Honda Motor will invest $2 billion and take a 5.7 percent stake in General Motors Co’s Cruise self-driving vehicle unit, extending cooperation between the two automakers in a technology that has enormous costs and risk but no market-ready products.
Honda, which has lagged behind many of its rivals in developing self-driving vehicles, is paying $750 million upfront for the minority stake in Cruise and will invest another $2 billion over 12 years, the companies said on Wednesday. Honda, GM and Cruise will jointly develop self-driving vehicles for deployment in ride services fleets around the world.
GM shares were up 3.5 percent in opening trade.
In May, Japan’s SoftBank Group (9984.T) said it would buy a 19.6 percent stake in Cruise for $2.25 billion.
Honda’s investment values Cruise at $14.6 billion – about a third of GM’s market cap, $48.5 billion. GM acquired the San Francisco-based startup in March 2016 for a reported $1 billion.
By comparison, analysts have pegged the value of Alphabet Inc’s Waymo self-driving unit as high as $175 billion. Honda has had discussions for two years with Waymo about possible collaboration, but no deal has been announced.
In a media briefing on Wednesday, GM President Dan Ammann said 2019 “remains the goal” for GM Cruise to launch a self-driving ride services fleet. He added: “The longstanding relationship we have with Honda will allow us to move very quickly in ramping up our efforts.”
GM Cruise and Waymo are often described as leading the pack of technology and auto companies competing to create self-driving cars and integrate them into ride services fleets.
Honda executive Seiji Kuraishi said: “This investment is based on a shared vision and their (GM’s and Cruise’s) superior technologies in this area.”
The GM-Honda announcement extends a partnership that includes joint development of electric vehicles with hydrogen fuel cells that are expected to go on sale in 2020. In June, Honda also said it would buy advanced batteries from GM in a move that could significantly reduce the cost of future electric vehicles at both automakers after 2020.