Back in 2016, General Motors (NYSE:GM) spent over $1 billion to acquire self-driving car start-up Cruise Automation. Since then, GM has invested aggressively to accelerate Cruise's development of autonomous vehicle (AV) technology, with the goal of launching a robo-taxi service using the all-electric Chevy Bolt. Last June, GM won a big seal of approval for its AV efforts, as the SoftBank Vision Fund -- which has funded numerous high-growth tech companies -- committed $2.25 billion to help Cruise commercialize its technology. Furthermore, the value of Cruise has continued to rise over the past year. This was highlighted by a new investment round completed this week at Cruise's highest-ever valuation. General Motors takes outside investment in Cruise GM Cruise lost more than $600 million in 2017 and more than $700 million last year, as the unit does not generate revenue yet and it is very expensive to develop self-driving car technology. GM expects the unit's losses to increase to $1 billion in 2019, as it ramps up hiring to accelerate the development of AV technology. While General Motors' core business generates adequate cash flow to fund Cruise, the automaker started to seek outside investments in Cruise last year. This has allowed it to recruit strategic partners, spread more broadly the risks related to developing cutting-edge technology, and return more of its own cash flow to shareholders. The SoftBank Vision Fund was the first outside investor. Under a deal announced nearly a year ago, SoftBank agreed to provide $900 million in cash up front, plus another $1.35 billion when "Cruise AVs are ready for commercial deployment," in return for a 19.6% stake in GM Cruise. This valued GM's self-driving unit at about $11.5 billion (including the investments pledged by SoftBank). GM lined up another strategic partner in October, as Honda Motor (NYSE:HMC) agreed to invest $750 million in GM Cruise at a post-investment valuation of $14.6 billion. Honda will also work with General Motors and Cruise on AV development and commercial deployment opportunities. It has committed to invest $2 billion over 12 years on these efforts. Cruise raises more cash As of the end of last quarter, Cruise had $2.2 billion of cash and investments on its balance sheet. That's plenty of money for now, but spending will increase dramatically when it actually begins the commercial rollout of its planned robo-taxi service. SoftBank will provide another $1.35 billion of cash at that point, but that probably won't be enough on its own, because losses are likely to accelerate at first as the Cruise robo-taxi business fights for market share. This made it prudent to lock down more funding now. On Tuesday, General Motors announced that the three existing partners (GM, SoftBank, and Honda) plus various institutional investors have invested another $1.15 billion in Cruise at a post-investment valuation of $19 billion. The new investment's terms imply that Cruise's valuation has risen nearly 50% since last June, excluding the new capital raised. That puts the value of GM's stake in Cruise at more than $13 billion. (The exact amount depends on how much the General provided in the current investment round, which hasn't been disclosed.) Investors still aren't giving GM the credit it deserves Based on Cruise's new $19 billion valuation, General Motors' stake in its AV subsidiary is now worth more than $9 per share. That means investors are currently valuing the rest of GM at around $29 per share: a mere four times the company's projected adjusted earnings per share for 2019, excluding losses related to Cruise. The rise of electric and autonomous vehicles does pose a long-term threat to GM's core business. That said, General Motors' lucrative truck and SUV franchises -- which account for the vast majority of the automaker's earnings -- are likely to remain highly profitable for many years to come. Moreover, an ongoing restructuring plan should drive strong growth in free cash flow over the next two years or so. As a result, GM's core business appears to be worth significantly more than the value investors are currently attaching to it. Shareholders should stay patient while CEO Mary Barra continues to reshape the company as a leaner, more profitable business.<doc-sep>Yes, the major public clouds offer a lot. But what you may not know are the limitations, and how open clouds make the difference. Elevate your enterprise data technology and strategy at Transform 2021. (Reuters) — General Motors’ majority-owned Cruise self-driving division on Tuesday said T. Rowe Price and a group of existing investors put down $1.15 billion in new equity, valuing the unit at $19 billion. Shares of the U.S. automaker rose as much as 2.1 percent to $38.89 in morning trading following the announcement. The latest funding round includes General Motors, Japan’s SoftBank Vision Fund and Honda, and should give the firm much-needed cash as it aims to launch vehicles by the end of 2019. The additional capital comes at a crucial time as a host of automakers and technology companies weigh how quickly autonomous vehicles can be marketed and sold in large volumes, and find ways to share rising costs for hardware and software development. Ford is in talks with German automaker Volkswagen about joining forces to create autonomous vehicles in a deal that could involve an investment by VW in Argo AI, an autonomous vehicle technology company majority owned by Ford. Cruise, which has secured capital commitments of $7.25 billion in the past year, was valued at $14.6 billion in the last funding round by Honda in October, which had invested $2.75 billion. The current valuation is equivalent to about 35 percent of GM’s market capitalization despite no significant revenue and a product not ready for commercial launch. Up to Monday’s close GM’s stock had risen about 14 percent this year, compared with a 17 percent increase in the S&P 500 index (Reporting by Ankit Ajmera in Bengaluru; Editing by Bernard Orr)<doc-sep>GM's Cruise business has secured new funding, bringing the company's value to $19 billion. The new round is $1.15 billion, and it comes from a group of institutional investors: GM, Japan's SoftBank Vision Fund, and Honda. Investment in Cruise now totals $7.25 billion. Cruise, General Motors' autonomous mobility business, keeps raking in the funding. Following major investments last year from Japan's SoftBank and Honda valuing the operation at nearly $15 billion, Cruise announced on Tuesday a new funding round of $1.15 billion that takes the business to a new valuation of $19 billion. In a statement, Cruise said that the funding round is coming from a "group comprising institutional investors, including funds and accounts advised by T. Rowe Price Associates, Inc., and existing partners General Motors, SoftBank Vision Fund and Honda." GM acquired Cruise (then called Cruise Automation) in 2016, for an all-in price of $1 billion. The company has now brought in $7.25 billion in total investment, according to a statement. Read more: GM Cruise plans to double in size by the end of 2019 and has hired a new exec to help it grow In 2018, GM President Dan Ammann moved over to Cruise as its CEO, while co-founded Kyle Vogt shifted to a CTO role to guide the company's expansion. Earlier this year, Cruise took over the former headquarters of Dropbox and announced plans to double its headcount in 2019. "Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation," Ammann said in a statement. "Having deep resources to draw on as we pursue our mission is a critical competitive advantage." Cruise is in a race with Alphabet's Waymo to bring automated rail-hailing services to customers. Ford's ArgoAI is also chasing that goal, and Tesla has declared that it will have a million robotaxis on the road by 2020. However, Cruise's valuation is more specific than any of its competitors, and the company benefits from being part of the largest US automaker. San Francisco-based Cruise has been testing autonomous Chevy Bolt electric vehicles, with the goal of rolling out a commercial ride-hailing service this year.<doc-sep>
GM Cruise has raised another $1.15 billion in new equity from a group of investors that includes T. Rowe Price Associates, Honda, SoftBank Vision Fund and its parent company GM, as the self-driving vehicle company pushes to launch a commercial autonomous ride-hailing service this year. This investment increases Cruise’s post-money valuation to $19 billion, inclusive of SoftBank’s previously announced investment commitment. Cruise has secured capital commitments totaling $7.25 billion in the past year, according to the company. “Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation,” said Cruise CEO Dan Ammann. “Having deep resources to draw on as we pursue our mission is a critical competitive advantage.” GM Cruise has one of the most aggressive timelines among companies hoping to deploy a commercial self-driving vehicle service. GM’s self-driving unit has stuck to its previously stated timeline to launch a commercial service “sometime in 2019.” Cruise has grown from a small startup with 40 employees to more than 1,000 today at its San Francisco headquarters. And Cruise isn’t curtailing that rate of growth; it’s accelerating it. Cruise announced in November plans to expand to Seattle, in pursuit of more engineering talent to develop its technology. GM Cruise aimed to hire between 100 to 200 engineers by the end of 2019. The company, now led by Ammann, who left his post as president of GM to take the job, plans to hire at least 1,000 more engineers and other personnel by the end of the year. (Kyle Vogt, a Cruise co-founder who was CEO and also unofficially handled the chief technology officer position, is now president and CTO.) Arden Hoffman, who helped scale Dropbox, left the file-sharing and storage company to head up human resources at Cruise and help the company scale quickly. The GM subsidiary is expanding its office space in San Francisco to accommodate the growth. GM Cruise will keep its headquarters at 1201 Bryant Street in San Francisco. The company also will take over Dropbox headquarters at 333 Brannan Street some time this year, a move that will triple Cruise’s office space in San Francisco. GM Cruise received a $2.25 billion investment by SoftBank’s vision fund in May 2018. That first SoftBank investment was cut into two parts, with the first tranche of $900 million made at the closing of the transaction. Once Cruise’s autonomous vehicles are ready for commercial deployment, SoftBank will complete the second investment of $1.35 billion, the companies said at the time. A few months later, Honda committed $2.75 billion as part of an exclusive agreement with GM and Cruise to develop and produce a new kind of autonomous vehicle. As part of that agreement, Honda will invest $2 billion into the effort over the next 12 years. At the time, Honda made an immediate and direct equity investment of $750 million into Cruise. Honda’s investment gives the automaker a 5.7% stake in Cruise.