Self-drive automaker Cruise, backed by General Motors, on Thursday said it raised $2.75 billion in its latest funding round with additional investment from Walmart Inc. and others, taking the startup's valuation over $30 billion.
"We are focused on our path to commercialization right now but the IPOs happening in the space right now are a great indication of the strength of the industry and the opportunity self-driving presents," a Cruise spokeswoman said in a statement to Reuters.
The investment will help support Walmart’s push to create a home-delivery logistics network that’s “fast, low-cost and scalable,” Walmart U.S. CEO John Furner said in a blog post.
The two companies began working together in November through a delivery pilot program in Arizona. For years Walmart has dived in and out of partnerships with last-mile logistics providers like Uber Technologies Inc., Lyft Inc. and Door Dash, and it’s also created an internal network called Spark to do the same.
Cruise’s new valuation of more than $30 billion is up from $19 billion when T. Rowe Price Associates Inc. invested in the company in 2019. Just as Microsoft gave Cruise a major software player in its corner, Walmart gives it a retail partner with thousands of stores and deep pockets.
Walmart’s deal won’t spell the end for the self-driving car tests it’s conducting with Waymo, the autonomous affiliate of Google, and startup Nuro Inc., a spokeswoman said.
The retailer is preparing for a future when shoppers don’t have to drive to the store and is trying out a number of different technologies, including drones. The cost of getting deliveries to customers’ doorsteps across the nation is often prohibitive, and it’s a big reason why Walmart’s domestic e-commerce business is still losing money.
Walmart’s test to use Cruise’s all-electric self-driving vehicles to deliver groceries from a store in Scottsdale, Ariz., is still in the early phases and hasn’t been expanded to other cities, the spokeswoman said.
Efforts to develop self-driving vehicles have picked up pace in recent months. California has approved more robotaxi testing on public roads, granting its first commercial permit for autonomous-vehicle deliveries last month to Nuro.
The investment is the latest sign of consolidation in the self-driving sector as big companies like Honda Motor Co., Walmart and Microsoft move in. Zoox Inc. sold to Amazon.com Inc. last year, and Cruise itself recently acquired autonomous-vehicle startup Voyage, which operates a service in retirement communities.
The announcement comes a week after peer TuSimple revealed plans for an initial public offering, at a time when self-drive technology is yet to be commercialized. TuSimple earlier Thursday said it raised $1.35 billion in its stock offering.
On Monday, Cruise said it planned to begin deploying a limited number of its Origin vehicles for ride-hail services in Dubai from 2023, its first overseas commercial service.
"Cruise is executing a global strategy with the right partners," said Grayson Brulte, president at consultancy Brulte & Co. "At the end of the day it will come down to who can cut the best deals which long term generate revenue and profits."
Reuters and Bloomberg contributed to this report.