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Honda's investment will give the automaker a 5.7% stake in GM Cruise.
Photo:
elijah newage / Reuters
Honda engine
Co.
HMC 0.20%
invests $ 2.75 billion in
General Motors
Co.
GM -2.63%
self-driving unit, a move that comes as automakers and technology giants struggle to get into a changing transportation landscape with technology.
Honda will immediately make a $ 750 investment in GM Cruise LLC and invest an additional $ 2 billion over the next 12 years, the two companies announced on Wednesday. This investment will give Honda a 5.7% stake in Cruise.
Honda will work with Cruise and GM to fund and develop a stand-alone vehicle that can be mass-produced for global deployment, according to a statement. They will also explore the possibilities of deploying a network of driverless vehicles.
Investment follows in Japan's footsteps
SoftBank Group
Body
investment of $ 2.2 billion in June for a 19.6% stake in Cruise. The automaker created Cruise as a separate business unit for future investments.
Ford engine
Co.
in July created a similar configuration for its autonomous vehicle business.
GM announced that SoftBank's injection will allow Cruise to launch a taxi-robot service in an undisclosed city sometime in 2019.
The financing of SoftBank and Honda allows GM to continue to develop driverless vehicle services without diverting capital from its traditional car manufacturing business.
Honda, which has long been proud to apply its own innovation technology, said it is looking for help from outside partners to develop driverless and electric cars.
GM created Cruise to attract capital from investors who do not want to be exposed to the automaker's cyclical and low-margin business. The Honda deal shows that GM Cruise is also attracting the interest of rivals and strategic investors seeking to partner with the automaker on the underlying technology.
In a May note to investors,
Piper Jaffray
& Co. said GM is better positioned than other automakers and even big tech companies to create a large mobility services company because of its progress with Cruise and its ability to mass-produce cars without driver.
"We believe that GM has a structural advantage over its competitors, including the Silicon Valley disruptors," said analyst Alexander Potter.
Write to Adrienne Roberts at [email protected] and Mike Colias at [email protected]
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