An expensive leap in the dark?
Cruise and General Motors (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. A sizeable potion of the investment will go to funding what are ruinously expensive autonomous vehicles for a single company to undertake a vehicle without a steering wheel.This is now far beyond just developing the Bolt at an incremental pace. (See AutoInformed.com on SoftBank Vision Fund to Invest $2.25 B in GM Cruise)
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 uses 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. The current plan is for GM to manufacture the new vehicle.
In the auto industry a new production vehicle takes roughly four years and about a billion dollars to design and bring to market. That’s if there is an existing assembly plant – if not, add another billion dollars – and an experienced team ready to move. Most companies don’t, so it takes much longer. The many-year delay from concept to production is the reason the navigation system and music player in your car always feel dated compared to the apps on your phone.
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.” Specifics on the benefits of the partnership to Cruise can be found here.
General Motors
General Motors, its subsidiaries and its joint venture entities sell vehicles under the Chevrolet, Buick, GMC, Cadillac, Holden, Baojun, Wuling and Jiefang brands. More information on the company and its subsidiaries, including OnStar, a global leader in vehicle safety and security services, and Maven, its personal mobility brand, can be found at http://www.gm.com.
Honda Motor Co.
Honda designs, manufactures and markets automobiles, motorcycles, power products and aviation products worldwide. A global leader in powertrain and electromotive technologies, Honda produces nearly 30 million engines annually for its three product lines. Honda and its partners build products in more than 60 manufacturing plants in 27 countries, employing more than 208,000 associates globally.
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