SoftBank Vision Fund will invest $2.25 billion in General Motors Co’s (GM.N) autonomous vehicle unit, Cruise, the companies said on Thursday, announcing a deal that validates the venerable Detroit automaker’s leadership in self-driving cars and sent GM shares up 10 percent.
The partnership with SoftBank’s $100-billion Vision Fund – one of the largest investments to date in self-driving technology – will help GM fund wide-scale deployment of self-driving cars, GM told analysts on Thursday. The partnership values Cruise, bought by GM two years ago for an estimated $1 billion, at $11.5 billion.
GM is competing with technology companies and other carmakers to produce self-driving cars that 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 (GOOGL.O) Waymo are often cited as the two top contenders.
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 still 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.
SoftBank also has invested billions of dollars in “dozens” of transportation-related startups, including many involved in some aspect of self-driving technology.
GM will also invest $1.1 billion in the unit after the deal closes, the company said.
SoftBank Vision Fund will own a 19.6-percent stake in GM Cruise once the transaction is completed, and will hold one of six seats on the company’s board. Its investment will be held in a preferred security that can be converted to GM common stock after seven years.