The Autonomous Transport Area is already the Wild West, and it has just become wilder.
The giant technology investment fund of the SoftBank Group Corp. has reached an agreement to inject $ 2.25 billion into the autonomous company of General Motors Co. in exchange for a 19.6 percent stake in a business now estimated at $ 11.5 billion. GM will own 80 percent of the new, semi-independent GM Cruise Holdings LLC. The investment is Cruise, the next year to bring self-driving cars on the road, a large chunk after.
The agreement announced on Thursday also complicates the already chaotic image of the actors in driverless cars. Google's parent company Alphabet Inc., GM, Uber Technologies Inc., Tesla Inc. and others are racing to develop driverless transports ̵
GM invested in Lyft, which subsequently attacked a driverless car with GM rival Ford. SoftBank now supports autonomous projects on both Uber and GM. Alphabet has done business with a number of competing automakers and owns part of Uber, which it also sued and accused of stealing Alpha's self-driving auto technology.
The disorder is unavoidable at this stage of development of autonomous transport is not a bullying candidate to dominate robotic vehicles. The jumble of players is basically a huge bet that more participants and a rich stew of allies and enemies will develop better technology and smarter strategies for it. Fingers crossed.
Of course there are winners and losers in every new development in the world of driverless cars. Securing betting by SoftBank is a definite advantage for GM. By Thursday, the automaker's stock had fallen 19 percent from its peak in October, with rising raw material costs and a break in production on pickups that weighed on profitability. The decline was a reminder that investors still see GM as a manufacturing company that has to deliver small things like revenue and spending targets that others (cough, Tesla, cough) have passed on. GM shares rose on Thursday morning on news from SoftBanks bet on Cruise.
Shareholders in old companies, especially those in which there have been many bankruptcies in the past, are rather impatient with digital reinvention. GM analysts expect the company to invest $ 8.5 billion this year, the highest since the 2009 bankruptcy. With SoftBank's investment, GM Cruise is now "funded to commercialization" GM President Daniel Ammann said on Bloomberg Television. That is a burden from the shoulders of investors.
On the other hand, try to imagine Uber CEO Thursday morning. He learned that SoftBank, the largest shareholder of his company, has billions of reasons to make Cruise successful in an area where Uber is counting on its future.
It is already a embarrassing relationship because the Japanese conglomerate supports several top rival rides. SoftBank tends to encourage the companies it invests in to work together, and it's easy to imagine Uber introducing Cruise cars into its on-demand vehicle fleet. It's just as easy to imagine that Uber refuses.
Over at Tesla, GM's deal and market reaction should at least cause discomfort. That same morning, Tesla denied reports that his autopilot driver assistance system had been involved in the recent crash of a Model S in Belgium. While Tesla says the system was not involved in this crash, it was investigated in other federal regulatory agencies.
The timing serves to highlight a hare-and-turtle dynamic. GM's approach to autonomous vehicles is known for its emphasis on redundancy and conservatism – so much so that the Bloomberg News chief in Detroit found a drive in a slumber . Prior to the collapse of SoftBank, no one seemed to buy GM shares because it would push into the future of the autonomous future.
This chaotic image of players in autonomous technology was inevitable. Cars are not like an app on which two children secretly work in their garage and one day can spring up in the world. Autonomous transportation needs the coordinated efforts of policymakers, companies that build or build cars, suppliers that can manufacture specialized parts, and software developers that can brainstorm and make robotics safe.
Conventional wisdom states that the efforts of established operators to be their own disruptors are doomed to failure. The move from GM is not guaranteed to prove it wrong, especially if the field is so crowded. But it keeps it safe in the race.
– Brooke Sutherland has contributed to this column.
This column does not necessarily reflect the opinion of the editors or the Bloomberg LP and its owners.
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Daniel Niemi at [email protected]