GM Cruise wins SoftBank backing to boost self-driving bid
SoftBank is pouring $2.25 billion into General Motors Co.’s autonomous-vehicle unit as the world’s biggest technology fund and America’s largest automaker join forces to take on Google in the battle to dominate the self-driving car business.
SoftBank Vision Fund will invest in GM Cruise Holdings LLC in two phases, with $1.35 billion going in once Cruise autonomous vehicles are ready to be deployed into an app-based ride-hailing service next year. Once SoftBank completes the investment, it’ll own 19.6 percent of GM Cruise, valuing the unit at $11.5 billion. GM’s shares surged in early trading.
The deal combines two key players in the emerging technology of self-driving cars and services. GM intends to be the first automaker to bring an autonomous taxi service to public roads next year, positioning the company alongside Waymo, the unit of Google owner Alphabet Inc., among the leaders in the burgeoning field. SoftBank also can lend expertise and connections to fuel GM’s ambitions, as it’s invested in major ride-hailing companies including Uber Technologies Inc. and China’s Didi Chuxing.
“This gives GM Cruise the capital necessary to commercialize at scale,” GM Chief Executive Officer Mary Barra told reporters at a briefing in Detroit. An additional $1.1 billion investment by GM will boost the total injection for Cruise to $3.35 billion.
GM shares climbed as much as 11 percent in early trading. The stock was down 7.7 percent this year through Wednesday’s close.
Run by SoftBank Group Corp. CEO Masayoshi Son, the SoftBank Vision Fund has about $100 billion in contributions mostly from sovereign wealth funds in Saudi Arabia and the United Arab Emirates. In addition to Uber and Didi, the fund has invested in the likes of India’s ride-hailing leader Ola, chipmaker Nvidia Corp. and driver-behavior tracker Nauto Inc.
“We were blown away by the ability of the Cruise team to integrate quickly,” said Michael Ronen, managing partner of SoftBank Investment Advisers. “The ability of GM to put production to work and make this a success was the last piece of the due diligence.
The capital raised and invested will carry GM and Cruise through the phase of making a business out of self-driving cars, GM President Dan Ammann said.