General Motors executives say a $3.35 billion investment in its autonomous-vehicle unit GM Cruise will accelerate the automaker’s work in the space and open additional opportunities to extend the potential of what it considers the biggest technical and business endeavor in the history of the industry.
GM announced earlier today the technology-investment fund SoftBank Vision Fund will invest $2.25 billion in GM Cruise, along with a $1.1 billion capital infusion from the automaker itself to mark one the largest investments to date in self-driving cars.
“Soft Bank brings a very broad ecosystem to the table across the entire technology universe,” GM President Dan Ammann says.
“Obviously, we are working on one of the biggest technical challenges and opportunities of all time, so having a partner with the scope and breadth and resources and relationships of SoftBank only enhances our opportunities as we bring this technology to reality and large scale,” Ammann says during an investor call to discuss the partnership.
GM shares soared more than 10% in early trading on news that one of the world’s biggest tech funds finds the automaker’s AV technology industry-leading. SoftBank, a unit of the Japanese multinational conglomerate SoftBank Group, will gain a 19.6% stake in GM Cruise once the investment is completed over two rounds. Soft Bank also gets a seat on the GM board of directors.
SoftBank is notable in the self-driving field as the largest investor in the ride-hailing company Uber, which also is working on AVs but suspended a portion of its work earlier this year after one its cars struck and killed a pedestrian. GM holds a significant investment in Uber rival Lyft.
Ammann says GM was on a path to fund its AV business itself, but found in SoftBank an investor that shared the automaker’s vision for the technology as well as its business opportunity.
“We weren’t looking for a partner, but we found one,” Ammann says.
Ammann says the cash infusion will accelerate talent acquisition at GM Cruise. Since buying the former Cruise Automation in 2016 for an estimated $1 billion, the unit’s staff has grown from 40 employees to more than 800. GM has another 800 of its own scientists and engineers working alongside.
The investment also represents freer source capital from the traditional corporate balance sheet to fund GM Cruise, as well as several commercialization options down the road given SoftBank’s many other relationships in the space.
“We see a lot of very significant strategic benefits to what we are announcing here,” Ammann adds.
Ammann, who brokered the Cruise Automation deal to vastly accelerate GM’s work on AVs, says the investment furthers GM’s strategy to keep all hardware and software technical expertise and testing in the field under its own roof.
Michael Ronen, managing partner-SoftBank Advisers, says GM’s approach makes its unique in the industry and calls the Cruise team brilliant and agile for its ability to iterate AV technology quickly. GM’s manufacturing might also gives the automaker an edge toward commercialization of the technology at scale.
Ronen also called out during the conference call what SoftBank considers a seamless partnership between Cruise and GM over the last two years.
“A disruptive startup on the one hand and an established industry leader on the other,” he says.
GM and SoftBank will hold their investment in GM Cruise for at least seven years.
“This is a long-term commitment,” Ammann says.
Beginning in the second quarter, GM will begin reporting GM Cruise as a separate segment to provide investors greater transperancy into the business,
The investment keeps GM among the leaders in the race to field autonomous ride-sharing and ride-hailing fleets to the emerging transportation-as-a-service sector, which is expected to grow to a $700 billion business in the U.S. by 2030. GM’s first volley of robotaxis will be deployed in 2019.
Google, Apple, Uber and other automakers are pursuing similar paths for AVs.
“We are on track with our plans,” GM Chairman and CEO Mary Barra says. “We’re 100% committed to this mission.”
