In a boost to the autonomous car industry GM’s self-driving car division, Cruise, has announced raising a $1.15 billion investment. Its self-driving car subsidiary, GM Cruise LLC, has valued the company at $19 billion, or more than one-third the market capitalization of GM’s market value of roughly $54 billion. GM stock is up 25% this year, and company shares were up over 1% in morning trading Tuesday.
Cruise announced the investment from a group led by T. Rowe Price on Tuesday and said it included money from GM, Honda and Japanese tech investment firm SoftBank.GM said the boost brings investments in Cruise over the past year to $7.25 billion, including money funnelled in from the parent company.
In a release announcing the news Cruise CEO Dan Ammann was quoted saying, “Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation. Having deep resources to draw on as we pursue our mission is a critical competitive advantage.”
Earlier in November Cruise had announced plans to expand to Seattle stating it would hire up to 200 engineers there by the end of 2019. Cruise raised $2.25 billion from SoftBank and $2.75 billion from Honda last year.
The company is currently focused on developing a self-driving version of the Chevrolet Bolt electric car, which will initially be deployed in a ride-hailing scheme. Cruise is currently testing vehicles on the road in California with plans for commercial use by the end of 2019 as it looks to compete with similar efforts from Waymo, Uber and Tesla. Cruise has petitioned the federal government to allow it to deploy cars without steering wheels or brakes, but has not yet received approval to do so.
Without disclosing other investors Ray Wert, a spokesman for the GM unit said in the statement that the deal includes funds and accounts advised by Baltimore-based T. Rowe Price. Cruise would not disclose how the investors would be repaid or its ownership structure. “We’re not speaking to the terms and conditions at this time,” Wert said.
Usually Investors in start-ups get their money back through profit sharing, when the company is spun off with a public stock offering, or when it is acquired by another company. For example when SoftBank made its investment last year, it bought a 20 percent stake in Cruise for $2.25 billion. So at that time the company would have been worth just over $11 billion.
Without setting a specific deadline for deploying vehicles without a person behind the wheel GM CEO Mary Barra said addressing analysts, “As soon as we’re able to launch without the driver, we will. So safety will gate us. We see huge opportunity. We think the path that we’re on and the way in which we’re developing this technology is critical.”
To summarise, Cruise has spent about $200 million last quarter and GM plans to double Cruise’s workforce to 1,000 employees this year and plans to spend $1 billion in 2019 to develop autonomous vehicles.
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