The autonomous vehicle unit of General Motors (NYSE: GM ) received a big fillip this week after it secured a $1.15-billion funding from an investor group. After several rounds of funding – to the tune of $7.25 billion – GM Cruise is currently valued at $19 billion. The valuation represents nearly one-third of GM’s total market capitalization.
The latest investment was made by the parent company, Honda, SoftBank Vision Fund and a group of institutional investors. The funding that went into the development of the Cruise technology is expected to have well positioned the company to take on its rivals in the self-driving landscape.
Autonomous transport systems typically require heavy investment due to the challenges involved in perfecting the technology so as to meet the stringent regulatory norms. With competition growing in the segment, it is important for automakers to be ready with foolproof technology before they commence mass production.
The latest funding was raised from the parent company, Honda, SoftBank Vision Fund and institutional investors
According to the company, the latest funding gives it a “critical competitive advantage” by making a significant resource available. It is estimated that the lion’s share of the fund will be used for the previously announced expansion activities at the company’s Seattle facility, where it is planning to hire dozens of engineers by year-end.
Earlier, Japan-based lender SoftBank had invested $2.25 billion in Cruise last year. A few months later, Cruise teamed up with Honda for designing the driver-less car, in a partnership that also included long-term investments of about $2 billion by the Japanese automaker.
GM shares gained more than 15% since the beginning of 2019, after hitting a low towards the end of last year. Having moved up around 5% over the past four quarters, the stock traded higher during Tuesday’s regular trading session.