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GM Cruise raises $1.15B at a $19B valuation from Softbank and Honda
- dclusin 7y agoCurious about the corporate structure behind this. Is Cruise a subdivision of GM or is it an independent company with GM just being majority shareholder?
- onetimemanytime 7y agoalmost certainly a separate corp, with GM and others having shares and agreements.
- thenewwazoo 7y agoCruise is a separate, privately-held corporation that is partially owned by GM (I'm not sure if they're majority or not any more).
- notfromhere 7y agoGM owns like 80%. I think the plan is to IPO it at some point, but if its actually successful I can't see why they wouuldn't just make it a decision. There's probably some value in locking themselves in as the exclusive provider of Cruise-enabled cars
- zaphirplane 7y agoWell the fact they are getting funding from Honda says Economy of scale and bigger r&d with a shared platform is better than getting out innovated by Uber/google
- echelon 7y agoWhy would Honda invest in a company 80% controlled by a competitor? Why would GM let Honda invest?
- thenewwazoo 7y agohttps://www.theverge.com/2018/10/3/17931786/gm-cruise-honda-investment-self-driving-car https://www.theverge.com/2018/10/3/17931786/gm-cruise-honda-...
- perfunctory 7y agoI don’t think the article answers the question.
- govg 7y agoSelf driving right now is a moonshot for many of these companies, and competing with the resources that Google can throw at (both in terms of AI talent as well as sheer money) can be tough. Partnering with GM allows Honda a piece of this, allows for future adoption, and consolidates both of their revenues. If Cruise does become successful, the thought process might be that both Honda and GM obtain the tech therein, and differentiate themselves via other methods. Imagine this to be a new engine type that is too costly for just one manufacturer to research, and so they partner up with the implication that both get usage rights once the engine is done.
- saalweachter 7y agoThree advantages that jump out at me: 1. Stability for the project. A self-driving R&D project internal to a larger company risks getting killed over the N years it takes to do the work without any payoff. 2. The investment probably looks better on the parent corporations budgets. They aren't sinking billions of dollars into R&D, they're investing in a third party which is sinking billions into R&D. The shares might even look good, if non-liquid, on paper. 3. Segments liability away from the larger company. When all self-driving cars in the world make a left turn at the same time due to an obscure calendar bug, it's just GM Cruise that gets sued out of existence.
- thenewwazoo 7y agoIt's also an easier sell to potential hires. You get RSUs in Cruise, not stock in GM, which a tech worker may not like the look of.
- deleted 7y ago[deleted]
- Shivetya 7y agoI am still awaiting Tesla so spin off the autonomous driving group at some point to limit liability
- WhompingWindows 7y agoI have a decent sense of where Tesla and Waymo are at in the SDC development competition, but where does Cruise stand? What kind of sensors, computation, vehicles, where are they testing? In my limited knowledge, I'd guess Waymo is ahead of these other players, but do we know who is "in second" or who is second-closest to rolling out actual fully autonomous services?
- MegaButts 7y agoNobody knows for sure since nobody is releasing anything meaningful (the disengagement reports are both voluntary and self-policed, with no standard for what constitutes a reported disengagement), but the general consensus is that Cruise is second behind Waymo.
- thenewwazoo 7y agoThis comment should be rated higher. It's exactly true. The data are self-selected and self-reported, and the specific criteria for what qualifies is considered a trade secret.
- repsilat 7y agoAnecdotally I see more Cruise cars in SF and more Waymo cars in Mountain View. I heard Cruise doesn't drive on freeways either, and that would affect disengagements per mile quite a bit. Still Cruise's disengagement rate is astonishingly high: 1000 disengagements every 0.19 miles[1], according to the Wall Street Journal ;-). 1: https://i.imgur.com/F0vqDCp.jpg https://i.imgur.com/F0vqDCp.jpg
- MegaButts 7y agoThat statistic is backwards - they have 0.19 disengagements per 1,000 miles, so roughly 5,000 miles per disengagement. But as previously mentioned, this is a wildly disingenuous number, literally orders of magnitude away from the reality of how their cars are performing on the road today.
- freehunter 7y agoIt gets really confusing talking about GM when they have an organization named Cruise and also a product called the Cruze.
- saalweachter 7y agoNever fear; the Cruze has been discontinued, along with the Volt, which was frequently confused with the Bolt.
- MR4D 7y agoIt’s even worse - GM is not the same company that it was 10 years ago (and many people lost money buying the stock because they didn’t know that!) !! https://www.thestreet.com/story/10544259/1/not-your-fathers-gm-shares.html https://www.thestreet.com/story/10544259/1/not-your-fathers-...
- ironmagma 7y agoFor funsies, GM also has a product called Super Cruise[1]. (Obligatory discliamer: I work for GM / Cruise) [1] https://www.cadillac.com/world-of-cadillac/innovation/super-cruise https://www.cadillac.com/world-of-cadillac/innovation/super-...
- jayonsoftware 7y agoHaving worked for GM I can say, one of the best things GM did was after they bought Cruise they kept it as a separate company and away from GM bureaucratic style of management where everything comes to die.
- fossuser 7y agoThey've also relegated it to a sideshow on only one of their models, rather than incorporating it into the core of their business. I wonder if they're underestimating its importance or if there might be internal fighting within GM. This is another advantage Tesla has being all in towards the goal.
- jayonsoftware 7y agoCruise will be a tech provider like Waymo. Tesla is the only company that has an end to end product from software to hardware..think Apple.
- Animats 7y agoCruise will be a tech provider like Waymo. While owned by General Motors, no. But with Softbank buying in, maybe GM is backing away from Cruise. Is this another the Saudi Arabia sovereign wealth fund investment via Softbank? They seem to have become the world's largest source of dumb money. Is there anybody, anywhere, yet who is deploying self-driving cars without "safety drivers" or insisting the driver remain active at the wheel? Cruise, no. Waymo, did for a while, then backed off. Volvo was supposed to be deploying by now but backed off. There are a few self-driving shuttle buses, but they're really slow, like 10mph, except when on dedicated pathways. Companies that are claiming they will deploy in volume in the next two years are bullshitting. Nobody has Level 3 self driving working reliably in test yet. Let alone Level 4 or 5.
- dragonwriter 7y ago> But with Softbank buying in, maybe GM is backing away from Cruise. SoftBank was already a big investor in Cruise.
- 33MHz-i486 7y agothat is an absurd valuation ... you're telling me a pre-revenue company is worth comparable amount to Lyft or United Airlines.
- xfitm3 7y agoThe alleged value stems from its IP, right? They’re at 1500 engineers or so.
- sonnyblarney 7y agoForget 'pre revenue' they are 'pre business model, pre product, pre complete IP' ...
- YjSe2GMQ 7y agoIsn't Lyft also essentially a bet on autonomous driving? With (probably) an even shorter time horizon to burn all their cash? Otherwise it's hard to see them making enough profit to justify a 17B valuation.
- CPLX 7y ago> Isn't Lyft also essentially a bet on autonomous driving? No. It’s an app-based taxi hailing service.
- YjSe2GMQ 7y agoYeah right. But other than self driving cars I fail to see how they'll un-dig themselves out of the money losing setup before burning through all the fresh cash collected in the IPO. Hopefully I'll be wrong.
- kenneth 7y agoI see this criticism about Lyft and Uber all the time, but I don't understand how both companies could not at some point simply raise their prices to make the unit economics work. Sure, they'd lose some business… but given there is almost no fixed costs to running their business, they'd still have large profitable businesses. The only reason they don't is they're fighting for marketshare with each other while in growth mode. But once both companies have established their places in the world, saturated their markets, I don't see why they wouldn't simply raise their prices accordingly. Revenue would drop, profit would rise. Eventually, the market reach an equilibrium. Note they could also just raise the share they take for themselves and prices simultaneously. If prices go up 20% and they up their fee from 20% -> 33%, their income goes up 60% and their unit economics look a LOT better.
- sonnyblarney 7y ago$20B valuation for companies without products is a very, very frothy signal. This kind of thing is waaay beyond what went on during the dot-com bubble, where there was a lot of value being created without any business model either.
- naveen99 7y agoI would value the common shares with a pretty steep discount. I think we can just ignore the 19 and focus on the 1.15 for now.
- InTheArena 7y agoFor all of the criticism that Tesla gets for a incremental approach - they still have the best semi-autonomous car in actual production and a difficult but obvious path to full autonomy. These guys could completely flame out without ever getting anything of value out into the market.
- Animats 7y ago$19 billion valuation and it doesn't work yet? Saw one of those making a left turn in San Francisco last week. The driver was cranking the wheel. It was not autonomous.
- hacoo 7y agoI work for Cruise. For safety, our drivers keep their hands on the wheel at all times, including when the vehicle is autonomous. The vehicle you saw may have been in manual mode, but seeing the driver crank the wheel usually isn’t a good way to tell.
- granshaw 7y agoI wonder how softbank’s vision fund has been doing, and whether that info is available somewhere. Seems like they’re in on every late stage splashy tech investment