- SoftBank will invest $US2.25 billion in General Motors‘ Cruise division.
- GM will follow with a $US1.1 billion investment.
- GM acquired Cruise Automation, a San Francisco startup, in 2016. The scale of the investment puts Cruise’s value at $US11.5 billion.
- Watch GM trade in real time here.
On Thursday, General Motors announced a substantial new investment in its self-driving-car division, Cruise, from Japan’s SoftBank.
“The SoftBank Vision Fund will invest $US2.25 billion in GM Cruise… further strengthening the company’s plans to commercialize autonomous-vehicle technology at large scale,” the automaker said in a statement.
“Our Cruise and GM teams together have made tremendous progress over the last two years,” GM’s chairman and CEO, Mary Barra, added. “Teaming up with SoftBank adds an additional strong partner as we pursue our vision of zero crashes, zero emissions, and zero congestion.”
The SoftBank investment will involve two phases: a $US900 million initial funding followed by a $US1.35 billion round.
Ultimately, SoftBank will take a nearly 20% equity share in Cruise, which has been operating as a stand-alone GM unit. The investment will value Cruise at $US11.5 billion; GM’s total market capitalisation is $US51 billion.
GM says it will invest $US1.1 billion in Cruise once the SoftBank effort is concluded, bringing the total funding of the division from this deal to $US3.35 billion.
SoftBank has also taken a substantial stake in Uber, widely reported at the time of the investment in 2017 to have discounted the private ride-hailing company’s lofty valuation.
GM and Cruise have focused on a fully integrated hardware and software solution to the challenge of establishing an autonomous ride-hailing/sharing network that can operate in urban environments. The deal has led to the rollout of a fully integrated autonomous electric car – the tech is being built into Chevy Bolt electric vehicles – that is being fleet-tested in San Francisco, Detroit, and Phoenix, with New York City scheduled to follow this year.
Commercialization, according to GM’s president, Dan Ammann, and Cruise’s CEO, Kyle Vogt, will arrive in 2019.
“The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage,” SoftBank managing partner Michael Ronen said in a statement. “We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.”
On a conference call with reporters, Ronen recounted learning of GM’s acquisition of Cruise, saying he thought “this could change everything.”
“Sitting here today, I think it will,” he added. “It’s a great beginning.”
GM shares surged in premarket trading on the news, up over 8% to $US41.
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