GM to buy Cruise Automation for over $1bn

Mar 11, 2016, 2:19 PM EST
GM logo.
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To boost its self-driving car development, GM will buy Cruise Automation for over $1 billion.

Fortune reports:

General Motors this morning announced that it will acquire Cruise Automation, a San Francisco-based developer of autonomous vehicle technology. No financial terms were disclosed, but Fortune has learned from a source close to the situation that the deal is valued at “north of $1 billion,” in a combination of cash and stock. Talks between the two companies originally related to a strategic investment by GM in Cruise, which was planning to raise a new round of venture capital funding. But that quickly morphed into an acquisition discussion with the entire agreement getting hashed out in less than six weeks. Cruise Automation had raised over $18 million in venture capital funding, most recently at a post-money valuation of around $90 million. Investors include Spark Capital, Maven Ventures, Founder Collective, and Y Combinator. The three-year old company is best known for having created an aftermarket “kit” that allows buyers to convert certain types of cars―namely Audi A4 and S4 models―into autonomous vehicles for highway driving. It But GM appears to be more interested in integrating Cruise’s technology into its original manufacturing process.

Reuters writes:

GM intends to use Cruise’s technology and people to accelerate its effort to develop vehicles that can operate without a human driver, potentially as part of ride-sharing fleets “as soon as possible,” GM President Dan Ammann said in an interview. “We will be committing considerable resources to recruit and grow the capability of the team,” Ammann said. Cruise has been working to develop hardware and software that could be installed in a vehicle to enable the car to pilot itself on a highway, without the driver steering or braking. GM initially planned an investment in the company but moved within five weeks to buy Cruise outright, said venture partner Nabeel Hyatt of Spark Capital, an investor in Cruise. "They moved faster than most Silicon Valley companies would move," he said.

The Wall Street Journal notes:

Bolstered by record U.S. auto sales and looking to broaden its business beyond producing and selling conventional car and trucks, GM has acquired or invested in a handful of new technologies. It invested $500 million to partner with Lyft Inc., a ride-sharing service, and purchased assets from Sidecar Technologies Inc. to help an effort to create its own car-sharing service. The auto giant’s efforts follow a broader industry push to prepare for shifts in consumer behavior. As cars become more automated and younger people delay getting licenses or move to urban centers, car companies expect car sharing, ride-hailing services and autonomous cars to be in greater demand.