Mortgages

Honda invests $2.75 billion in GM’s self-driving car division

Japanese automaker Honda Motor Co Ltd will invest $2.75 billion and will receive a share of 5.7% in the American General Motors Co Cruise division, which is developing self-driving cars.

Honda, which lagged behind many of its competitors in the development of unmanned vehicles, will immediately pay $750 million for its share in GM Cruise. The Japanese company will spend another $2 billion over 12 years on joint development and deployment of a network of autonomous vehicles.

Honda’s investment raises the cost of the Cruise to $14.6 billion, which is about a third of GM’s market capitalization of $48 billion. At a briefing, GM President Dan Amman said that in 2019 GM Cruise put a target to launch unmanned vehicle services. He said that the long-standing relationship with Honda will allow to increase joint efforts very quickly.

The deal was announced several months after the Japanese SoftBank Group announced an investment in Cruise of $2.2 billion. This puts Cruise on a par with Alphabet Inc’s Waymo in terms of resources and ambitious plans to launch commercial services.

Honda is also negotiating with Waymo for a possible two-year collaboration. Although the deal was not announced, the agreement between the sides to discuss the integration of Waymo’s self-driving cars technology into Honda cars is still actual, the automaker’s spokesman said.

Other automakers create similar alliances to share the uncertainty and the enormous cost of such developing technologies that have not yet been widely accepted by consumers. Toyota and SoftBank, a major investor in many technology projects around the world, announced that they will be engaged in the joint development of unmanned vehicles. The companies will create a joint venture MONET. The starting capital of the joint venture will be 2 billion yen ($17.5 million). SoftBank will own 50.25% of shares, Toyota will receive the rest.