By on June 16, 2018

GM Cruise self-driving Testing

The small San Francisco startup bought by General Motors in 2016 could generate a lot of money for the automaker in the near future.

According to sources who spoke to Bloomberg, GM wants to unlock the value of its self-driving Cruise Automation division (officially GM Cruise LLC) — a 50-person company valued at $600 million at the time of purchase. Japan’s SoftBank, which recently pledged a $2.25 billion investment in the division, now values Cruise at $11.5 billion.

To put that figure into context, GM’s market capitalization hovers around $50 billion. The word “Cruise” should be accompanied by an old-timey cash register sound.

According to Bloomberg‘s sources, there’s a number of options on the table for Cruise: a initial public offering of shares, the listing of a tracking stock to reflect the division’s value, or a spin-off (a la Ferrari’s departure from Fiat Chrysler Automobiles).

After SoftBank’s vote of confidence, GM pledged another billion of its own dollars towards the division, which aims to offer an autonomous ride-hailing service next year. The Japanese bank’s investment hinges on meeting this timeline. Self-driving cars based on the Chevrolet Bolt (the “Cruise AV”) will utilize technology developed by the automaker’s self-driving arm to carry paying passengers, providing another revenue stream for GM.

Still, the massive growth in Cruise’s workforce and valuation means there’s money to be had in the division itself, should GM decide to allow the public a chance to grab a piece. This isn’t a plan that’s set in stone, however. Bloomberg reports that the automaker won’t make a decision until Cruise fleshes itself out a little, meaning a potential wait of two years or more.

[Image: General Motors]

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14 Comments on “GM Looking at Ways of Squeezing Cash Out of Cruise: Report...”

  • avatar

    The technology exists today to have airliners that take off, fly to another city or continent, and land all without a pilot or even a cockpit for a pilot. This technology has existed for years. But this has not happened. WHY ?
    Is it because the CEOs of the airlines have not considered this as a way to increase profits ? No. There must be another reason. Is it because the companies that manufacture the big jumbo jets want to keep the expense of a cockpit and human interface controls versus some cameras and sensors just to maintain the price of the airliner where it is now ? No, I don’t think so. It must be something else. Is it because the Pilots Union is so powerful that the elimination of their jobs would lead to a job action and the bankruptcy of the airlines ? Probably not.

    I ask you, the Best and the Brightest. I AM COMPLETELY STUMPED.

    • 0 avatar

      The last time the airline industry attempted a job action it was air traffic controllers. Ronaldus Maximus put a quick stop to that nonsense, Trump would do the same.

    • 0 avatar

      It’s pretty similar to cars. The aircraft can perform most normal actions with little input. However, the pilots are monitoring everything to make sure everything is on track. They also take over when something goes wrong.
      This is the biggest hurdle with automated cars. As long as everything is normal, they will work fine. But what happens when unusual circumstances exhibit themselves. Can someone who hasn’t driven in all year, and now they have to take over during an ice storm.

      • 0 avatar

        Sorry, some bad auto correct. I meant to say Can someone who hasn’t driven all year be expected to take over in an ice storm?

        • 0 avatar

          An excellent point.

          Also, there have been airplane crashes as the result of the autopilot doing the wrong thing (and I’m sure there were legitimate reasons why it did what it did, but it still resulted in disaster), or when a pilot counted more on the automation than they should have, also leading to disaster.

          Humans aren’t perfect, nobody denies that (or, nobody in their right mind). But, neither are machines and computers, a fact some seem far less willing to accept (right up until it crashes them into a cement baracade or fire truck or whatever).

    • 0 avatar

      Maybe because there are no parked emergency vehicles on the runway for takeoff and landing.

      $11 billion valuation? Seriously?

      • 0 avatar

        All of the equipment/vehicles on the runways have transponders. The wildlife, like deer – well that’s another story. I’m a co-designer of an aircraft ground collision avoidance system BTW. While it wasn’t as tough as designing a system for autonomous cars, I learned enough to appreciate how difficult teaching a computer to avoid collisions actually is. Especially weather conditions. Like monsoon rain hitting the runway so hard it was bouncing up.

  • avatar
    SCE to AUX

    Are all these people insane?

    How do they think they can avoid liability in an accident? Just by blaming someone else?

    These fake valuations will correct once these businesses have to deal with lawyers.

  • avatar

    In ten years the hype over autonomous cars will have subsided. Millions of dollars will have been spend with little or no commercial results. I am sure some important safety technology will result from this research, but overall the technology will hit a dead end. As we learned from the Rogers Smith years at GM spending money on exotic technological will not improve quality. GM and Ford should not be sidetracked from their mission to equal the Japanese and Germans in quality.

    • 0 avatar

      “In ten years the hype over autonomous cars will have subsided.”

      No, because the need and the market won’t go away. The number of cars on the road is increasing, the age of people needing to drive is increasing and the amount of driver distractions is increasing. The technology is improving exponentially; if it isn’t ready for the big time yet then it will be soon.

      Automated cars will become mainstream, maybe not in 10 years but definitely within 50. It’ll start as a top end aid like AutoPilot, which will filter down to the masses like cruise control did and eventually become mandatory in congested places like Central London’s ban on ICE cars.

      I’ll hang on to my stick-shift as long as I can and you’ll hang on to your steering wheel as long as you can, but eventually the technology will displace us.

  • avatar

    I think that they (autonomous car proponents) are counting on old people- and the upper limit on age potentially goes UP every year- who are no longer able to drive will be driven around in driverless cars. They think that this market will be ginormous enough for MANY MANY companies to make huge fortunes from it, the way that Ford Motor Company made money in the 1920s and 1930s. The way that the railroads made money in the 1800s and early 1900s. The way the BANKSTERS always make money.
    No one not after this imaginary pile of cash (and it may materialize) is really enthusiastic about driverless cars.

  • avatar

    “The Japanese bank’s investment hinges on meeting this timeline.”

    SoftBank isn’t a Japanese bank.

    SoftBank (which got its start in tech) is now a holding company with vast holdings in numerous industries (including telecommunications).

    The investment in GM Cruise was made by its investment arm (Softbank Vision Fund).

  • avatar

    >GM Looking at Ways of Squeezing Cash Out of Cruise

    Lease as a crash test vehicle?

  • avatar

    “GM wants to unlock the value of its self-driving Cruise Automation division (officially GM Cruise LLC) — a 50-person company valued at $600 million at the time of purchase. Japan’s SoftBank, which recently pledged a $2.25 billion investment in the division, now values Cruise at $11.5 billion.”

    When GM went bankrupt, didn’t they “value” Hummer’s branding at a half a billion dollar or so? And if I remember right, they couldn’t sell it for a tenth of that. Just something to keep in mind.

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