GM recently announced that it will buy out SoftBank Vision 1’s equity ownership stake in its majority-owned subsidiary Cruise, while making a separate investment in the autonomous vehicle unit. The automaker will acquire SoftBank’s stake for $2.1 billion, according to a press release and the independent investment will be $1.35 billion.
“We are extremely pleased to announce GM is leveraging the strength of its balance sheet to capitalize on the opportunity to increase its equity investment in Cruise and advance our integrated autonomous vehicle strategy. We continue to believe our investment represents an extraordinary opportunity for creating long-term shareholder value,” said GM Chair and CEO Mary Barra. “Our increased investment position not only simplifies Cruise’s shareholder structure, but also provides GM and Cruise maximum flexibility to pursue the most value-accretive path to commercializing and unlocking the full potential of AV technology.”
Kyle Vogt, Cruise’s recently appointed CEO, said that he looks forward to continuing the partnership between GM and Cruise. “Cruise will continue to operate as it does today – an independent company working alongside GM in a flexible, collaborative partnership,” he said. “Cruise and GM’s continued partnership as well as GM’s financial strength and manufacturing scale are significant enablers and key differentiators for Cruise as we accelerate our progress and enter this next phase of commercialization.”
Additionally, GM and Cruise announced that the Recurring Liquidity Opportunity Program launched on Friday. This program allows Cruise employees with vested stock options to sell them back to GM.
This announcement comes soon after Cruise filed a petition with the National Highway Traffic Safety Administration, requesting approval to begin producing and deploying its autonomous Cruise Origin robotaxi. The Origin is to be assembled at GM Factory Zero in Michigan, which was recently retooled into an all-EV production facility.
Cruise also recently received a permit in the state of California that allows its fleet of fully autonomous Chevy Bolt EVs to collect fares from passengers instead of simply giving test rides free of charge.
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Waste of money. gm should jettison this boondoggle as soon as they can while they can get some value from it.
Obviously SoftBank does not share GM's assessment of Cruise's growth & profitability potential. They are taking a $150M loss on their original investment of $2.25B just to get out of Cruise (GM paid SoftBank $2.1B for Softbank's share). Seems like GM might take this $2.1B and instead use it to address current product deficiencies / lawsuits and attempt to stabilize their declining market share. Their market share decline has been blamed on the chip shortage but other manufacturers have also faced these challenges and maintained or increased their market share (although it is an admittedly smaller total market). GM is down to around 14% overall and if this trend continues it will become increasingly difficult for GM to hit the sales volumes required to recoup the huge investment in EVs.
Very smart. If Cruise pans out (Technology Wise) it will become a Cash Cow for GM.
Amazing acquisition by GM.