That investment is expected to create 200 jobs at Argo AI's Pittsburgh headquarters and at the company's two other offices by the end of the year, as Ford works to put a self-driving auto on the market in 2021.
Agro AI founders Bryan Salesky and Peter Rander will continue to lead the company under Ford, and the startup's AI and robotics knowledge will be applied to Ford's own existing AI projects. Argo AI is based in Pittsburgh, Penn. and has hubs in Southeastern Michigan, where Ford is based, and the Bay Area of California. Both are alumni of Carnegie Mellon National Robotics Engineering Center.
Ford says the software it develops with Argo could potentially be licensed to other companies.
Argo will develop "a virtual driver system for autonomous vehicles", said Ford CEO Mark Fields at a press event in San Francisco on Friday.
"From an accounting standpoint, Argo AI is a subsidiary of Ford", says Fields; however, he stopped short of calling the partnership an outright acquisition.
Ford's global product chief and CTO, Raj Nair, and group vice president of global strategy, John Casesa, will hold two of the five seats on Argo AI's board.
That licensing model will put Ford in direct competition with Waymo, Google's self-driving vehicle company, which announced plans this year to develop both hardware and software for self-driving cars. It also gives Ford a majority stake in Argo AI. "We want to provide options so folks can live where they want to live", Salesky said, noting the scarcity of candidates with the right expertise. The Argo AI team will initially focus on supporting Ford's autonomous vehicle development and production efforts, but may in the future look to license this technology to other companies.
"The unconventional deal structure addresses a huge problem for traditional carmakers: They have trouble competing with the hotbed of Silicon Valley to hire the same engineers and developers", said Kerry Wu, senior mobility analyst at CB Insights.
Last March, Ford created a Smart Mobility subsidiary to invest in its emerging mobility opportunities as it begins to invest more in services outside traditional vehicle and truck ownership. Fiat Chrysler is working with Alphabet's Waymo on self-driving Pacific minivans. It's already deep into road testing for autonomous versions of its Ford Fusion Hybrid.
"We're in a critical period that will determine how the autonomous-vehicle market will shake out: Will the automotive industry close the gap with the software industry, or will it become an OEM supplier to the software industry, as happened in the cellphone market?"