Ford is putting $1 billion into an AI startup, Detroit’s biggest investment yet in self-driving car tech

Johana Bhuiyan

The automaker will take a majority stake in Argo AI, founded by two top engineers from Google and Uber.

Ford has made Detroit’s biggest investment yet in self-driving technology, acquiring a majority stake in artificial intelligence startup Argo AI for $1 billion, the company announced on Friday.

Argo AI was founded by two top engineers from Google and Uber who were both previously at Carnegie Mellon’s robotics institute. The startup plans to use its expertise in AI to develop software for self-driving vehicles.

Bryan Salesky, the CEO of Argo AI, was the head of hardware at Alphabet’s car division, Waymo, for the past three years. Peter Rander, Argo’s COO, left Uber in September, where he was one of the top engineers for its self-driving division.

This is the largest investment a traditional auto manufacturer has made in self-driving technology. General Motors acquired self-driving startup Cruise for $1 billion last year, and Uber bought autonomous trucking company Otto for $680 million, also last year.

Ford will dole out the $1 billion over a five year schedule but will immediately become the majority shareholder. The company declined to disclose its specific stake, but the investment would value Argo at over $1 billion.

Ford says Argo will remain headquartered in Pittsburgh and operate with substantial independence. Both Ford and Argo elect two board seats, with a fifth independent position. Ford plans to install Raj Nair, head of research and development, and Vice President John Casea to the board.

This is the most Ford has spent on autonomous technology. In 2016, the automaker acquired on-demand shuttle service Chariot for far below $1 billion and invested in Velodyne, a maker of Lidar technology. Ford says it plans to market fully self-driving cars by 2021.

While Ford will effectively own Argo, the AI developer plans to eventually license its software and sensor suite to other companies.

“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.”

“There’s a lot of advantages to having this company be independent and operate with the agility of a startup,” Salesky told Recode. “We know that in order for this technology to be fully realized and deployed at scale, we have to work with folks that know how to do that.”

According to Fields and Rander, the most important reason Ford didn’t acquire Argo was so the startup could attract top talent with offers of equity.

This is also not the first instance of a cross-pollination between staffers from Uber, Google and Carnegie Mellon.

Both Rander and Salesky — who plan to have a team of 200 by the end of the year — were big losses for Alphabet’s self-driving car company Waymo and for Uber.

As Recode first reported, Rander left Uber along with two other top self-driving engineers — mapping head Brett Browning and autonomy head Drew Bagnell — just a year or so after Uber famously raided Carnegie Mellon’s Robotics Institute for top talent.

Rander’s departure came in the wake of Uber’s acquistion of Otto, a startup co-founded by former Google engineer Anthony Levandowski. The Otto founder was put in charge of Uber’s entire self-driving division, which sources said contributed to staff defections.

For Waymo, Argo is the latest car startup to be hatched by one of its former engineers. In addition to Argo and Otto, Chris Urmson, Waymo’s former lead technologist, is starting Aurora, as Recode first reported.

Then there’s Nuro.ai, which was started by two former top executives of Google’s self-driving car project: Jiajun Zhu and Dave Ferguson.

Though Google has been working on its self-driving technology far longer than any other tech company and has arguably the most advanced technology, many sources say there has been internal tension over the company’s path to market.

It’s no coincidence that many of those who’ve left what is now called Waymo to start their own companies are laser-focused on commercializing self-driving technology.

“We want to take a straight-line path to market as much as we possibly can,” Salesky said.

You can contact this reporter at johana@recode.net or on Confide, WeChat or Telegram at (516) 233 8877.