- General Motors confirmed that it would pay $2.1 billion to buy the SoftBank stake.
- SoftBank had invested $900 million in Cruise in 2018 and also stated that it would invest another $1.35 billion but failed to invest.
- Cruise awaits a regulatory permit to allow it to charge riders for a driverless ride-hailing service launched in San Francisco.
SoftBank Group Corp’s Vision fund has exited the bet on General Motors self-driving car subsidiary Cruise. This happened after the company upped the wager, investing another $3.45 billion in the loss-making unit.
The departure of SoftBank has raised suspicions around the self-driving car, Cruise. The sector watchers are questioning whether Cruise is ready to generate meaningful revenue for the time being, and how deep GM might have to dig to fund development.
General Motors buy Vision Fund
General Motors confirmed that it would pay $2.1 billion to buy the SoftBank Vision Fund stake in Cruise. Also, it would make a separate $1.35 billion investment in the unit that SoftBank had committed to making in 2018.
By combining these transactions General Motor’s stake will rise by 80% in Cruise. The remaining stakeholders in Cruise are Microsoft, Walmart, and Honda Motor Co.
SoftBank promised $1.35 billion
In 2018, SoftBank had invested $900 million in Cruise and also stated that it would invest another $1.35 billion when Cruise Autonomous vehicles were ready for commercial deployment potentially bringing the stakes to 20%.
Now, the SoftBank exit of Cruise is reported after the self-driving car awaits a regulatory permit to allow it to charge riders for a driverless ride-hailing service launched in San Francisco.
Referring to a project developed by the parent of Google, the professor of electrical and computer engineering at Carnegie Mellon, Raj Rajkumar said, “Based on the experience that we have seen from Alphabet’s Waymo in Arizona, the revenue that you will generate from that deployment will be very, very small.”
A long road ahead
It is being estimated that General Motors and partners like Honda may have to seek more funding for the time being. SoftBank is already debt-ridden and has its internal problems to deal with.