Ford Investing $1 Billion in Tech Startup Argo AI

On Friday, Ford Motor Co announced its plans to invest $1 billion during the next five years in Argo AI a tech startup to help the automaker reach the goal it set of producing an autonomous vehicle for commercial ride sharing before 2021.

Argo AI, based in Pittsburgh, was founded by former executives with Uber and Google who worked on self-driving teams. With the investment, Ford becomes the largest shareholder at the company.

Ford CEO Mark Fields announced that the investment was in line the announcement made previous related to capital expenditures.

The startup, which focuses on robotics and artificial intelligence, will help to build what Ford is calling a virtual driver system that will be at the heart of its fully autonomous vehicle to be developed by 2021.

Fields during a Friday press conference said that with the agility that Argo AI has and Ford’s scale the benefits of start up in technology is being combined with discipline and experience at Ford, which should make for a strong result.

Executives said that once the technology has been fully developed by Argo AI for Ford, it could possibility be licensed to be used by other companies.

While the majority of Argo AI’s equity will be retained by Ford, Argo AI will be able to hire 200 additional employees and the hiring process will have an advantage due to the potential for having an equity stake in the business.

Field said that Argo has the opportunity to operate the business quite independently with its own board, but due to it being a separate business or subsidiary, it can recruit with compensation packages that are very competitive and that include equity.

Up to this point, the investments by Ford in technology for future transportation have remained quite modest in comparison to those by General Motors and other automakers.

One of the largest such investments by Ford in the last year was an injection of $75 million in Velodyne, to acquire a minority stake in the manufacturer of lidar sensing systems that are laser-based for autonomous vehicles.

Ford’s rival GM invested a billion dollars last year in its acquisition of Cruise Automation a self-driving startup in Silicon Valley.

In addition, GM made a $500 million investment in Lyft, the ride services company based in San Francisco that is a competitor to Uber. GM took a 9% stake in Lyft with its investment.

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