Ford to invest $182M in software company Pivotal

Ford Motor Co. is investing $182.2 million in Palo Alto-based software company Pivotal, marking the latest collaboration between Detroit’s automakers and Silicon Valley.

The move will lead to quicker updates for cloud-based software like the recently created FordPass customer experience app and Dearborn shuttle service. The Dearborn automaker is increasingly experimenting with new technologies and services beyond selling cars, and is turning to a company with more experience building software and lines of code. In addition to the investment, Ford’s Chief Information Officer Marcy Klevorn will join Pivotal’s board of directors.

“The reason for doing this is very strategic,” Ford President and CEO Mark Fields told The Detroit News. “The ability to develop software and the capabilities necessary to do that is going to be very important as we deliver these products and services going forward.”

Ford and Pivotal have been working together for years. Recently, the tech company helped the Dearborn automaker create FordPass, a smartphone app that lets users do things like pay for downtown parking or share their vehicle.

But Fields said Ford’s Thursday investment was “like going from dating to getting married.”

“It really solidifies our learning, but more importantly our access to a lot of these cutting-edge development methods and tools that Pivotal has at a speed we wouldn’t have been able to do otherwise,” Fields said.

As part of the partnership, Ford and Pivotal will open three software labs. The companies offered no other details, except to say the labs will be in the U.S. and Europe.

“It really puts them in a unique position in terms of how we work with them, how they influence us and how we share development and technology,” Rob Mee, Pivotal’s CEO, told The News. “Pivotal has a way of working with its customers where we really embed with them... so they can be enabled to build software in the same way the very fastest and best developers in Silicon Valley do.”

In addition to Ford, Pivotal received an additional $71 million of funding from investors including Microsoft and General Electric.

Pivotal has been working with Ford’s IT team in Dearborn, but the automaker’s presence in Silicon Valley — an office and testing facility in Palo Alto — allowed the collaboration to happen. Fields got to know Mee and his team during one of his many visits to Silicon Valley about two years ago.

“Without us having our lab set up out there — or our intent to do it at that time — it wouldn’t have happened,” Fields said of their relationship. “Having our presence in Silicon Valley has helped not only strengthen our relationship with Pivotal, but is strengthening a lot of relationships as we’re being viewed more and more in the Valley as part of the community as opposed to some transactional partner that comes in and out.”

Fields and Ford Executive Chairman Bill Ford Jr. have repeatedly said partnerships are key in an era of rapidly developing connected and autonomous cars.

“With the skill sets we’re learning ... we’re trying to come at this not with a talk-to-the-hand approach,” Fields said. “We really have to open ourselves up to a lot of these new skills that will allow us to go faster and to we think be ahead of the market in many cases.”

Mee said Ford has been a “learning organization.”

“They’re focused on absorbing what they can from everyone and not saying, ‘Hey, it’s only the Ford way to do ‘X,’ ‘Y,’ or ‘Z,’ ” Mee said.

The Pivotal partnership is the latest in a string of collaborations between automakers and tech companies.

Earlier this year, General Motors Co. announced significant investments in ride-hailing service Lyft, and the acquisition of Silicon Valley startup Cruise Automation. On Tuesday, Fiat Chrysler Automobiles announced a partnership with Google’s driverless car program to build 100 autonomous Pacifica minivans.

Ford and Google were rumored to be near a partnership in January, but nothing ever materialized.

Fields said that Ford is “absolutely not” at a disadvantage after the Google-FCA tie-up, and that he feels “very comfortable” where the Dearborn automaker is at developing its own autonomous cars.

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