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SoftBank bets Big on GM’s Self-Driving Technologies, invests $2.25 Bn

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Published on : Jun 01, 2018

Capital injections in self-driving technologies are seeing no bounds, with the key focus to accelerate their commercialization within a year or two. Nowhere is this more notable in emerging and developed markets in the automotive and transportation industries. In the most recent such development which has considerably raised up the ante, the Japanese multinational conglomerate announced on May 31, 2018 that it is investing in total of US$2.25 billion in GM Cruise Holdings LLC, the autonomous vehicle technology unit of the U.S.-based vehicle manufacturer. The massive quantum of investment underscores its ambition to become a global leader in the self-driving space in not-so-distant future. The investment made by SoftBank’s Vision Fund will be done in stages, wherein Cruise will secure $900 million after the close of the transaction, with a further infusion of $1.35 billion. The equity stake that Vision Fund will hold in GM’s Cruise is pegged at a significant 19.6 %, while the collaboration will value the autonomous unit at $11.5 billion.

Regulatory Challenges and Safety Issues key Bottlenecks in Commercialization of Self-driving Vehicles

Self-driving technologies and autonomous systems have been poised to cause disruption in the transportation industry world over. However, notable constraints such as regulatory challenges and engineering and safety issues continue to plague their commercialization at large.

In recent months, SoftBank has been betting big on mobility companies by investing in companies that provide ride-sharing services, especially to riders in various emerging markets, with prominent name being China's Didi Chuxing and India’s Ola (ANI Technologies Pvt. Ltd.). Earlier this year, it closed a deal to become the major shareholder in Uber Technologies Inc. which has notably riling under controversy regarding its governance.

Fund Injections into GM’s Cruise to boost Integration of Self-Driving Technologies with Ride-Sharing Services

GM was severely criticized by skeptics for overvaluing Cruise when it bought the startup in 2016, after which Cruise was left to work largely independently. According to experts, GM Cruise together with Alphabet Inc’s Waymo are at the fore of the automakers seeking to garner huge gains from the integration of self-driving technologies into ride-sharing fleets.

The Detroit-headquartered automaker hopes to gain competitive edge over its rivals with fully integrated hardware and software in the fiercely competitive self-driving technology market.