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PRINT EDITION
Honda turns to self-driving technology with planned $2.75-billion investment in GM's Cruise
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By NICK CAREY, PAUL LIENERT
REUTERS
  
  

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Thursday, October 4, 2018 – Page B1

WARREN, MICH. -- Honda Motor Co. Ltd. will invest US$2.75-billion and take a 5.7-percent stake in General Motors Co.'s Cruise self-driving vehicle unit, to jointly develop self-driving vehicles for deployment in ride-services fleets around the world.

Honda, which has lagged behind many of its rivals in developing selfdriving vehicles, is paying US$750million upfront for the minority stake in Cruise and will invest another US$2-billion over 12 years, the companies said on Wednesday.

The deal, which calls for Honda to provide engineering expertise, extends co-operation between the two auto makers in a technology that has enormous costs and risk but no market-ready products.

Other global auto makers are forging similar alliances to share the uncertainty and huge price of developing technologies that have yet to gain widespread consumer acceptance.

Honda shares were down almost 4 per cent to US$29.37 at the close. GM was up 2 per cent.

In May, Japan's SoftBank Group said it would buy an initial 10-percent stake, followed by another 9.6per-cent stake, in Cruise for US$2.25billion.

Honda's investment values Cruise at US$14.6-billion - about a third of GM's market cap of US$48-billion. GM acquired the San Francisco-based startup in March, 2016, for a reported US$1billion.

By comparison, analysts have pegged the value of Alphabet Inc.'s Waymo self-driving unit as high as US$175-billion. Honda has had discussions for two years with Waymo about possible collaboration, but no deal has been announced.

In a media briefing on Wednesday, GM president Dan Ammann said 2019 "remains the goal" for GM Cruise to launch a self-driving ride-services fleet. He added: "The longstanding relationship we have with Honda will allow us to move very quickly in ramping up our efforts."

GM has been "very selective in our approach" to investors in Cruise and "we will evaluate other investment opportunities as they come along," he said.

Mr. Ammann later told investors: "We're moving as quickly as we can to get to the point where we can initially deploy the technology and then scale it. ... This is an effort that requires very, very significant resources to pull off."

Mr. Ammann said Honda will contribute its engineering knowhow will help GM Cruise build a global ride-services business.

GM Cruise and Waymo are often described as leading the pack of technology and auto companies competing to create selfdriving cars and integrate them into ride-services fleets.

Honda executive Seiji Kuraishi said: "This investment is based on a shared vision and their [GM's and Cruise's] superior technologies in this area."

GM Cruise has a test fleet of more than 100 self-driving versions of the Chevrolet Bolt AV, rebadged as Cruise AV.

GM chief executive Mary Barra said the automaker is still focused on testing self-driving vehicles in San Francisco before expanding to other markets.

Waymo has agreements with Fiat Chrysler Automobiles NV and Jaguar Land Rover Automotive PLC to buy and equip tens of thousands of vehicles with its self-driving systems.

Ford Motor Co. and BMW AG have said they plan to deploy selfdriving cars in 2021.

BMW, which has a development partnership with suppliers Intel Corp., Aptiv PLC and Canada's Magna International Inc., expects some rivals and ride-services companies to join its consortium for developing self-driving cars as auto industry profits come under increasing pressure, board member Klaus Froehlich said on Tuesday.

At the Paris Auto Show on Wednesday, the heads of Daimler AG and Renault SA said the two companies may expand their cooperation to batteries, self-driving vehicles and mobility services.

The GM-Honda announcement extends a partnership that includes joint development of electric vehicles with hydrogen fuel cells that are expected to go on sale in 2020. In June, Honda also said it would buy advanced batteries from GM in a move that could significantly reduce the cost of future electric vehicles at both automakers after 2020.

Associated Graphic

GM's relationship with Honda will allow the company 'to move very quickly' in increasing its efforts to launch a self-driving ride-services fleet, president Dan Ammann said.

ELIJAH NOUVELAGE/REUTERS

Friday, October 05, 2018
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