Honda Motor Co. and General Motors have struck a deal in which Honda will invest $750 million in GM’s self-driving car unit and will commit as much as $2 billion in additional funding in the next few years.
According to a report in The Wall Street Journal citing the companies, Honda and GM will jointly develop mass-produced self-driving cars. Honda will work with GM Cruise to design autonomous cars from the ground up that can be made in high volumes and shipped around the globe. The two are also looking at opportunities to create a network of self-driving vehicles.
“This is a partnership that has a running start to it and will allow us to move very quickly,” said GM President Dan Ammann in an interview with The Wall Street Journal.
As part of the deal, Honda will invest $750 million in GM Cruise now, with the additional $2 billion spread out over the course of 12 years. As part of the deal, Honda also gets a 5.7 percent stake in Cruise. Honda is joining SoftBank, which in June acquired a 19.6 percent stake in Cruise via a $2.2 billion investment. With the investments from Honda and SoftBank, GM now has a valuation of $14.6 billion. GM has made Cruise a separate unit to lure investors who don’t want to be part of the traditional, low-margin automobile market, noted the report.
The investments from SoftBank and Honda enable GM to continue developing self-driving cars without taking capital from its core car-making business. The paper noted that the investment is a bit of surprise, as Honda had been in talks to partner with Waymo, the self-driving company owned by Alphabet. The two announced a deal in December of 2016, but have failed to ink anything since then. In a statement to The Wall Street Journal, Waymo said it is still in talks with Honda and other car makers.
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