Ford to Invest $1 Billion in Artificial Intelligence Start-Up

Ford to Invest $1 Billion in Artificial Intelligence Start-Up

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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.

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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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