GM is Making an Additional $3.4 Billion Investment in Autonomous Driving Technology Developer Cruise, Will Acquires Softbank's Stake in the Company
【Summary】General Motors announced on Friday its acquiring SoftBank Vision Fund’s equity ownership stake in San Francisco-based autonomous driving technology developer Cruise for $2.1 billion. As part of the massive investment, GM is separately making an additional $1.35 billion investment in Cruise, replacing a previous commitment made by the Softbank’s Vision Fund fund in 2018.
General Motors announced on Friday its acquiring SoftBank Vision Fund's equity ownership stake in San Francisco-based autonomous driving technology developer Cruise for $2.1 billion.
As part of the massive investment, GM is separately making an additional $1.35 billion investment in Cruise, replacing a previous commitment made by the Softbank's Vision Fund fund in 2018.
GM acquired a majority ownership stake in Cruise in 2016 for around $1 billion, back when the company was a relatively unknown autonomous driving startup. The goal of the investment was to help GM jumpstart its own development of self-driving technology, which Cruise did.
In 2018, GM appointed former President Dan Ammann as CEO of Cruise, but he unexpectedly left the company just over three months ago. In his place, Cruise CTO and co-founder Kyle Vogt was reinstated as CEO of the company, a job he formally accepted three weeks ago.
"GM's increased investment illustrates its commitment to Cruise and our mission of creating a better world by deploying driverless cars at scale," said Vogt. "Cruise and GM's continued partnership as well as GM's financial strength and manufacturing scale are significant enablers and key differentiators for Cruise as we accelerate our progress and enter this next phase of commercialization."
Cruise has made significant progress to develop self-driving cars that can navigate the busy streets of San Francisco without human intervention. Over the past several years, Cruise has been working to launch an autonomous ride-hailing service that's similar to Uber using a fleet of Chevy Bolt EVs outfitted with technology for autonomous driving. The efforts have created significant value for both GM shareholders and Cruise's minority shareholders.
"We are extremely pleased to announce GM is leveraging the strength of its balance sheet to capitalize on the opportunity to increase its equity investment in Cruise and advance our integrated autonomous vehicle strategy," said GM Chair and CEO Mary Barra. "Our increased investment position not only simplifies Cruise's shareholder structure, but also provides GM and Cruise maximum flexibility to pursue the most value-accretive path to commercializing and unlocking the full potential of AV technology."
Cruise will continue to operate as an independent company, working alongside GM to commercial and scale its autonomous ride-hailing service.
Cruise has been testing its driverless vehicles in the city of San Francisco for the past several years in preparation for a commercial launch of its robotaxi service.
The city's hilly terrain makes the city a challenging environment to operate self-driving vehicles, which is one of the reasons that Cruise has extensively mapped the city so its autonomous vehicles can navigate safely, without human intervention.
A fleet of self-driving Chevy Bolt EVs at Cruise's headquarters in San Francisco.
GM, Cruise and Japan's Honda also collaborated on a multi-passenger shuttle named the Cruise Origin that will be used for its planned robotaxi service. The Origin was unveiled by Cruise in Jan 2020.
The Cruise Origin is a zero-emissions, shared, electric vehicle that has been purposefully designed from the ground up to operate without a human driver. It was the first production vehicle purposefully built by a global automaker without a steering wheel or brake pedal.
The Origin will be manufactured at GM's Factory ZERO electric vehicle manufacturing facility in Michigan.
Earlier this month, Cruise was issued one of only two "Drivered Deployment" permits by the California Public Utilities Commission (CPUC), which greenlights a passenger service in autonomous vehicles (AVs) as long as there is a safety driver behind the wheel.
More importantly, the permit allows Cruise to collect fares from passengers that use the service, as well as offer shared rides. The permit paves the way for a wide scale commercial launch of the service.
Although Cruise plans to remove the safety drivers from its autonomous vehicles, for now they must be present if the company wants to collect fares in San Francisco.
Before the permit was issued, Cruise could operate its ride-hailing service in the city for testing purposes only. The state allowed the company to begin picking up passengers for testing purposes in Sept 2021, but was not permitted to collect fares at the time.
Last summer, Cruise said it plans to access a $5 billion line of credit to finance the purchase of tens of thousands of Cruise Origin shuttles, as the company looks to scale its autonomous ride-hailing service to other major U.S. cities.
In addition to GM's increased investment, Cruise today launched its "Recurring Liquidity Opportunity Program", which delivers on Cruise's promise to provide its employees the potential for long-term share price upside as well as flexibility around share liquidity.
This program will keep Cruise extremely competitive and help the company attract and retain some of the world's best talent as its scales its operations.
Cruise, along with its rival Waymo, are widely considered to be the industry leaders in the development of self-driving technology in the U.S. Waymo spun out of Google's self-driving car project and is also planning to launch a commercial robotaxi service in San Francisco and other cities.
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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