Honda to invest $2.75 billion in GM's Cruise autonomous vehicle unit
DETROIT -- Honda will invest $2.75 billion in General Motors' autonomous vehicle operations, including plans to develop and deploy a purpose-built self-driving vehicle.
The Japanese automaker will receive a 5.7 percent stake in GM Cruise LLC for the investment, which includes an immediate $750 million and another $2 billion for development and deployment of self-driving vehicles over the next 12 years, GM and Honda executives said Wednesday.
Honda, according to GM CEO Mary Barra, will provide Cruise with additional engineering, design and technology expertise and assist in the company’s “global reach and the ability to deploy at-scale.”
“It will really expand Cruise’s leadership in the development and deployment of autonomous technology,” Barra told reporters Wednesday at the company’s technical center in suburban Detroit.
The investment values Cruise at $14.6 billion -- $3.1 billion more than when SoftBank Vision Fund, a prominent technology investment firm, announced plans to invest $2.25 billion in the operations in May.
That deal gave SoftBank a 19.6 percent stake in GM Cruise, which includes Cruise and Strobe Inc., a lidar company GM acquired in October 2017.
The announced partnership sent GM shares up 3.3 percent to $34.40 as of 19:35 p.m. CET.
The investment from Honda comes roughly nine months after GM announced plans to launch public ride-hailing services with self-driving vehicles that do not have manual controls such as steering wheels and pedals, starting in 2019.
GM President Dan Ammann said next year “remains the objective,” however he stressed that safety will be the determining factor on when the vehicles launch.
Cruise CEO Kyle Vogt, in a post on Medium, said the company has already started “quietly prototyping a ground-breaking new vehicle over the past two years that is fully released from the constraints of having a driver behind the wheel.”
“Building a new vehicle that has an incredible user experience, optimal operational parameters, and efficient use of space is the ultimate engineering challenge,” he wrote. “We’re going to do this right, and by joining forces with Honda we’ve found the perfect partner to help make it happen.”
Ammann, who oversees Cruise, on Wednesday said the vehicle will be the first purpose-built vehicle at-scale that’s “free from the constraints of having to think about vehicle design and having a driver at the wheel, and all the traditional approaches to that.”
“This takes us into the true future of mobility,” he said, later declining to provide a timeline for production or deployment of such a vehicle.
Cruise’s current self-driving fleet is based on the Chevrolet Bolt EV. The newest iteration of the car took out the manual controls such as pedals and steering wheels, however still has the traditional interior of the car.
Vogt, in the post, questioned why shouldn’t the “car of the future” include “giant TV screens, a minibar and lay-flat seats? Maybe it should,” he wrote.
A teaser photo of the front end of the vehicle released Wednesday shows a rectangular, pod-like vehicle with large vertical illuminated headlights. Ammann, on a call with investors Wednesday, said the plan is for GM, not Honda, to manufacturer the vehicle.
GM was expected to begin testing its autonomous vehicles this year in New York. However, Barra on Wednesday said the company is focusing its current efforts in San Francisco.
“We’ve really refocused the efforts to make sure that we are as efficient as possible to be able to deploy safely,” said Barra, adding the company continues “early work” in the Big Apple. A company spokesman confirmed Cruise has completed mapping streets in the city.
Ammann described the Honda partnership as having “a running start,” as the automakers have previously teamed up on the development of other advanced technologies. He called the relationship between the two companies “longstanding and deeply trustful.”
Honda’s investment in GM’s Cruise comes four months after the two companies announced plans to develop a new generation of batteries aimed at cutting costs and accelerating the companies’ rollout of electric vehicles.
The companies also previously formed an advanced-technology alliance announced last year between GM and Honda, which have been working on advanced hydrogen fuel cells for deployment in 2020.
Honda Executive Vice President and Representative Director COO Seiji Kuraishi, via teleconference Wednesday, said Honda hopes the collaboration “will further strengthen” the company’s efforts and partnerships with GM.
When asked about reported conversations between Honda and Google’s self-driving affiliate, Waymo, Kuraishi declined to directly comment on those talks.
“As we’ve announced today, we decided to announce an exclusive collaboration with GM and Cruise,” he said through a translator.
While the tie-up is exclusive on Honda’s end, GM is not ruling out adding other partners to Cruise.
“In terms of other partnerships and opportunities, we will evaluate things as they come along but we have an incredibly well-resourced plan and a huge pool of talent behind this effort now that’s going to enable us to go as quickly as we possibly can,” said Ammann, adding the company has been “extremely selective” in taking on partners.