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Technology

SoftBank boosts funding in GM's driverless unit Cruise

Vision Fund hedges bet after investment in Uber's self-driving unit

SoftBank and Honda have added investments in General Motors' self-driving unit, Cruise, valuing the company at $19 billion.   © AP

NEW YORK -- SoftBank Vision Fund has participated in a $1.15 billion new funding round in General Motors' autonomous driving unit, Cruise, the San Francisco-based company announced Tuesday.

SoftBank joined existing partner Honda Motor and new investor T. Rowe Price in the new round. The Vision Fund previously committed $2.25 billion into GM Cruise for a roughly 20% stake. Following the new investment announced on Tuesday, GM Cruise's valuation rose to $19 billion, more than a third of General Motors' market capitalization. The company declined to disclose how much SoftBank contributed in this round.

The new round came after an announcement last month by a consortium of Japanese companies, including SoftBank and Toyota Motor, that it would invest $1 billion in Uber's self-driving unit, to which SoftBank will contribute $300 million. In February, SoftBank also invested nearly $1 billion in Nuro, a Mountain View, California-based driverless food delivery startup, which has launched service in two U.S. cities.

GM Cruise has been testing its driverless vehicles in California and aims to "reach commercialization at scale beginning in 2019," as it looks to compete with other pioneers in the space including Uber, Tesla and Google's Waymo. On Tuesday, Waymo announced that it has inked a partnership with ride-hailing company Lyft to introduce 10 autonomous vehicles in Phoenix over the next few months. At Tesla, CEO Elon Musk has said he is confident that self-driving robotaxis by the EV maker will be available next year.

"Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation," Cruise CEO Dan Ammann said Tuesday. "Having deep resources to draw on as we pursue our mission is a critical competitive advantage."

The future of transportation has been a centerpiece in SoftBank CEO Masayoshi Son's road map of investments. SoftBank is the largest shareholder of Uber, which is expected to go public on Friday at a valuation of $90 billion, and has stakes in ride-sharing companies Grab, in Singapore, and Ola, in India. Self-driving technology will be a crucial link in the future operations of these companies, all of which are burning through lots of cash.

"As of today, the consensus believes neither Uber or Lyft can be profitable without autonomous driving," said Christopher Eberle, an analyst at Nomura Securities. "[SoftBank] may be looking to hedge their bets as the leader in autonomous remains unclear."

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