General Motors (NYSE: GM) said last week that the SoftBank Vision Fund will invest $2.25 billion in GM Cruise Holdings (GM Cruise), “further strengthening the company’s plans to commercialize Autonomous Vehicle technology at large scale.” GM will also invest $1.1 billion in GM Cruise upon closing of the transaction, subject to government regulatory approval of course.
It’s part of a larger auto industry trend that see automakers scrambling for funding and technical expertise to transform themselves into mobility companies – an expensive and risky strategy. The reason for the deal became clearer yesterday when GM announced that all Cadillac models will come with a sophisticated autonomous cruise control that requires no driver input on limited access highways. (See AutoInformed.com on Autonomous Vehicle Nod – Super Cruise on All Cadillacs)
“GM has made significant progress toward realizing the dream of completely automated driving to dramatically reduce fatalities, emissions and congestion,” said Michael Ronen, managing partner, SoftBank Investment Advisers. “The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage.
The SoftBank Vision Fund investment will be made in two phases. At the closing of the transaction, the Vision Fund will invest the first tranche of $900 million. At the time that Cruise AVs are ready for commercial deployment, the Vision Fund will complete the second tranche of $1.35 billion. Together, this will result in the SoftBank Vision Fund owning a 19.6% equity stake in GM Cruise and will afford GM increased flexibility with respect to capital allocation.
The GM and SoftBank Vision Fund investments are expected to provide the capital necessary to reach commercialization at scale beginning in 2019 on Cadillac models.