Honda Invests Big in GM's Cruise Self-driving Arm

Steph Willems
by Steph Willems

Honda likes what GM Cruise LLC is doing, and wants it to have some cash. On Wednesday, the Japanese automaker announced it would invest $2.75 billion in the GM-owned autonomous driving company, hoping to reap some of the reward of its purpose-built self-driving car.

While still under development, Cruise claims the vehicle — free of such things as a steering wheel or pedals — will arrive in 2019. Already, the company has a fleet of modified Chevrolet Bolts operating as testbeds for the technology. Once unveiled, GM Cruise plans to use the vehicle in a new ride-hailing service while also making it available to others, potentially funneling big bucks into its parents’ coffers. Honda’s, too.

Honda’s investment sees the automaker hand over $750 million up front, with the rest of the sum changing hands over the course of 12 years. The $2 billion will go towards development and mass production of the vehicle.

In a joint statement, the automakers said the investment will aid in the creation of a vehicle “that can serve a wide variety of use cases and be manufactured at high volume for global deployment.” For its contribution, Honda nets a 5.7 percent stake in GM Cruise LLC, which now carries a valuation of $14.6 billion.

The two automakers also announced they “will explore global opportunities for commercial deployment of the Cruise network.”

Alternative revenue streams are what Cruise is all about. The automaker purchased the Silicon Valley startup in 2016 for $581 million, tasking it with the development of GM’s own self-driving car. The unit purchased LIDAR maker Strobe a year later. Earlier in 2018, Cruise’s fortunes rose after a $2.25 billion investment from the Softbank Vision Fund — an investment that garnered the firm a 19.6 percent stake.

“The Honda partnership paves the way for massive scale by bringing a beautiful, efficient, and purpose-built vehicle to our network of shared autonomous vehicles,” said Cruise CEO Kyle Vogt in a statement.

As for the vehicle under development, progress is apparently well advanced. In a statement reported by Automotive News, GM president Dan Ammann, who oversees Cruise, said the car is the first purpose-built production vehicle that is “free from the constraints of having to think about vehicle design and having a driver at the wheel, and all the traditional approaches to that.”

Forgive this writer for feeling a little concerned about his driving future.

[Images: General Motors]

Steph Willems
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  • Mjz Mjz on Oct 03, 2018

    I will NEVER EVER ride in an autonomous vehicle that does not have redundant controls. NEVER EVER.

    • Brn Brn on Oct 03, 2018

      I'd consider it. Not yet, but someday.

  • Tedward Tedward on Oct 04, 2018

    I'm with mjz. There is no upside to removing the physical controls. The way I see it there are only two plausible reasons for that design change, and they are pr shock value and cost savings. Neither, obviously, is sufficient justification to remove the most important failsafe a self driving car could have, the squishy grey computer that has been handling this kind of math with ease for decades. I won't get in one and I will have an angry response to seeing them on the street. It makes me think poorly of GM and Honda that they would participate in a program or business model set up this way.

  • Varezhka I have still yet to see a Malibu on the road that didn't have a rental sticker. So yeah, GM probably lost money on every one they sold but kept it to boost their CAFE numbers.I'm personally happy that I no longer have to dread being "upgraded" to a Maxima or a Malibu anymore. And thankfully Altima is also on its way out.
  • Tassos Under incompetent, affirmative action hire Mary Barra, GM has been shooting itself in the foot on a daily basis.Whether the Malibu cancellation has been one of these shootings is NOT obvious at all.GM should be run as a PROFITABLE BUSINESS and NOT as an outfit that satisfies everybody and his mother in law's pet preferences.IF the Malibu was UNPROFITABLE, it SHOULD be canceled.More generally, if its SEGMENT is Unprofitable, and HALF the makers cancel their midsize sedans, not only will it lead to the SURVIVAL OF THE FITTEST ones, but the survivors will obviously be more profitable if the LOSERS were kept being produced and the SMALL PIE of midsize sedans would yield slim pickings for every participant.SO NO, I APPROVE of the demise of the unprofitable Malibu, and hope Nissan does the same to the Altima, Hyundai with the SOnata, Mazda with the Mazda 6, and as many others as it takes to make the REMAINING players, like the Excellent, sporty Accord and the Bulletproof Reliable, cheap to maintain CAMRY, more profitable and affordable.
  • GregLocock Car companies can only really sell cars that people who are new car buyers will pay a profitable price for. As it turns out fewer and fewer new car buyers want sedans. Large sedans can be nice to drive, certainly, but the number of new car buyers (the only ones that matter in this discussion) are prepared to sacrifice steering and handling for more obvious things like passenger and cargo space, or even some attempt at off roading. We know US new car buyers don't really care about handling because they fell for FWD in large cars.
  • Slavuta Why is everybody sweating? Like sedans? - go buy one. Better - 2. Let CRV/RAV rust on the dealer lot. I have 3 sedans on the driveway. My neighbor - 2. Neighbors on each of our other side - 8 SUVs.
  • Theflyersfan With sedans, especially, I wonder how many of those sales are to rental fleets. With the exception of the Civic and Accord, there are still rows of sedans mixed in with the RAV4s at every airport rental lot. I doubt the breakdown in sales is publicly published, so who knows... GM isn't out of the sedan business - Cadillac exists and I can't believe I'm typing this but they are actually decent - and I think they are making a huge mistake, especially if there's an extended oil price hike (cough...Iran...cough) and people want smaller and hybrids. But if one is only tied to the quarterly shareholder reports and not trends and the big picture, bad decisions like this get made.