General Motors (NYSE: GM) today announced it is acquiring SoftBank Vision Fund 1’s equity ownership stake in Cruise for $2.1 billion and separately will make an additional $1.35 billion investment in Cruise, replacing a previous commitment made by the fund in 2018.
Cruise has made self-driving cars a reality and is arguably the leader on the pathway to commercial autonomous ridesharing and delivery, creating significant value for both GM shareholders and Cruise’s minority shareholders. Since Cruise was founded in 2013, it has run more than 2 million autonomous miles in California. It has 300+ all-electric AVs on roads in San Francisco and Phoenix. Funding is more than $9 billion with ~1900 employees, with a market valuation of, gulp, +$30 billion (before today). (AutoInformed: Cruise CEO – It Will Be Hard to Sell a Car That Isn’t Self-Driving; Honda and Cruise to Start Testing Autonomous Vehicles on Public Roads)
“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,” said GM Chair and CEO Mary Barra.
The Cruise Origin is a zero-emissions, shared, electric vehicle that has been designed from the ground up to operate without a human driver. This means it does not rely on certain human- placed features, such as a steering wheel or a sun visor, to operate safely. The Origin seeks to lead environmental sustainability, ensuring U.S. leadership in developing and manufacturing autonomous technology and artificial intelligence while supporting the American workforce and promoting accessibility.
“Cruise will continue to operate as it does today – an independent company working alongside GM in a flexible, collaborative partnership. Cruise and GM’s continued partnership as well as 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,” said Kyle Vogt, Cruise CEO.
Vogt says Cruise has 5 of the 6 permits necessary in California (“other states are ephemeral”) to move into further development of an autonomous future. The missing, or rather not activated yet for ride hailing, is credit card authorization. “Transportation in the US right now comprises 3 trillion miles a year at a cost of 60-80 cents per mile. We are on the verge of a huge paradigm shift. Yes there will be some situations where people might want to drive themselves, but we do see a path to [selling or leasing] a million plus Avs in 2030,” Vogt told AutoInformed two weeks ago.
The challenges are the cost of the technology that works and customer satisfaction – make the riders happy. Cruise is 7 or 8 weeks into dozens of driverless vehicles on the roads. The technology is scalable from two cities, to three, to 20 to… exponential growth. Hence the capital market interests.
In addition to GM’s increased investment, Cruise today launched its Recurring Liquidity Opportunity Program, which delivers on Cruise’s promise to provide Cruise employees the potential for long-term share price upside as well as flexibility around share liquidity. This program – it’s claimed – will keep Cruise extremely competitive in the talent market against both public and private companies as the company enters the early commercialization phase and continues to attract and retain some of the world’s best talent.
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