DETROIT -- A group of institutional investors is putting $1.15 billion into GM Cruise LLC, the autonomous-vehicle unit of General Motors.
Cruise on Tuesday announced the investment from a group led by T. Rowe Price and said it included money from GM, Honda and the Japanese tech investment firm SoftBank.
CEO Dan Ammann said in a statement that the investment gives Cruise deep resources to draw on as it develops and deploys self-driving vehicles.
Ray Wert, a spokesman for the GM unit, would not disclose other investors, but the statement said the deal includes funds and accounts advised by Baltimore-based T. Rowe Price.
The investment brings Cruise's valuation to $19 billion, the statement said. It comes in addition to $2.75 billion invested by Honda Motor Co. in October and $2.25 billion from SoftBank in May 2018.
Tuesday's announcement brings investments in Cruise during the past year to $7.25 billion, including money kicked in by the parent company, GM.
Automakers and tech companies have sought help to cover the high capital cost of developing autonomous vehicles. The potential to make money is tremendous for companies that can cut the cost of transporting humans or delivering goods.
Cruise would not disclose its ownership structure or how the investors would be repaid. "We're not speaking to the terms and conditions at this time," Wert said.
Investors in startups typically get their money back through profit sharing, when the company is spun off with a public stock offering, or when it is acquired by another company.
When SoftBank made its investment last year, it bought a 20% stake in Cruise for $2.25 billion. So at that time, the company would have been worth just more than $11 billion.
Cruise is considered among the leaders in the race to deploy autonomous vehicles without human backup drivers. It pledged to do that in an unspecified city sometime this year, but it recently backed away from that goal.
During its first-quarter earnings conference call, GM CEO Mary Barra wouldn't give a date for deploying vehicles without a person behind the wheel. "As soon as we're able to launch without the driver, we will," Barra told analysts. "So safety will gate us. We see huge opportunity. We think the path that we're on and the way in which we're developing this technology is critical."
GM plans to double Cruise's workforce to 1,000 employees this year, and it plans to spend $1 billion in 2019 to develop autonomous vehicles. Cruise spent about $200 million in its previous quarter.
Kyle Vogt, Cruise's chief technology officer, and Dan Kan, chief operating officer, co-founded the San Francisco-based company in 2013. GM acquired it for $581 million in May 2016, paying $291 million in cash and the remainder in stock. The total value of the deal was about $1.5 billion when taking into account agreements GM entered into that are tied to key personnel staying on and reaching certain performance targets.
Information for this article was contributed by staff members of Bloomberg News.
Business on 05/08/2019