General Motors has announced its plan to buyout SoftBank's stake in its self-driving technology unit for $2.1 billion. The company said it would buy back all of Softbank's stake in Cruise Holdings LLC, giving it around 80% ownership of the business unit.
GM said it also plans to invest an additional $1.35 billion in Cruise. Once the deal is made, Softbank will no longer have any ownership interest or rights in the autonomous driving company. The Japanese investment company acquired its stake in Cruise more than four years ago as part of its big bet on cutting-edge technologies such as electric vehicles and autonomous driving.
SoftBank invested around $2.25 billion in July 2018 through its multi-billion dollar Vision Fund to acquire a 19.6% interest in Cruise. The company was then a freshly established business unit under GM, mostly made up of Cruise Automation, a driverless developer bought by GM in early 2016.
SoftBank's exit, which comes as the Japanese company battles with debts, has spurred speculation among industry watchers about whether Cruise is capable of generating major revenue as GM promised. At the same time, other analysts believe that it would take more investments to make the company commercially viable.
GM spokesperson, David Caldwell, said the latest agreement demonstrates the company's trust in Cruise while also simplifying the ownership structure. He added that investors such as Microsoft, Walmart, and Honda, still continue to have confidence in the company's future prospects.
GM has long been speculated to spin-off Cruise as a separate entity. The departure of Cruise's CEO, Dan Ammann, in December last year had led some analysts to believe that GM may have different plans for the business unit.
GM's CEO, Mary Barra, recently said that the company plans to further invest in the technologies being developed by Cruise for its planned robot-taxi business. However, Barra said that they would be reviewing the viability of the business, and a spin-off could be possible depending on their findings.
Cruise, like many other self-driving vehicle companies, has pushed back its commercialization goals in recent years while it further develops its technology. Cruise announced in October that it expects to deploy thousands of robot taxis around the United States in the coming years. GM said it expects Cruise to generate around $50 billion in revenue by the end of the decade.
Cruise's current CEO, Kyle Vogt, said the buyout of SoftBank's stake in the company would not affect its current operations. He said Cruise would continue to operate as an independent company that is working closely and collaboratively with GM.