Honda Invests $2.75B In GM Self-driving Car Unit Cruise

by Bamidele Ogunberu Posted on October 3rd, 2018

Houston, Texas, USA : General Motors Co. (GM) and Japanese automaker Honda Motor Co. (HMC) announced on Wednesday that they will work together on developing a self-driving vehicle. General Motors and Honda Motor Co. will work jointly with GM’s self-driving car unit Cruise Holdings to fund and develop a purpose-built autonomous vehicle for Cruise.

The autonomous vehicle will be manufactured at high volume for deployment worldwide. In addition, Cruise, General Motors and Honda will explore global opportunities for commercial deployment of the Cruise network.

Honda will invest $2 billion over 12 years in Cruise in addition to a $750 million equity investment in the autonomous vehicle unit, which will bring its total investment in the project to $2.75 billion.

In addition to the recently announced investment by Japan’s SoftBank Group in Cruise, the transaction by Honda brings the post-money valuation of Cruise to $14.6 billion, GM noted.

“Together, we can provide Cruise with the world’s best design, engineering and manufacturing expertise, and global reach to establish them as the leader in autonomous vehicle technology – while they move to deploy self-driving vehicles at scale,” said General Motors Chairman and CEO Mary Barra.

GM announced plans in January to mass-produce self-driving cars that will have no steering wheel, pedals or manual controls by 2019. The automaker has filed a safety petition with the Department of Transportation for its fourth-generation self-driving Cruise AV, its first production-ready vehicle built from the start to operate safely on its own.

GM said in May that Japan’s SoftBank Group’s Vision Fund will invest $2.25 billion in Cruise. GM added that it will also invest $1.1 billion in Cruise upon closing of the transaction.

Cruise founder Kyle Vogt used adjectives like “innovative,” “space-efficient,” and “multi-purpose,” to describe the new automobile.

The joint project will compete with other automakers already spending billions on self-driving technology.

This week, Ford called for engineers of self-driving vehicles to develop technology to allow the cars to let pedestrians know what moves they’re going to make on the road.

“We want everyone to trust self-driving vehicles — no matter if they are riders in these vehicles themselves or pedestrians, cyclists, scooter users or other drivers sharing the road,” John Shutko, Ford wrote in a blog post. “Having one, universal communication interface people across geographies and age groups can understand is critical for the successful deployment of self-driving technology.”

Several auto and technology companies are betting big on development of autonomous vehicles. Ride-hailing service Uber hopes to resume testing its self-driving cars before the end of the year, while automaker Ford has said it plans to launch a fully-autonomous vehicle by 2021.

Waymo, Alphabet Inc.’s self-driving technology company, has made a limited number of autonomous vehicles without steering wheels and pedals.

Below is the announcement:

Honda Joins with Cruise and General Motors to Build New Autonomous Vehicle

Honda investment of $750 million values Cruise at $14.6 billion.

Cruise and General Motors Co. (NYSE: GM) announced today that they have joined forces with Honda (TYO: 7267) to pursue the shared goal of transforming mobility through the large-scale deployment of autonomous vehicle technology.

Honda will work jointly with Cruise and General Motors to fund and develop a purpose-built autonomous vehicle for Cruise that can serve a wide variety of use cases and be manufactured at high volume for global deployment. In addition, Cruise, General Motors and Honda will explore global opportunities for commercial deployment of the Cruise network.

Honda will contribute approximately $2 billion over 12 years to these initiatives, which, together with a $750 million equity investment in Cruise, brings its total commitment to the project to $2.75 billion.

In addition to the recently announced SoftBank investments, this transaction brings the post-money valuation of Cruise to $14.6 billion.

“This is the logical next step in General Motors and Honda’s relationship, given our joint work on electric vehicles, and our close integration with Cruise,” said General Motors Chairman and CEO Mary Barra. “Together, we can provide Cruise with the world’s best design, engineering and manufacturing expertise, and global reach to establish them as the leader in autonomous vehicle technology – while they move to deploy self-driving vehicles at scale.”

“Honda chose to collaborate with Cruise and General Motors based on their leadership in autonomous and electric vehicle technology and our shared vision of a zero-emissions and zero-collision world,” said Honda Executive Vice President and Representative Director COO Seiji Kuraishi. “We will complement their strengths through our expertise in space efficiency and design to develop the most desirable and effective shared autonomous vehicle.”

“With the backing of General Motors, SoftBank and now Honda, Cruise is deeply resourced to accomplish our mission to safely deploy autonomous technology across the globe,” said Cruise CEO Kyle Vogt. “The Honda partnership paves the way for massive scale by bringing a beautiful, efficient, and purpose-built vehicle to our network of shared autonomous vehicles.”

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Bamidele Ogunberu

Bamidele Ogunberu

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