GM’s self-driving vehicle unit gets a push with investment of US$2 bn

June 4, 2018

mission-cruisegmJapan’s SoftBank Group is investing US$2.25 billion into General Motors (GM)’s autonomous-vehicle unit. The world’s biggest technology fund, SoftBank’s US$100 million Vision Fund, will invest in GM’s newly created unit, GM Cruise Holdings, in two phases: with the first phase comprising US$900 million and a further $1.35 billion when Cruise vehicles are ready for commercial deployment, in an app-based ride-hailing service next year, subject to regulatory approval.

Once SoftBank completes the investment, it will own 19.6% of GM Cruise, which will have a value to the tune of US$11.5 billion. GM Cruise’s assets include Cruise Automation, based in San Francisco, and Strobe, a small self-driving sensor developer that Cruise acquired last year.

An additional US$1.1 billion investment by GM this year and next on self-driving vehicle development and commercialisation, will boost the total injection for Cruise to US$3.35 billion.

The two are joining forces to take on Google in the battle to dominate the self-driving car business. US-headquartered GM intends to be the first vehicle maker to bring an autonomous taxi service to public roads next year, positioning the company alongside Waymo, the unit of Google owner Alphabet.

Alphabet, which plans to launch a robo taxi service later this year, also has a deal to buy up to 62,000 minivans from Fiat Chrysler Automobiles for its self-driving fleet.

Ford Motor Co and BMW both plan to deploy self-driving cars in 2021; Tesla has talked about creating a network of self-driving cars and Uber says it is sticking with a development effort despite an accident where a Google self-driving car killed a woman in the US. Uber is also in talks to use Waymo technology on the Uber network, a reflection of the movement in the industry.

Run by SoftBank Group CEO Masayoshi Son, the SoftBank Vision Fund has about US$100 billion in contributions mostly from sovereign wealth funds in Saudi Arabia and the UAE. SoftBank’s earlier investments include major ride hailing taxi services such as Uber Technologies and China’s Didi Chuxing; India’s ride-hailing leader Ola, chipmaker Nvidia and driver-behaviour tracker Nauto.

Both GM and SoftBank will be prevented from selling their stakes in Cruise for seven years, and GM will report the unit’s financial results in quarterly reports, said company officials.

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