Argo AI Is Ford's New $1 Billion Weapon In the War for Robotics Talent

The partnership will give Ford tools to attract and keep top engineering talent.

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JIM WATSON—AFP/Getty Images

The war for robotics talent in the U.S. is heating up—and to give itself a fighting chance, Ford is investing $1 billion in startup Argo AI. 

Argo AI is a robotics startup founded late last year by former Google self-driving car engineering team leader Brian Salesky and Peter Rander, who left Uber's Advanced Technologies Center in September 2016. Ford's investment means Argo has scored a significant source of funding that will enable it to become a major and immediate player in the artificial intelligence space, while helping the carmaker stay at the forefront of the autonomous vehicle race. 

The Pittsburgh, Pennsylvania-based company will become a subsidiary of Ford, and will be responsible for developing the virtual driver system for its upcoming autonomous vehicle that it plans to release in 2021. Ford will transfer many of its current employees working on the system to Argo AI, and they'll receive equity in the new company, which has the option of an IPO. This arrangement should help Ford attract and retain talent during its sprint to roll out autonomous vehicles. 

However, it's not clear what else besides star power and equity opportunity Argo AI brings to the table.

The founders declined to state during a call with analysts and media on Friday afternoon how many employees and what intellectual property the company has. By the end of the year, Argo AI expects to employ 200 people, the majority of which will likely come from Ford's current roster of autonomous vehicle researchers and engineers. But that could be acceptable, if the partnership's raison d'être is to serve mostly as a recruiting platform rather than technology enhancement.

"It’s fairly clear this is more of a corporate structure announcement than an acquisition," says Gartner analyst Michael Ramsey. "The structure of the deal, plus the very small number of employees—could be just a few—means this should be considered a strategic decision to try to obtain and retain talent."

Ford will be the majority stakeholder in Argo AI, yet the deal has been structured to enable Argo AI to operate with substantial independence while earmarking a large portion of the shares to attract and award to talent.

 For Argo AI, it gives them access to funding and a source of distribution for their product. For Ford, it enables the carmaker to put its virtual driver group under the new team and attract top talent through equity opportunity with the startup. Another upside for Ford is that is may open additional revenue streams.

"This also helps potential to create significant value in the company from two aspects: allowing us to bring autonomous vehicles to the marketplace in the near term, and potentially license this to other OEMs," said Ford CEO Mark Fields on the call. Ford will continue to lead the design, development, and integration of its autonomous vehicle hardware platform with vehicles.