Dear Commons Community,
Ford Motor Company announced yesterday that it 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 investment in self-driving car research. Argo AI will develop the technology exclusively for Ford at first, and then plans to license its technology to others. As reported in the New York Times:
“The investment is a way for Ford 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.”
This is a smart decision by an old and venerable company that needs to position itself for the future in the high-tech artificial intelligence arena.