investment

February 16, 2017 at 6:30 AM

Earlier this month Ford Motor Co. announced plans to invest $1 billion over the next five years in Argo AI, a Pittsburgh-based startup formed a few months ago by pioneers in artificial intelligence technology for autonomous vehicles. The deal makes Ford a majority stakeholder in the fledgling company, which will be operated as a subsidiary to develop the brains for future Ford self-driving cars.

But the partners vow to manage the new unit semi-autonomously from the rest of Ford. As a result, the carmaker hopes to benefit from combining the innovation, agility and speed of a startup with its own experience, global scale and systems integration and vehicle design expertise.

Argo will have its own board, consisting of its two co-founders—CEO Bryan Salesky and chief operating officer Peter Rander—and Ford’s global development boss Raj Nair and group vice president of global strategy John Casesa, along with a yet-to-be-named independent director. With plans to open offices in Michigan and Silicon Valley, the startup says it will aggressively recruit top software and robotics engineers by offering them stock shares in the new company. By the end of the year Argo expects to have a staff of 200, including an unspecified mix of new hires, current employees and Ford transfers.

Salesky and Rander met while working together at Carnegie Mellon University's National Robotics Engineering Center in Pittsburgh. The two went on to work for Google and Uber, respectively, where they focused on self-driving car technology. Argo’s vice president of robotics, Brett Browning, and chief financial officer Daniel Beaven also are Uber alums. Browning was a senior engineering manager in charge of the ride-hailing company’s mapping and localization efforts for self-driving cars.

With the fast-paced advances in machine learning, artificial intelligence and computer vision, the team saw an opportunity to launch their own company with Argo AI. But they wanted to partner with an established carmaker to maximize the potential of the emerging technologies and get self-driving vehicles on the road.

Salesky says he was impressed with Ford’s comprehensive approach to the issue. Although it had lagged behind rivals in the development of automated vehicle systems, Ford has made a recent push to catch up. The carmaker opened a Smart Mobility research center in Palo Alto, Calif., a year ago and now plans to double its staff there to 260 scientists and engineers by the end of 2017.

In August, Ford set an ambitious goal of launching a fully autonomous vehicle—without a steering wheel or foot pedals—by 2021. The hybrid-electric model initially is expected to be relegated to ride-hailing services, but Ford envisions following up with consumer sales by as early as 2025.  

To support the program, Ford has made a slew of recent acquisitions and investments. The list includes:

  • Chariot, a San Francisco-based ride-sharing company;
  • 3-D mapping specialist Civil Maps;
  • SAIPS, an Israeli company developing machine learning and computer-vision technology;
  • Velodyne, which is of the leaders in lidar sensors; and
  • Pivotal, a Silicon Valley-based software development company.

Ford also inked an exclusive licensing agreement with machine vision specialist Nirenberg Neuroscience.

Moving forward, Ford says it will focus its autonomous vehicle efforts on leading the development of vehicle hardware, system integration, manufacturing and design. It also will work with government regulators and public organizations to help set standards, develop an infrastructure and raise awareness and acceptance for self-driving cars.

Specialized technologies and services, meanwhile, will be handled by Argo AI and other affiliated and third-party experts. Ford will get Argo’s technology first, but the carmaker also is encouraging the startup to pursue licensing opportunities with other companies—even its direct competitors.

This is a step in the right direction as Ford tries to transform itself from being a traditional builder and seller of cars into a mobility company. To succeed, Ford must continue to seek out new partners and ideas, as well as give its own team the resources and flexibility to implement them. During the Super Bowl, Ford launched a new commercial that showed how its mobility solutions could help people in “stuck-in-life” situations. More importantly it appears to be applying the strategy to itself to reinvent the company and break free of the “not-invented-here” syndrome that has longed plagued Detroit automakers. Smart move.