General Motors (GM) and its subsidiary Cruise reported that they have a formed a partnership with Honda Motors (HMC) to develop an autonomous vehicle. Honda will jointly work with GM and Cruise to fund and develop the autonomous vehicle for Cruise. The trio will also look out the global opportunities for commercial deployment of the Cruise network.
Honda will spend $2.75 billion, which includes about $2 billion over 12 years for these initiatives and an equity investment of $750 million in Cruise. After this deal, Cruise’s valuation had increased to $14.6 billion, which also includes the recently announced SoftBank investments.
In May 2018, General Motors announced that SoftBank Vision Fund will invest $2.25 billion in GM Cruise Holdings. The Detroit automaker also stated that it will invest $1.1 billion in Cruise upon closing of this transaction.
In June this year, GM and the Japanese carmaker partnered to develop advanced battery components to accelerate both companies’ plans for all-electric vehicles. The joint venture is expected to produce an advanced hydrogen fuel cell system around 2020.
“With the backing of General Motors, SoftBank and now Honda, Cruise is deeply resourced to accomplish our mission to safely deploy autonomous technology across the globe,” said Cruise CEO Kyle Vogt. Cruise has been prototyping a driverless vehicle over the past two years.
After this deal, Cruise’s valuation had increased to $14.6 billion
Last year, GM acquired LIDAR technology company Strobe. LIDAR technology uses light to create high-resolution images to provide an accurate view of the world than cameras or radar alone and this technology is expected to play a crucial role in the development of self-driving vehicles. As part of this deal, Strobe and GM’s Cruise Automation planned to develop the LIDAR solutions for autonomous vehicles.
According to Global Autonomous Vehicle Market Opportunities and Forecasts 2019-2016 report by Allied Market Research, the global autonomous vehicle market is expected to reach $557 billion by 2026 at a CAGR of 39.5%.
Deliveries of the US auto behemoth stood at 694,638 vehicles for the third quarter in the US, which was down 11% compared to the same period a year ago. Hurricanes impacted the sales in the quarter. At the end of the quarter, about one-third of GM sales were 2019 models.
GM shares, which plunged to a 52-week low ($33.20) on Tuesday, were up about 5% when the market opened Wednesday. Shares of Honda were trading in the negative territory in NYSE during the morning hours.
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