SoftBank deal could open more doors for GM
Japanese fund brings 'broad ecosystem to the table'
DETROIT -- The multibillion-dollar tie-up between General Motors and a prominent technology investor is about more than capital. It's about relationships.
SoftBank Vision Fund's $2.25 billion investment for a nearly 19.6 percent stake in GM's autonomous vehicle operation could open the door for GM to strategic partnerships with other companies backed by the fund, which holds investments in Uber and a network of ride-hailing companies in Asia; chipmakers Arm Holdings and Nvidia; and Mapbox, a mapping platform for website and mobile app developers. The fund is part of Tokyo-based conglomerate SoftBank Group Corp., whose principal businesses include robotics, microchips and mobile telecommunications, including the Sprint network.
"SoftBank brings a very broad ecosystem to the table," GM President Dan Ammann told investors during a conference call Thursday. He said the deal opens the automaker to a "unique set of relations" and enhances the company's opportunity to commercialize self-driving vehicles.
Ride hailing could emerge as a key area for synergy, given SoftBank's extensive investments in the sector.
GM, which has sought regulatory approval to deploy a fleet of self-driving electric vehicles in a ride-hailing network next year, has an existing relationship with Uber rival Lyft. In early 2016, it invested $500 million in the company in what it called a "long-term strategic alliance" to establish an on-demand network of autonomous cars.
But the relationship was nonexclusive, and while the two companies have tied up to make GM vehicles more accessible to Lyft drivers, they have increasingly pursued their autonomous vehicle plans separately. Lyft, for example, has struck deals with Ford Motor Co. and Waymo, which this week expanded its relationship with Fiat Chrysler Automobiles, and GM didn't mention Lyft in announcing its plan to deploy self-driving EVs.
GM hasn't yet offered details on its robotaxi plan. GM CEO Mary Barra said the automaker will "explore all options" with respect to the public launch. They could include GM owning its own fleet, partnerships or a combination of both.
Ammann reaffirmed those plans Thursday, saying: "I think we have a very high degree of flexibility in how this technology is deployed."
The SoftBank deal is multifaceted. With its investment in the self-driving arm now called GM Cruise -- incorporating the Cruise Automation unit and Strobe Inc., a lidar company GM acquired in October -- the fund also gains a stake in any robotaxi business and revenue from any in-car experiences or data from the venture.
Michael Ronen, managing partner of SoftBank Investment Advisers, which launched the Vision Fund in May 2017 with backing from Saudi Arabia's sovereign wealth fund among other investors, said companies in its portfolios will make their own decisions regarding future partnerships with GM Cruise.
"There's plenty of opportunity for each one and for each management team and each company to pursue the best path forward," Ronen said. "And I think we'll see in years to come how that shapes up."
Ammann said GM had been on a path to fully fund the AV operations and "wasn't looking for a partner," but through discussions over the last several months decided the tie-up was the best decision.
The investment values GM Cruise at $11.5 billion.
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. Ammann said the new capital will carry GM "well into scale commercialization" of self-driving vehicles.
GM also gets one of six seats on the board of GM Cruise, which GM will treat as a separate segment in its next earnings report. It must retain at least 5 percent of the common equity of GM Cruise to retain the position.
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