Honda to invest $2.75 billion in Cruise the GM autonomous vehicle subsidiary

Honda has hardly any electric cars in its lineup — yet it is going to invest $2.75 billion in Cruise, the autonomous driving company bought by giant GM.

Investment spread over 12 years

There will be only $750 million in investment that will take place right now. The rest will be spread out over the following 12 years. Cruise has attracted other investment as just five months ago Softbank invested $2.25 billion in the project. Cruise is now valued at more than $14 billion.

What will the new vehicle be like?

Founder and chief executive officer (CEO) of Cruise, Kyle Vogt said that it would be innovative, space efficient and multi-purpose. He noted that when there is a chance to design a vehicle from scratch, one is not limited to a design that looks like an existing autonomous vehicle, but can work from first principles. He said that everything was in place to move reasonably quickly on the project.

The president of GM, Dan Amman, would not say what the new car would look like, claiming that it would be the next evolution in the future of transportation, and that it would be manufactured in high volumes for global deployment. Amman said: "This is a purpose-built vehicle that will be the first vehicle produced at scale that is freed from the constraints of vehicle design and having a driver at the wheel".

Mary Barra, CEO of GM commented on the close relationship between the two automotive companies that brought about the new project: “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. 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.”

A recent CNN article indicates the novelty of such a partnership: "With Honda's engineering and financial assistance, Cruise will begin developing a new vehicle that is not based on any existing car, the companies said. It will represent the next step in autonomous driving, one in which controls for human operation are entirely absent."

Honda, GM, and Cruise hope to expand Cruise network globally

Cruise claims it will begin to offer a commercial ride-hailing service using autonomous Chevy Bolts next year. The service is expected to be in San Francisco where Cruise has its headquarters. Cruise is already testing autonomous cars in the Bay Area.

Both companies have had decades of experienced building cars and this should stand them in good stead for the future in competition with Tesla. As the leader in the field, Tesla is setting sales records in spite of troubles with its founder Elon Musk. Tesla claims it has already equipped every car it makes with the hardware needed for fully autonomous operation. The company's Model 3 car is already increasing production in order to serve a mass market.

Previously published in Digital Journal