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GM and Honda are joining forces on self-driving cars with a $750 million Honda investment making GM Cruise worth $14.6 billion
GM will join with Honda to develop a "purpose-built autonomous vehicle" for Cruise, GM's self-driving division. Honda will invest $2 billion over 12 years, with an additional $750 million invested in Cruise. Honda's equity investment raises Cruise's valuation to $14.6 billion.
GM’s $2 billion deal with a Japanese tech giant may give the automaker a big advantage in the race to develop self-driving cars
The deal has given GM equity value that it can use to attract new talent. Cruise has grown dramatically since GM bought it in 2016; what started as a 40-employee startup now has 800 people working it. GM President Dan Ammann said that another leg of significant growth is on the way.
GM’s self-driving car unit could be worth $43 billion — nearly 4 times the valuation it received 6 weeks ago, RBC says
Cruise has been growing at a quick pace ever since GM acquired the San Francisco startup and its 50 employees for $581 million. GM hopes to increase Cruise's headcount to 1,648 in California by 2021 thanks to a tax credit package worth $8 million approved by state officials last year.
GM is realigning its top leadership to take Cadillac to the next level and to expand its Cruise self-driving business
Cadillac will now be overseen directly by product czar Mark Reuss, while Ammann focuses on Cruise commercialization in 2019 and an ongoing $2.25-billion investment in Cruise from Japan's SoftBank.
GM is reportedly thinking about spinning off its Cruise self-driving division. For several years, GM share values have frustrated investors who think that a company banking over $70 billion in profits since its own 2010 IPO should be worth more.
The SoftBank investment will involve two phases: a $900 million initial funding followed by a $1.35 billion round. Ultimately, SoftBack will take a nearly 20% equity share in Cruise, which has been operating as a stand-alone GM unit.
Tesla's position in electric cars is strong, but its challenges with autonomy are becoming more pressing. And now it's starting to look like Tesla may not have a strong business model for its autonomous technology.
Fully autonomous vehicles are likely to arrive first in fleets. And fleet rollouts will favor competitors who can build self-driving tech into their cars.
The automaker also stressed that the fully autonomous vehicle would emphasize safety.
Tesla has never been that company can't innovate. But after a decade-and-a-half, the Palo Alto-based carmaker doesn't have massive scale.