SoftBank vision fund putting $2.25 billion into GM’s Cruise
Autonomous driving is a goal that most major technology and automotive firms are working toward. Simultaneously, network operators are looking ahead to ultra-dense 5G networks and pervasive edge computing that will support the multi-access connectivity driverless vehicles will need. But, driverless cars have big implications—truckers, couriers and taxi drivers will ultimately be displaced and traditional vehicle-ownership models will give way to transportation-as-a-service, like Uber on steroids. Known for his long-term planning, what can SoftBank CEO Masayhoshi Son’s investments related to ride-sharing and autonomous vehicle development tell us about the future of connected vehicles?
This week SoftBank announced plans for a two-part, $2.25 billion total investment in GM’s Cruise autonomous vehicle development subsidiary. Cruise started in 2013 and teamed up with GM in 2016 to execute on its plan of building a fleet of self-driving vehicles. The two part investment from SoftBank’s Vision Fund contemplates initial funding of $900 million followed by $1.35 billion “at the time that Cruise AVs are ready for commercial deployment,” according to GM. With the total investment, SoftBank will have a 19.6% stake in Cruise.
“GM has made significant progress toward realizing the dream of completely automated driving to dramatically reduce fatalities, emissions and congestion,” said Michael Ronen, managing partner, SoftBank Investment Advisers. “The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage. 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.”
On the ride-share front, The Economist reckons SoftBank has invested around $20 billion since 2014 buying stakes in regional ride-share operators, including Ola of India, Southeast Asia’s Grab, Didi in China and Brazilian subsidiary 99, and 15% of Uber. The author concludes, “Mr. Son sees ride-hailing as a way to profit from a wider upheaval in transport, as the firms develop autonomous cars and roll out electric vehicles…it is another example of Mr. Son putting the pieces together and seeing the end state in an industry. And then backing the idea with lots of money.”
The “end state” these investments speak to is the idea of widespread autonomous taxis available on-demand through. As RBC Capital Markets analyst Joseph Spak told The Street, “We have believed that GM has a meaningful seat at the table for shared autonomous vehicles…and we believe this deal affirms that view.” GM shares jumped more than 10% on the news of SoftBank’s investment.
