General Motors is upping its stake in its autonomous driving unit Cruise, the Detroit automaker buying out an equity stake held by Japanese investment management fund SoftBank for $2.1 billion.
GM also said it will invest an additional $1.35 billion in Cruise as part of its focus on bringing autonomous vehicle technology to market. The company has held a majority stake in Cruise since 2016, though the San Francisco-based operation has received significant capital from several other investors, including both SoftBank and Honda.
“We continue to believe our investment represents an extraordinary opportunity for creating long-term shareholder value,” GM Chairman and CEO Mary Barra said in a statement released Friday afternoon, shortly after Wall Street finished trading for the week.
“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,” she added.
A “flexible, collaborative partnership”
After buying out shares held by the SoftBank Vision Fund and some of its affiliates, GM will hold a roughly 80% stake in Cruise.
The startup was founded in 2013 by Dan Kan and Kyle Vogt. Vogt has long served as chief technical officer but was also named Cruise president and interim CEO last December following the departure of Dan Ammann. Vogt was named permanent CEO in late February. A former C-Suite executive at GM, Ammann was appointed Cruise chief executive shortly after GM took control of the autonomous technology firm.
“Cruise will continue to operate as it does today — an independent company working alongside GM in a flexible, collaborative partnership,” Vogt said in Friday’s statement. He cited “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.”
There are dozens of companies around the world working on autonomous vehicle technology though Cruise is widely regarded as one of the leaders.
Taking the driver out of the equation
It has been testing prototype vehicles for several years on public roads, using them as part of a pilot ride-sharing service. It recently received approval from California regulators to begin offering rides to paying customers using fully driverless vehicles. That will begin in San Francisco, though GM CEO Barra has indicated the goal is to quickly expand to other U.S. markets.
The next step is to begin production of the Cruise Origin, a toaster-shaped shuttle designed to serve as the primary vehicle for a commercial driverless ride-sharing service.
Industry analysts have long contended that pulling the driver out of the equation is the critical step towards making ride-sharing a viable alternative to vehicle ownership.
While there has been no public explanation for why Ammann left Cruise last year, insiders have quietly suggested he held a significantly different view from Barra about where the company would go beyond ride-sharing. The GM CEO wants to see Cruise technology adopted for use in its retail vehicles and earlier this year said that could happen by sometime mid-decade.