Japan's SoftBank Dumps Cash Into America's Autonomous Vehicles, Sets GM Deadline for 2019

Matt Posky
by Matt Posky
japans softbank dumps cash into americas autonomous vehicles sets gm deadline for

Several months after procuring a large ownership stake in Uber, SoftBank has placed $2.5 billion into General Motors’ self-driving program. The automaker intends to begin deploying autonomous vehicles next year and CEO Mary Barra says her company will invest $1.1 billion of its own funds into the effort to ensure the timeline is adhered to.

Thanks to the hefty investment from SoftBank’s Vision Fund, the Japanese holding company now owns roughly 20 percent of General Motors’ tech subsidiary, known as Cruise Automation. While tech firms and automakers have been driving hard to surpass each other in terms of autonomous development for years, GM currently appears to have the most riding on the hardware.

The long-term strategy for General Motors sees ride sharing, taxi services, and personal data acquisition as a huge financial opportunities. By launching 13 million connected cars over the next several years, the company thinks it can accrue wealth through an in-car digital marketplace that sells apps and services. Afterward, it can collect driver data (purchasing choices, driving habits, etc.), sell it off to whoever wants it (including insurance companies), and issue in-car advertisements — something it’s already pursuing with help from IBM’s Watson.

However, the keystone to all of this is self-driving cars. The less time a driver has to spend looking at the road, the more time they can spend interacting with the digital marketplace and engage with GM’s carefully chosen partners. Essentially, General Motors can continue making money as a car manufacturer while running a healthy data-focused side business.

It’s something other automakers are considering and actively working on, but GM is making the most noise. Wall Street responded favorably following the company’s initial announcements in 2017, but the automaker’s stock price has been comparatively herky-jerky through 2018.

According to Bloomberg, $1.35 billion of SoftBank’s investment is conditional on the carmaker’s autonomous-driving arm being able to deploy vehicles next year. With so much riding on Cruise’s success, it seems unlikely General Motors would agree to a deal without being highly confident it can deliver.

News of the announcement drove GM’s share price up over 10 percent on Thursday. Assuming it maintains that trajectory, it would result in the largest single-day increase of automaker’s shares in almost a decade.

While SoftBank’s investment is the biggest news in the autonomous driving sphere, it’s not the only story. Waymo announced it will add roughly 62,000 Chrysler Pacifica vans to its fleet. The company intends to expand its driverless ride-hailing program into new markets after piloting it in Phoenix, Arizona, this year.

[Image: General Motors]

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  • Redgolf Redgolf on Jun 01, 2018

    only if ALL cars are autonomous! all autonomous vehicles must be equipped with multiple restraints, helmets, and crash proof cocoon systems and 2 car lengths distance kept per 10 mph of speed! still wouldn't want to be sitting in one broken down on I 24 going to or from Nashville!

  • "scarey" "scarey" on Jun 01, 2018

    Does anyone remember the cop cars in the movie Demolition Man ? Auto drive with a foam system to protect the driver and passengers in case of a crash. "Take this job and SHOVEL it"".

  • Keith Maybe my market's different. but 4.5k whack. Plus mods like his are just donations for the next owner. I'd consider driving it as a fun but practical yet disposable work/airport car if it was priced right. Some VAG's (yep, even Audis) are capable, long lasting reliable cars despite what the haters preach. I can't lie I've done the same as this guy: I had a decently clean 4 Runner V8 with about the same miles- I put it up for sale around the same price as the lower mile examples. I heard crickets chirp until I dropped the price. Folks just don't want NYC cab miles.
  • Max So GM will be making TESLAS in the future. YEA They really shouldn’t be taking cues from Elon musk. Tesla is just about to be over.
  • Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
  • Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
  • William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.