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Honda stakes self-driving future on GM with $2.8bn investment

Traditional automakers to develop robot taxis in challenge to Silicon Valley front-runners

An image of the Cruise AV driver's seat. It is designed to operate safely on its own, with no driver, steering wheel, pedals or other manual controls when it goes on the road in 2019. (Photo courtesy of General Motors)

TOKYO -- Honda Motor has pledged to invest a total of $2.75 billion in a partnership with General Motors for autonomous-driving technology, aiming to parlay the U.S. automaker's massive driving data into innovations that challenge Google and Apple.

In a deal announced on Wednesday, the Japanese automaker is taking a 5.7% stake in GM's self-driving unit Cruise Holdings for $750 million, and will put up an additional $2 billion toward the project over the next 12 years. The goal is to develop driverless taxis, with an eye to eventually offering automated taxi services across the globe.

The tie-up between the traditional automakers in next-generation driving technologies suggests a new phase in auto-sector competition that shifts the focus from scale to data.

"Honda chose to collaborate with Cruise and General Motors based on their leadership in autonomous and electric vehicle technology and our shared vision of a zero-emissions and zero-collision world," Honda Executive Vice President Seiji Kuraishi said in a statement. "We will complement their strengths through our expertise in space efficiency and design to develop the most desirable and effective shared autonomous vehicle."

The partners intend to focus at first on testing driverless taxis in San Francisco with an eye toward commercialization. Once commercialization is achieved there, the focus would turn to efficient expansion.

"This is the logical next step in General Motors and Honda's relationship, given our joint work on electric vehicles, and our close integration with Cruise," said General Motors Chairman and CEO Mary Barra on Wednesday.

GM purchased Cruise in 2016 for around $1 billion. Japan's SoftBank Group has a roughly 20% stake through its tech-focused $100 billion Vision Fund. Honda's 5.7% stake makes it the third-largest shareholder.

The latest move marks the third tie-up by the automakers on next-generation cars. In 2013, they established a tie-up on fuel cell vehicles to jointly produce core components in the U.S. This June, they announced joint development of lithium-ion batteries for electric vehicles that charge faster and keep cars running longer than current offerings.

Information technology leaders like search giant Google and iPhone maker Apple are ahead in the self-driving race, but automakers' wealth of driving data gives them a unique vantage point. The partnership between Honda and GM, whose combined unit sales for 2017 topped 14 million, represents a major step in automaker-led development.

The race to build the cars of the future involves four technological battlefields: connectivity, automation, sharing and electrification. Development of automation -- which involves accurately detecting pedestrians and other surroundings, as well as complex maneuvering -- is particularly costly. Developing self-driving taxis will take $1.8 trillion worth of investment through 2035, according to Boston Consulting Group.

GM has amassed troves of self-driving test data and other such information, putting it far ahead of Honda in this area. Huge amounts of information can also be gathered from connected cars by fitting sensors on a range of parts. New businesses could be born from discoveries arising from data on driving and human movements.

The U.S. company leads global automakers in the self-driving development race. On top of its Cruise purchase, it has taken a stake in U.S. ride-hailing app Lyft, the principal domestic rival to Uber Technologies. Its partnerships give GM an edge in supplying cutting-edge cars. Next year, it will work with Cruise to roll out the first mass-production vehicle capable of operating autonomously under limited conditions, known as level 4 -- a standard said to be the second-most sophisticated aspect of vehicle automation.

Honda, by contrast, is undeniably behind. It rolled out a system-assisted vehicle of level 2 self-driving standards just this year.

Its joint development efforts with Google's automated-driving cousin Waymo have so far borne little fruit. Asked about relations with Waymo Wednesday, Kuraishi said only that he would refrain from commenting on other companies.

Other big names like Toyota Motor and U.S.-based Ford Motor are seeking to advance in automated-vehicle development, but through tie-ups with companies outside the industry.

Since the 1990s, major automaker partnerships have largely focused on scale, with many geared toward supplementing product offerings or providing emergency lifelines. But with auto markets maturing in developed countries the world over, prospects for sales growth in traditional vehicles appear confined to markets like China and India. Sensing the need to create new industries that make use of cars, automakers are pursuing revolutionary transport technologies using data and IT.

Nikkei staff writer Jada Nagumo contributed to this article.

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