SoftBank to Invest $2.2 Billion in GM's Cruise Self-Driving Car Unit
GM is aiming for commercialization of self-driving cars 'at scale' in 2019.
Japanese firm SoftBank will invest $2.25 billion in General Motors' Cruise Automation self-driving car unit. GM will also invest $1.1 billion upon the transaction's closing, a company press release said.
SoftBank, which also has stakes in ride-hailing companies Uber and Didi Chuxing, will funnel money to Cruise through its Vision Fund in two tranches. It will initially invest $900 million, followed by $1.35 billion when Cruise self-driving cars "are ready for commercial development," according to GM. The investment will give SoftBank a 19.6-percent stake in Cruise.
Outside investment will give GM more flexibility in allocating capital, keeping Cruise, err, cruising without the need for constant infusions of cash from its parent company. SoftBank's connections to Uber and Didi Chuxing could also offer a path to commercializing Cruise's technology. Both ride-hailing companies want to adopt autonomous cars, and Cruise has already tested the concept. Note that GM holds a stake in Uber rival Lyft.
GM bought Cruise Automation in early 2016 for an estimated $1 billion. Since then, the automaker has quickly ramped up self-driving car tests. It now builds prototype autonomous Chevrolet Bolt EV electric cars on the same Michigan assembly line that customer cars are built on.
The cars equipped with self-driving technology are currently being tested on public roads in California, Arizona, and Michigan.
The SoftBank investment will provide the necessary capital to "reach commercialization at scale in 2019," according to GM. The automaker previously said it planned to commercialize autonomous cars with a ride-hailing service and has also shown renderings of a self-driving car with no manual controls. But even if it has the money, GM will have to deal with a murky regulatory environment and public ambivalence toward self-driving cars.