An employee at a Ford plant in Louisville, Ky. Ford sees “mobility services” as potentially more profitable than its traditional business of making and selling cars. Luke Sharrett/Bloomberg
SAN FRANCISCO — One of the oldest automakers in the
United States is making a billion-dollar bet that one day, owning a car may not
be a necessity of American life.
Ford Motor announced on Friday
its plans to invest $1 billion over the next five years in Argo AI, an
artificial intelligence start-up formed in December that is focused on
developing autonomous vehicle technology.
The move is Ford’s biggest effort to move into self-driving
car research. Argo AI will develop the technology exclusively for Ford at
first, and then plans to license its technology to others.
The investment is also a way for Ford, which is more
than century old, to tap into Silicon Valley talent and make headway in a
competitive space. Former Google and Uber self-driving
technologists will lead the effort out of Pittsburgh, a hub for robotics
and autonomous vehicle research, and satellite offices will be in place in the
San Francisco Bay Area and southeastern Michigan.
Argo AI will operate as a subsidiary of Ford; the
automaker will be the majority shareholder. But Argo AI will also use shares of
its stock to lure robotics and engineering professionals from other companies,
a challenge in a field where companies like General Motors, Chrysler, Uber and
Google are all racing to bring autonomous vehicles to the mainstream.
“If we can combine the
best of a start-up and marry that with proper equity compensation, then that’s
the best of both worlds,” Mark Fields, president and chief executive of Ford,
said at an event with reporters in San Francisco on Friday.
The move comes as Ford positions itself as not just a
manufacturer of cars, but as a provider of “mobility services,” enabling people
to get around without owning cars. That is especially important as companies
like Uber and Lyft, ride-hailing services popular in urban areas, have reduced
the need for people to have their own vehicles.
Ford sees mobility services as potentially more
profitable than its traditional business of making and selling cars.
Manufacturing vehicles requires billions of dollars in investments in plants
and engineering — costs that are often difficult to recoup. Company executives
have said mobility services could generate returns of around 20 percent,
compared with the 8 percent it earns on making vehicles today.
As part of that strategy, Ford has been racing to
develop self-driving cars, put down roots in Silicon Valley and acquire
fledgling players in ride-hailing services, autonomous-driving technologies and
related areas.
“There is not a strong enough pipeline of talent
coming out of the universities today,” Bryan Salesky, chief executive and
co-founder of Argo AI, said on Friday. Mr. Salesky said Argo AI was looking to
hire 200 employees across its three offices by the end of the year.
In the last several months, Ford acquired Chariot, a
start-up that ferries commuters around the San Francisco area, and invested in
Civil Maps, which is developing 3-D mapping technology that can be used by
self-driving cars. In August, Ford also acquired SAIPS, an Israeli company
developing machine learning and computer-vision technology.
A year ago, Ford opened a research center in Palo
Alto, Calif., a move Mr. Fields acknowledged was aimed at making Ford “part of
the ecosystem of Silicon Valley.”
Ford is also remaking its headquarters and main
development center in Dearborn, Mich., just outside Detroit, into two
sprawling, high-tech campuses of energy-efficient buildings — similar to those
that dot Silicon Valley. The automaker envisions the new campuses, which will
take 10 years to complete, as places that will showcase autonomous shuttles as
well as electric bikes and other green modes of transportation.
Other automakers are moving in the same direction.
General Motors has invested $500 million in Lyft, a ride-hailing service and
main rival of Uber. G.M. also acquired Cruise Automation, a maker of sensors
and other gear that can enable conventional automobiles to drive themselves on
highways.
Like Ford, G.M. also has a Silicon Valley tech center,
and it is spending $1 billion to renovate its main big development campus in
Warren, Mich.
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