GM, Honda Strike up Partnership to Develop an Autonomous Car

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【Summary】Under the partnership, Honda will make a $750 million equity investment in General Motors’ Cruise subsidiary and spend an additional $2 billion over the next 12 years to jointly develop self-driving technology.

Original Vineeth Joel Patel    Nov 09, 2018 3:00 PM PT
GM, Honda Strike up Partnership to Develop an Autonomous Car

For the most part, large automakers have decided to solve the autonomous-car dilemma on their own, choosing to invest in startups over creating partnerships with other auto manufacturers. It's all about keeping one's secrets close to the chest, especially when there's billions at risk. In a surprising move, Honda and General Motors have struck up a partnership that will see the automakers work on autonomous vehicles together. 

Honda And GM Announce New Partnership 

The collaboration between the two will see Honda make an immediate $750 million equity investment in General Motors' Cruise, which is the automaker's self-driving vision that's been under its arm since 2016. Honda will also invest $2 billion over the next 12 years into developing a mass-produced autonomous vehicle. The large amount of investment on Honda's part brings the post-money valuation of Cruise up to a dizzying $14.6 billion. 

"This is the logical next step in General Motors and Honda's relationship, given our joint work on electric vehicles, and our close integration with Cruise," said General Motors Chairman and CEO Mary Barra. "Together, we can provide Cruise with the world's best design, engineering and manufacturing expertise, and global reach to establish them as the leader in autonomous vehicle technology – while they move to deploy self-driving vehicles at scale." 

According to Kyle Vogt, CEO of Cruise, the union between the Japanese and American automakers will see the introduction of an "innovative, space-efficient autonomous vehicle that delivers an exceptional experience and minimizes congestion on crowded city streets." Other than those details, information on the self-driving vehicle is scarce. The sole picture that's available depicts a pod-like machine with lengthy vertical headlights, which Vogt claims is a prototype that GM and Cruise have already created. 

Why The Collaboration Makes A Lot Of Sense

On paper, the partnership makes sense. Honda and GM have worked together before, as the two brands announced an agreement to develop the next generation of batteries for electric vehicles earlier this June, and partnered last February to expand on their hydrogen fuel-cell technology. 

"Honda chose to collaborate with Cruise and General Motors based on their leadership in autonomous and electric vehicle technology and our shared vision of a zero-emissions and zero-collision world," said Seiji Kuraishi, Honda's executive vice president. "We will complement their strengths through our expertise in space efficiency and design to develop the most desirable and effective shared autonomous vehicle." 

The partnership between Honda and GM doesn't include the American brand's driverless ride-sharing service that it's planning on debuting next year. The service will feature autonomous Chevrolet Bolts, while the city the service will be available in hasn't been announced yet. 

We expect to see other automakers learn from Honda and General Motors in the near future and create new partnerships with one another. As Michelle Krebs, an executive analyst for Autotrader pointed out to The Detroit News, these kind of global partnerships are necessary for long-term survival and profit.  

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