Japan’s SoftBank Group Corp will invest $2.25 billion in General Motors Co’s autonomous vehicle unit Cruise, the companies said on Thursday, a deal that validates the venerable Detroit automaker’s leadership in self-driving cars and sent GM shares up more than 10 percent.
The move by SoftBank’s $100-billion Vision Fund is one of the largest investments to date in self-driving technology by one of the highest-profile global technology investors.
It gives GM funds for wide-scale deployment of self-driving cars, which GM aims to roll out next year. The partnership values Cruise at $11.5 billion, a triumph for GM, which was criticized for overpaying an estimated $1 billion for the startup two years ago.
The GM share jump on Thursday was the stock’s largest one-day gain since the company re-listed after its 2009 bankruptcy.
Self-driving cars are expected to revolutionize the way people use vehicles and fundamentally change the business model of building and selling them. GM and Alphabet Inc’s Waymo are often cited as the two top contenders. Alphabet, which plans to launch a robo taxi service later this year, underscored its own ambitions on Thursday, announcing a deal to buy up to 62,000 minivans from Fiat Chrysler Automobiles for its self-driving fleet.
GM Chief Executive Officer Mary Barra said the company is still "on track" to begin deploying its Cruise AVs in commercial ride-sharing fleets in 2019. Barra said GM plans to launch its own ride and delivery services business, but said it might also explore "other opportunities" with some of the companies that SoftBank has funded, including Uber, Didi, Ola and Grab.
Shares of GM rose 10.3 percent to $41.72 in early afternoon trade.
GM’s initial purchase of Cruise ignited a deal frenzy in Silicon Valley, which may accelerate after the SoftBank partnership.
Cruise operated with an unusual amount of autonomy after the purchase by GM, although Cruise CEO Kyle Vogt last year told a Fortune event that it was "not smooth sailing" at first. “It took us probably six months to a year to really figure out how to work well together and to achieve what we have now, which is mutual respect," he said last July.
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