Brent Snavely and Marco della Cava

Detroit Free Press and USA Today

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.

"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.

Ford to double Silicon Valley presence; invests $75M

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.

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.