Producing self-driving vehicles requires a lot of money and, perhaps, even more faith. It would seem investors have both when it comes to this part of the automotive industry as General Motors’ Cruise outfit has secured $1.15 billion in new equity.
Cruise officials revealed Tuesday that T. Rowe Price and a group of existing investors put down $1.15 billion in new equity, pushing the self-driving vehicle unit’s value to $19 billion.
As a result, GM’s shares jumped as much as 2.1% to $38.89 in morning trading on the heels of the announcement. The new funding includes GM, Japan’s SoftBank Vision Fund and Honda Motor Co Ltd., and should provide Cruise the cash it needs to launch vehicles by the end of 2019.
GM’s Cruise isn’t the only autonomous vehicle maker looking to secure more cash. Tesla Inc. officials are looking to raise as much as $2.4 billion with a new issue of stocks and debt. The California-based EV maker is looking to keep its product development machine rolling, including making sure all of its vehicles have the capability to be fully self-driving, CEO Elon Musk said during the company’s earnings call.
(GM moves Ammann into CEO role at Cruise. Click Here for the story.)
The two are not alone. Ford Motor Co. has an agreement with German automaker Volkswagen AG about joining forces to create autonomous vehicles in a deal that could involve an investment by VW in Argo AI, an autonomous vehicle technology company majority owned by Ford, according to Reuters.
Cruise, which has secured capital commitments of $7.25 billion in the past year, was valued at $14.6 billion in the last funding round by Honda in October, which had invested $2.75 billion.
“Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation,” Cruise CEO Dan Ammann said in a Tuesday statement. “Having deep resources to draw on as we pursue our mission is a critical competitive advantage.”
(Click Here to see more about Ammann quitting Lyft board of directors.)
The $1.15 billion investment was announced in a press release tweeted by Cruise. The tweet also had a link to the Cruise careers page. It’s a not-so-subtle reminder that “resources” doesn’t just mean cash, but it also means talent. The company is aggressively recruiting the tech talent necessary to get its concept to reality, hoping to hire another 1,000 people in the next nine months.
One of those new “personnel” was Ammann himself. Ammann had worked closely with Cruise since GM acquired the self-driving vehicle start up back in 2016.
At that time, it was thought his responsibility shift would give him more time to GM Cruise on track toward its goal of introducing an autonomous vehicle next year reflects the importance that the company places on that business.
(SoftBank invests $2.25 billion in GM Cruise. Click Here for the story.)
Japan’s SoftBank plowed $2.25 billion into GM Cruise — GM responded by putting another $1 billion of its own into the enterprise — probably provided some incentive to make sure it meets its goals. However, the current move suggests
Great job GM! We know you are the leader in EV’s.