WASHINGTON General Motors announced Friday that it would acquire its stake of SoftBank Vision Fund’s equity in U.S. automaker’s self-driving car subsidiary Cruise for $2.1 billion, which will increase the stake of GM to 80%.
Detroit-based GM added that it would add another $1.35 billion in investment into Cruise and a prior commitment in 2018 by SoftBank Vision fund in 2018. SoftBank Vision Fund in 2018. Softbank (OTC: SFTBY) was the fund that previously made a $900 million investment in Cruise; however, it did not immediately reply to our request to comment.
The acquisition from the equity stake provides GM the time to develop self-driving vehicles before possibly launching a Cruise IPO, which could enable other investors like Microsoft (NASDAQ: MSFT), Walmart (NYSE: WMT), and Honda to earn a profit from its stake in Cruise.
Then, in December, GM declared that Dan Ammann, as the then CEO of Cruise, left the company abruptly. An individual informed of the issue confirmed that he had been dismissed. Another source stated the two of them, GM, were at odds over the best time to take Cruise publicly.
Barra did not stress the need to speed up a Cruise open-for-sale in the last month. “There’s plenty to be achieved with an environment that is friction-free with Cruise as well as GM,” she said.
In February, The California Public Utilities Commission issued permits to Cruise to allow passengers to ride in autonomous vehicles, with security drivers on board.
Last month, GM and Cruise requested U.S. regulators for permission to construct and operate self-driving vehicles that do not require any human-controlled controls, such as brake or steering wheels. The Cruise was once hoping to begin commercializing its robotic taxi service by the year’s end.
SoftBank’s agreement from 2018 made it clear that it would invest an additional $1.35 billion in Cruise vehicles when they were in good enough condition to be used in commercial applications. “For GM it means they receive more ownership in an exciting area in the GM story,” said David Whiston, Morningstar auto analyst.
In tweets, Kyle Vogt, the CEO, and co-founder of Cruise and Cruise.com stated that Cruise would allow employees to sell shares with vested rights to GM each quarter to offer financial flexibility to employees.
Going public is “a significant distraction, particularly in the present,” he said, noting that he wanted the business to remain to concentrate on expanding its driverless ride-hail service launched by the company in San Francisco.
GM spokesperson David Caldwell said the deal demonstrated GM’s faith in Cruise and streamlined their ownership model. The company’s other shareholders of Cruise, such as Microsoft, Walmart, and Honda, were involved in technology partnerships, like the delivery project partnered with Walmart.
“GM is taking advantage of its strength in the balance sheet to capitalise on the potential to increase its equity investments in Cruise and further develop our strategy for integrating autonomous vehicles,” Barra said in an announcement.
SoftBank’s commitment for 2018 of investing $2.25 billion into Cruise was considered to confirm GM’s leading position in the latest technology of autonomous automobiles and the comparatively high price of GM’s first purchase of Cruise, estimated at $1 billion.