Two automotive rivals said Wednesday, Oct. 3, that are teaming up to usher in the era of autonomous vehicles.
General Motors Co.'s (GM) - Get General Motors Company (GM) Report self-driving car subsidiary Cruise announced that Honda Motor Co. (HMC) - Get Honda Motor Co., Ltd. Sponsored ADR Report will invest $2 billion over the next 12 years to fund and develop a purpose-built autonomous vehicle for Cruise. Honda will also make a $750 million equity investment in Cruise, bringing the total commitment to $2.75 billion.
Cruise, GM's autonomous arm, is now valued at $14.6 billion following a separate, recently announced investment from SoftBank.
"This is the logical next step in General Motors and Honda's relationship, given our joint work on electric vehicles, and our close integration with Cruise," said General Motors Chairman and CEO Mary Barra. "Together, we can provide Cruise with the world's best design, engineering and manufacturing expertise, and global reach to establish them as the leader in autonomous vehicle technology - while they move to deploy self-driving vehicles at scale."
Shares of GM rose 2.6% to $34.17 at 10 a.m. New York time, while American depositary receipts of Honda fell 3.4% to $29.41.
GM has begun testing autonomous-driving vehicles in a few cities, including San Francisco, and it plans to launch a paid self-driving taxi service in 2019.
The automaker acquired Cruise in 2016 for $581 million in cash, but the overall value of the transaction was closer to $1 billion when including incentives for "key talent," Bloomberg reported.
-- Anders Keitz contributed reporting.
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