General Motors Co. and the SoftBank Vision Fund are partnering to invest in GM Cruise to bring self-driving vehicles to market by next year, the company said May 31.
SoftBank is a technology investment firm with stakes in companies such as Uber. It will invest $2.25 billion in GM Cruise Holdings, and GM will invest $1.1 billion in GM Cruise, its self-driving arm, when the transaction closes at the end of June, the company said.
“Our Cruise and GM teams together have made tremendous progress over the last two years,” GM Chairman and CEO Mary Barra said in a news release. “Teaming up with SoftBank adds an additional strong partner as we pursue our vision of zero crashes, zero emissions and zero congestion.”
GM’s stock was up 7.5% to $40.77 in pre-market trading.
The SoftBank Vision Fund investment will be made in two pieces. Vision Fund will invest the first slice of $900 million. When the Cruise autonomous vehicles are ready for commercial deployment, the Vision Fund will make the second investment of $1.35 billion, “subject to regulatory approval,” GM said. SoftBank Vision Fund will own 19.6% equity in GM Cruise, GM will own the balance. This investment process will give GM flexibility with respect to capital allocation, according to the automaker.
“The GM Cruise approach of a fully integrated hardware and software stake gives it a unique competitive advantage,” Michael Ronen, managing partner of SoftBank Investment Advisors, said in a statement. “We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.”
The GM and SoftBank Vision Fund investments are expected to provide the necessary capital to reach commercialization of autonomous vehicles “at scale” beginning in 2019, GM said.
“We’ve been in discussion for quite some time. We’re very aligned as to what this technology can bring to the world,” GM President Dan Ammann said.
“The capital we’re raising and announcing today is very significant and will carry us to full deployment.”
SoftBank’s Ronen concurred.
“This feels like the right time. There’s still work to do between now and next year to make this work,” he said.
“We have invested significant amounts of capital in ride sharing globally. We’ve made other investments in tech that relates to automotive including artificial intelligence,” Ronen said. “Frankly, we’re also at the beginning of that investment strategy as it relates to automotive and there’ll be plenty of opportunities to do more.
“There is more exclusivity between GM and SoftBank. We have agreed to a seven-year term before each of us can seek capital outside of this partnership, which is a ‘good runway’ to get that technology growth going,” he said.