Japan’s SoftBank plans to invest $2.25 billion into GM’s self-driving car unit Cruise to help bring fleets of autonomous vehicles to market faster. Softbank’s investment, made from its Vision Fund, will give the company (sftby) a 19.6% stake in Cruise, which has been operating as a separate unit from GM.
The GM and SoftBank Vision Fund investments are expected to provide the capital needed to commercialize a fleet of self-driving ride-hailing service vehicles beginning in 2019.
“We were blown away by the ability of the Cruise team to iterate quickly, to work through the integrated approach, which we believe is crucial to the success of this business, Michael Ronen, managing partner of SoftBank Investment Advisers said during a conference call with reporters Thursday. Cruise’s speed and approach to safety paired with GM’s ability to produce volumes of self-driving vehicles at scale helped clinch the deal, Ronen noted.
The Softbank investment in Cruise will be made in two parts. The first tranche of $900 million will be made at the closing of the transaction. Once Cruise’s autonomous vehicles are ready for commercial deployment, Softbank will complete the second investment of $1.35 billion.
Softbank and GM Cruise have agreed to a 7-year term before either party can seek liquidity outside of the partnership. “That’s a good benchmark to what we believe should be a runway for this technology to get to, at least, close to maturity,” Ronen said, adding there will be plenty of growth between now and the end of term.
The Softbank Vision Fund has has become a dominant force in the venture community with aggressive and large investments in some of the most prominent startups in the world. Its investments include a variety of ride-hailing companies such as Uber, China’s Didi Chuxing, Grab, Ola, and 99.
“GM has made significant progress toward realizing the dream of completely automated driving to dramatically reduce fatalities, emissions, and congestion,” Ronen said in a statement released prior to the conference call. “The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage. We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.”
GM acquired Cruise in 2016 and has been testing self-driving cars in San Francisco as well as a suburb of Phoenix. GM announced in November during its investor day plans to introduce an autonomous ride-sharing service to several big cities in 2019.
In January, GM filed a petition asking the federal government permission to deploy self-driving Chevy Bolts that have no steering wheel, pedals, or other manual controls in preparation to launch its robo ride-sharing service.