GM's autonomous vehicle unit receives $2.25B boost from investment firm

DETROIT -- SoftBank Vision Fund, a prominent technology investment firm, is investing $2.25 billion in Cruise Automation, General Motors' autonomous vehicle operation.

The investment, GM said Thursday, will provide financial backing for the automaker’s plan to begin launching self-driving vehicles on a volume basis in 2019.

GM shares surged 12.9 percent to close at $42.70 on a day that saw the Dow Jones industrial average plummet by 252 points to 24,416. 

“This is a very historic day when we look at the future of personal mobility. We are pleased to partner with Softbank,” GM CEO Mary Barra told journalists at the company’s headquarters. “We’re 100 percent committed to this mission and creating safe autonomous vehicles at large scale.”

The deal will give SoftBank Vision a 19.6-percent stake in GM Cruise, which includes Cruise and Strobe Inc., a lidar company GM acquired in October.

The investment values the two operations at $11.5 billion. GM President Dan Ammann said the valuation “recognizes” the progress the company has made in autonomous vehicles over the last two years.

Ammann, during a call with investors Thursday, said the automaker was “on a path” to fully fund the operations and “wasn’t looking for a partner” but through discussions over the last several months decided the tie-up was the best decision.

As part of the deal, GM will also invest $1.1 billion in GM Cruise upon closing of the transaction, which is expected by the end of June. GM’s investment includes some of the automaker’s previously announced plan to invest $1.1 billion in autonomous vehicles in 2018. GM says it has already invested upward of $500 million in the technology so far this year.

The investment from SoftBank Vision will be made in two installments. At the close of the transaction, the Vision Fund will make a first outlay of $900 million. At the time that Cruise AVs are ready for commercial deployment, the Vision Fund will complete the second investment of $1.35 billion, subject to regulatory approval.

‘Unique set of relationships’

SoftBank Vision, which has substantial investments in other mobility providers, such as chipmaker Nvidia Corp. and ride-hailing giant Uber Inc., is a part of SoftBank Group Corp., a global conglomerate holding company based in Tokyo.

“We’re just really excited to be partnering with SoftBank to bring this vision to life,” said Ammann. The deal opens GM to a “unique set of relations” and additional options for commercialization of self-driving vehicles, he said.

Michael Ronen, managing partner of SoftBank Investment Advisers, said the company has been monitoring the autonomous vehicle space for several years. He said the firm decided to invest in GM and Cruise “for several reasons,” including the automaker’s capability to quickly manufacture the vehicles at scale and “seamless partnership” between the Detroit automaker and San Francisco-based Cruise.

The deal is multifaceted. SoftBank’s stake includes any future robotaxi business and monetization of any in-car experiences or data.

Seven years into the deal, SoftBank can exchange its stake in GM Cruise for liquidity or GM can seek to have the company transfer its interest into GM shares. Until then, GM holds decision rights over liquidity.

SoftBank Vision also will receive one of six director seats for GM Cruise, which GM will begin reporting as a separate segment when reporting its earnings.