General Motors’ stock price was cruising after news broke this morning that Japanese holding company SoftBank has invested $2.25 billion into the automaker’s driverless vehicle division. Once the deal closes, GM (NYSE: [[ticker:GM]]) will reportedly invest an additional $1.1 billion.
According to multiple news outlets, Cruise, GM’s autonomous car operation, is now expected to have enough capital to launch its vehicles commercially through a ride-hailing service. GM’s stock price jumped more than 12 percent to $42.57 following the news.
“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,” said Michael Ronen, managing partner of SoftBank Investment Advisers, during a conference call with reporters today. Ronen also praised Cruise’s swift pace of development and approach to safety along with GM’s ability to produce autonomous vehicles at scale, helping to seal the deal. One it’s all said and done, SoftBank will own a nearly 20 percent stake of Cruise.
This is not SoftBank’s first foray into transportation tech. The company’s Vision Fund, which made today’s Cruise investment, has also backed Uber and China’s Didi Chuxing. Before it was acquired by GM in 2016, Cruise—or Cruise Automation, as it was known as back then—was a small startup based in the Bay Area.
As for when we can expect to see Cruise cars on the road, GM CEO Mary Barra has said it could be as early as next year. It’s not known whether GM and Cruise will launch their own ride-hailing service or will partner with an existing company such as Lyft, which garnered a $500 million investment from GM in early 2016. Of course, there are currently no federal regulations allowing for the widespread operation of self-driving cars, but a few states, including Michigan and Nevada, have looser laws favorable to the mobility industry.
Whatever happens next with Cruise, this deal should be seen as another big turning point in the development of autonomous vehicles. To quote SoftBank’s Ronen, “This would be one of the largest-scale or the largest-scale effort in the space. There is a lot of interest in the space. This is as big as it gets.”
