SoftBank is putting $2.25 billion into GM
GM’s autonomous vehicle unit targets Google’s Waymo.
SoftBank is pouring $2.25 billion into General Motors’ autonomous-vehicle unit as the world’s biggest technology fund and America’s largest automaker join forces to take on Google in the battle to dominate the self-driving car business.
SoftBank Vision Fund will invest in GM Cruise Holdings in two phases, with $1.35 billion going in once Cruise deploys autonomous vehicles in an app-based ride-hailing service next year. Once SoftBank completes the investment, it’ll own 19.6 percent of GM Cruise, valuing the unit at $11.5 billion.
The deal combines two key players in the emerging technology of self-driving cars and services. GM intends to be the first automaker to bring an autonomous taxi service to public roads next year, positioning the company alongside Waymo, the unit of Google owner Alphabet Inc., among the leaders in the burgeoning field.
SoftBank also can lend expertise and connections to fuel GM’s ambitions, as it’s invested in major ride-hailing companies including Uber Technologies and China’s Didi Chuxing.
“This gives GM Cruise the capital necessary to commercialize at scale,” GM Chief Executive Officer Mary Barra told reporters at a briefing in Detroit. An additional $1.1 billion investment by GM will boost the total injection for Cruise to $3.35 billion.
Cruise’s value is on the rise since GM acquired the company two years ago for $581 million in cash. Adding in bonuses and other payments to key employees, the deal was said to have cost closer to $1 billion.
GM’s stake in Cruise is now worth about $9.2 billion, Joseph Spak, an analyst at RBC Capital Markets, said in a note to clients. While it’s difficult to assess who’s winning the autonomous race, he’s argued that GM “has a meaningful seat at the table” and said the SoftBank deal “affirms that view.”
Run by SoftBank Group CEO Masayoshi Son, the SoftBank Vision Fund has about $100 billion in contributions mostly from sovereign wealth funds in Saudi Arabia and the United Arab Emirates. In addition to Uber and Didi, the fund has invested in the likes of India’s ride-hailing leader Ola, chipmaker Nvidia and driver-behavior tracker Nauto.
“We were blown away by the ability of the Cruise team to integrate quickly,” said Michael Ronen, managing partner of SoftBank Investment Advisers.
The capital raised and invested will carry Cruise through the phase of making a business out of self-driving cars, GM President Dan Ammann said.
Both GM and SoftBank will be prevented from selling their stakes in Cruise for seven years.