GM revs up autonomous car unit and dormant shares fly
GM said it will sink US$1.1 billion into its GM Cruise automated division, while Japanese firm SoftBank will spend US$2.25 billion for a nearly 20 per cent stake
DETROIT—The Japanese technology conglomerate SoftBank will spend US$2.25 billion for a nearly 20 per cent stake in General Motors’ autonomous vehicle unit.
GM said Thursday that it will also sink another US$1.1 billion into its GM Cruise automated division. The capital infusion is designed to speed large-scale deployment of self-driving robotaxis next year.
Investors, looking for a reason to cheer on the century-old automaker, sent shares rocketing 10 per cent higher at the opening bell, the largest one-day gain ever for the company.
The move widens the SoftBank Vision Fund’s influence in ride-hailing services. The fund closed a deal in January to spend about $9 billion for a 15 per cent stake in Uber and also owns a stake in China’s top ride-hailing firm Didi Chuxing.
San Francisco-based GM Cruise would remain a wholly owned subsidiary of GM with the automaker holding roughly 80 per cent of the business.
The deal is expected to close by the end of June.
GM has announced plans to carry passengers in self-driving cars that won’t have a backup driver in 2019, and CEO Mary Barra said the investment would help to speed that process. The company hasn’t announced where or exactly when the service will begin.
Even though SoftBank has spread billions across multiple ride-hailing and autonomous vehicle companies, it has no plans to integrate them, said Michael Ronen, a managing partner. “Each company will make its own decisions about what’s in the best interest of the company.”
SoftBank was impressed by the speed that GM Cruise is moving toward safely deploying the cars, Ronen said, as well as GM’s ability to produce large numbers of electric vehicles needed to start a robotaxi service.
The investment will last for seven years, with SoftBank having options to continue or exit.
GM’s investment is in addition to what it already has spent on Cruise, including $400 million to $500 million this year and an initial $562 million investment to buy Cruise Automation in 2016.
SoftBank also holds significant stakes in Sprint and several other telecommunications companies, mostly based in Japan.