Softbank has announced a planned investment of $2.25 billion in General Motors’ (NYSE: GM) autonomous vehicle efforts. Softbank will invest $900 million now, and an additional $1.35 billion when GM’s autonomous vehicles are ready for commercial deployment. GM announced it is also investing $1.1 billion in the joint effort.
The self-driving car division of GM getting the investment is a separate company known as GM Cruise. GM Cruise employed 40 people when it was acquired two years ago. Today, its workforce has grown to about 800. GM said that SoftBank Vision Fund will own 19.6 percent equity in GM Cruise, while GM will own the rest of the joint venture.
GM Chairman and CEO Mary Barra said the investment will help GM to launch autonomous vehicles next year. In a news release, Barra said, “Our Cruise and GM teams together have made tremendous progress over the last two years. Teaming up with SoftBank adds an additional strong partner as we pursue our vision of zero crashes, zero emissions and zero congestion.”
GM and SoftBank have agreed to a 7-year term before either can change their arrangement. The companies said that the time frame was chosen to ensure the agreement provides enough time to significantly grow the technology. Michael Ronen, managing partner of SoftBank Investment Advisors, said in a media statement, “We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.”
The partnership represents the biggest joint effort between a tech investment company and an automaker to develop self-driving cars. GM makes a great partner for Softbank because it has the ability to mass-produce self-driving cars quickly and in large numbers. GM has already been building autonomous versions of its Chevrolet Bolt EV at a production facility in Detroit.
General Motors said it will bring self-driving technology in the form of ride sharing to consumers in the United States by next year. The company did not say whether it planned to launch its own ride service or partner with another company. GM has not yet had discussions with government agencies on approval to put self-driving cars on the roads and did not say in which cities it planned to roll out the service.