Cruise Automation, the automated driving tech company purchased by General Motors for $1 billion in 2016, hasn’t made any money yet. That hasn’t stopped it from raking in investments.
This week Cruise announced it secured an additional $1.15 billion investment, following an updated $19 billion valuation. The fresh funds come 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 (SVF) and Honda,” Cruise revealed in a press release.
If you’re surprised to see Honda listed as the company’s investors, don’t be. The Japanese automaker pledged $2 billion (including a $750 million investment in Cruise) as a part of an agreement with GM to develop a purpose-built self-driving car together.
More intriguing is Softbank Vision Fund’s additional funding of Cruise. And I say that because SVF injected $333 million into Uber’s own self-driving division, Uber Technologies Inc.’s Advanced Technologies Group (Uber ATG), just last month, which will be spun off into its own entity.
Plus, SVF pumped $2.25 billion into Cruise last May. Clearly, SVF is hedging its bets on the future of automated driving — it would rather have a hand in all the major players on the off chance one makes it big.
What will Cruise do with the additional monies? Well, GM said that it intends to put self-driving ride-sharing vehicles (without steering wheel or pedals) on the road as soon as 2019. So, Cruise will likely use the funds to bring to fruition that goal.
GM isn’t the only American automaker with aims of releasing steering wheel-less cars onto the road in the coming years. Ford said it would be building such a vehicle in 2021.
To me, these goals seem like a bridge too far — at least, this early on. Most Americans are still afraid of self-driving cars. What’s more, it’s not clear the infrastructure is in place to launch self-driving vehicles that don’t include any manual human driving inputs.
Despite the challenges, carmakers are still marching to the goal of releasing automated driving vehicles on the road. They’re keen to ensure they’re safe, though. That’s why GM, Ford, and Toyota recently formed an autonomous-car safety group, the Automated Vehicle Safety Consortium (AVSC).
Amusingly, AVSC’s formation was followed by Tesla CEO Elon Musk announcing his company would have over one million robotaxis on the road by 2020. It’s a dubious claim at best. It highlights, however, that some brands are racing toward releasing self-driving cars before the tech — and the public — are ready.
In the face of these announcements, I recently argued that these kinds of automated robotaxis will be the last kinds of self-driving vehicles to hit the road. They’ll be proceeded by low-speed shuttles and over-the-road automated semi-trucks. That’s because the cost to produce vehicles capable of Level 4 automated driving will be incredible. What’s more, the complexity of building a car that can be safe all the time — especially in urban environments — is still too great.
Still, though, it’s nice to see that investors see value in pumping more money into self-driving efforts.