text: 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. 
   
   Argo AI is a stealth self-driving startup out of Pittsburgh 
   
   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. 
   
   Ford is competing with Silicon Valley to own autonomous expertise 
   
   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. 
   
   A ride in Ford’s first self-driving car ||||| Ford will be the majority stakeholder in Argo AI. Based in Silicon Valley, Argo AI will operate with substantial independence 
   
   From left: Peter Rander, Argo AI COO; Mark Fields, Ford president and CEO; Bryan Salesky, Argo AI CEO; and Raj Nair, Ford executive vice president, Product Development, and chief technical officer. Ford is investing $1 billion during the next five years in Argo AI, combining Ford’s autonomous vehicle development expertise with Argo AI’s robotics experience and startup speed on artificial intelligence software. (Photo: Ford Motor Company) 
   
   SAN FRANCISCO — Ford is betting $1 billion on the world's self-driving car future through a majority investment in a small start-up company called Argo AI as it tries to win the high-stakes talent war in the emerging self-driving car industry. 
   
   Ford said the deal combines a group of Ford employees along with Ford’s virtual driver system — the brains of autonomous vehicles — with the talent and expertise of Argo AI's founders and their robotics experience. 
   
   The company was cofounded a few months ago by Google car project veteran Bryan Salesky and Uber engineer Peter Rander, who met while working at Carnegie Mellon University's vaunted robotics and engineering school. 
   
   Ford CEO Mark Fields and Argo AI executives declined to say exactly how much money Ford is paying to become a majority stakeholder in Argo AI, or even exactly how many employees currently work for the start-up. 
   
   But they did make it clear that a good bit of the $1-billion figure will be deployed over a period of five years as the company works to attract and retain the brightest minds in the fast-paced self-driving vehicle industry, which has been marked by talent wars for the best engineers and software developers. 
   
   ​In 2015, Uber poached about 40 engineers from Carnegie Mellon in a move that left one of the world’s top robotics research institutions in a crisis. Last month, Tesla filed a lawsuit against Sterling Anderson, the former director of its Autopilot program, for leaving the company to join Chris Urmson, a former director of Google's Self-Driving Car Project, to form a start-up called Aurora. 
   
   "This is a move by Ford to be able to attract and retain talent," said Mike Ramsey, an analyst for Gartner, a research firm. "They are setting up a structure that allows them to pay big money…for some of these guys who are really hard to get." 
   
   Argo AI, which is headquartered in Pittsburgh, Pa., will have offices in Michigan and California and expects to have 200 employees by the end of this year. 
   
   The company has been structured so it can operate independently of Ford. The structure gives Argo AI the ability to provide both Ford employees who will join the start-up and new Argo AI employees with significant equity ownership stakes in the company. 
   
   "That is very important …we are one team, we have to reflect that in the way we compensate everyone," said Raj Nair, Ford's executive vice president of product development. "Ford Motor Co.'s equity is based on the much larger automotive and manufacturing business." 
   
   Ford's investment also is part of a continuing investment strategy anchored to transforming the car and truck seller into a mobility company with a hand in ride-hailing, ride-sharing and even bicycle rentals. 
   
   President and CEO of Ford Motor Company Mark Fields talks with Vice President Joe Biden and Congresswoman Debbie Dingell, D-Michigan next to the Ford Fusion autonomous vehicle while touring the 2017 North American International Auto Show in Detroit, January 10, 2017. (Photo: JIM WATSON, AFP/Getty Images) 
   
   "The reason for the investment is not only to drive the delivery of our own autonomous vehicles by 2021, but also to deliver value to our shareholders by creating a software platform that can be licensed to others," Fields said. "This move gets us the agility and speed of a start-up combined with Ford's global scale." 
   
   Salesky, a self-driving car hardware specialist who left Google's renamed Waymo car program last fall, said that he decided to start his own company with Rander because of "the incredible advancements in machine learning, artificial intelligence and computer vision, but we just needed a partner to get these cars into the hands of millions of people." 
   
   Salesky, who said he spoke with a number of partners, said he liked Ford's approach to self-driving cars better than other potential partners. 
   
   "We were very impressed. When we talked to others, it was very clear that Ford was one of the few manufacturers that really understands the full ecosystem that needs to come together for self-driving cars," Salesky said. 
   
   Ford has made other efforts to ramp up its self-driving car program. 
   
   Last spring, Ford invested $182 million in Pivotal, a Silicon Valley-based software development company. 
   
   Ford also said in August it would invest $75 million in Velodyne, a developer of light detection and ranging sensors essential for self-driving cars, and separately said it would double its staff in Palo Alto, Calif., to 260 by the end of this year. 
   
   The Dearborn automaker said it plans to increase its team of researchers, engineers and scientists from 130 to 260 by the end of 2017. 
   
   Ford's early stage investment in Argo AI reflects a growing desire on the part of automakers and tech companies to combine forces in order to tackle the still daunting task of making autonomous driving an everyday reality. 
   
   Last year, General Motors paid $581 million to acquire Cruise Automation, a San Francisco-based start-up that develops software for autonomous vehicles. 
   
   The Ford Fusion Autonomous car is displayed at the 2017 North American International Auto Show in Detroit, January 10, 2017. (Photo: GEOFF ROBINS, AFP/Getty Images) 
   
   Uber is busy testing self-driving car software in a $300-million partnership with Volvo, while Fiat Chrysler Automobiles has teamed up with Waymo to create a fleet of 100 self-driving Pacifica hybrid minivans. Waymo CEO John Krafcik, a veteran of Hyundai North America, has also indicated that his company plans to sell its technology to other automakers. 
   
   Chinese giant Baidu had hoped to give its self-driving program a boost through a partnership with BMW, before that venture fell through last fall due to differences on project trajectory. And a growing number of small start-ups, such as Silicon Valley's Drive.ai, also are looking to grab a slice of this pie. 
   
   Most experts working in this increasingly crowded field are targeting 2021 for delivering autonomous cars to consumers, likely as part of a commercial ride-sharing fleet. 
   
   Argo AI will focus on what amounts to the self-driving car's computer brain, which relies on computer algorithms to process data coming from an array of sensors — radar, lasers, cameras — that help the car navigate through its environment. 
   
   "That virtual driver system, that brain, needs a platform to power, and that's where our expertise in building cars comes in," Nair said. 
   
   Contact Brent Snavely: 313-222-6512 or bsnavely@freepress.com. Follow him on Twitter @BrentSnavely. 
   
   Read or Share this story: http://on.freep.com/2kYE5M6 ||||| The race to build a self-driving car keeps getting more intense -- and expensive. 
   
   Ford (F) announced Friday afternoon it would invest $1 billion over five years in a previously unheard of startup. Argo AI, led by Google and Uber veterans, will combine with Ford's existing team to develop a fully self-driving car. 
   
   It's the latest high-priced investment that a major company has made in self-driving car engineers. 
   
   Almost a year ago, General Motors (GM) spent $1 billion to acquire Cruise Automation. And last August, Uber spent $680 million on Otto, a self-driving car startup led by former Google (GOOGL) engineers that hadn't even existed a year before. 
   
   Related: You car's data may soon be more valuable than the car itself 
   
   Argo AI is a startup that hadn't even been publicly announced. And Ford hasn't acquired all of the startup, it's only the majority stockholder. Argo AI engineers will have equity in the company, which should help it attract talent. Other companies have tried similar arrangements amid intense competition for qualified engineers. 
   
   When Google spun off its self-driving car project as Waymo in December, CEO John Krafcik said the arrangement would help it to better align incentives for employees. 
   
   Argo AI plans to have 200 employees by year's end. They will be split between Silicon Valley, Michigan and Pittsburgh. 
   
   Argo AI CEO Bryan Salesky spent three years working at Google's self-driving car program. He left in 2016. His cofounder, Peter Rander, spent nearly two years working on Uber's autonomous vehicle team in Pittsburgh. 
   
   Experts have long warned that legacy automakers such as Ford risk being disrupted by tech companies like Google. Tech companies have the software expertise that is necessary to build a safe self-driving car. 
   
   The doomsday scenario for automakers is to turn into Nokia, which was a global leader in cell phones -- until Apple unveiled the iPhone. Nokia wasn't able to keep up during the smartphone revolution and watched as SiIlicon Valley titans Apple (AAPL) and Google sucked up their profits. 
   
   Ford is clearly willing to spend a lot of money to avoid such a fate. ||||| If you had to pick a single buzzword to define the auto industry of late, it would have to be "mobility." Car companies are coming to grips with demographic and socioeconomic changes and the rise of the sharing economy and are moving beyond the old way of doing business, i.e., just building cars and selling them to customers. Ford has been on the leading edge of this trend, announcing in August last year that it plans to put an SAE level 4 autonomous vehicle into mass production as a ride-sharing service in 2021. Today, it announced that, as part of that plan, it is investing $1 billion over five years in a company called Argo AI, a startup led by the former leads of Google and Uber's self-driving programs. 
   
   Further Reading Q&A: Ford’s futurist knows kids today see status in their smartphones, not cars "The next decade will be defined by the automation of the automobile, and autonomous vehicles will have as significant an impact on society as Ford's moving assembly line did 100 years ago," said Ford president and CEO Mark Fields. "As Ford expands to be an auto and a mobility company, we believe that investing in Argo AI will create significant value for our shareholders by strengthening Ford's leadership in bringing self-driving vehicles to market in the near term and by creating technology that could be licensed to others in the future." 
   
   This isn't the first strategic investment in self-driving technology from the Blue Oval. As part of last August's reveal, the company announced it was investing in lidar sensor-maker Velodyne and 3D-mapping company Civil Maps. Ford also purchased a machine-vision company called SAIPS and entered into a licensing agreement with another, Nirenberg Neuroscience. 
   
   Argo AI's work will focus on what Ford is calling the Virtual Driver System, the AI software that will be used by its autonomous vehicles. (Argo also says it will be open to licensing this technology platform to other OEMs.) One reason for the investment is the need to attract the talent required to hit the 2021 deadline. While Ford will be the majority shareholder in Argo AI, the company is structured to be able to offer what Fields described as "competitive equity" to employees. 
   
   Further Reading Video: Find out how technology is changing Ford with its CTO, Raj Nair And some of Ford's current employees working on the software side of the company will be moved over to Argo AI (enabling them to benefit from the equity offer), although those working on the hardware and vehicle design side of things will remain with Ford. Argo AI is based in Pittsburgh; co-founders Brian Salesky and Peter Rander are both alumni of Carnegie Mellon National Robotics Engineering Center. However, the company will also be recruiting in Silicon Valley and south Michigan. 
   
   "Working together with Argo AI gives Ford a distinct competitive advantage at the intersection of the automotive and technology industries," said Raj Nair, Ford executive vice president of global product development and chief technical officer. "This open collaboration is unlike any other partnership—allowing us to benefit from combining the speed of a startup with Ford's strengths in scaling technology, systems integration, and vehicle design."
target: – Ford has made another big bet on the future of self-driving cars, investing $1 billion in previously unknown startup Argo AI. "The next decade will be defined by the automation of the automobile," Ford CEO Mark Fields said in a statement, per Ars Technica, predicting that self-driving technology will change the world as much as the Ford assembly line did a century ago. The investment buys a lot of self-driving know-how for Ford: Argo AI CEO Bryan Salesky worked on Google's self-driving car program for years, while co-founder Peter Rander spent years with Uber's program, CNN reports. Ford is now the majority stakeholder in the startup and Fields says that while it is now a subsidiary "from an accounting standpoint," Argo will be given a lot of independence. Equity in the firm will be offered to tempt engineers away from other companies, the Verge reports. Salesky tells the Detroit Free Press that they spoke to several possible partners and decided they were most impressed by Ford's vision for self-driving vehicles. "When we talked to others, it was very clear that Ford was one of the few manufacturers that really understands the full ecosystem that needs to come together for self-driving cars," he says.