Market Overview

GM's Cruise, Honda Team Up On Autonomous Vehicle Development

GM's Cruise, Honda Team Up On Autonomous Vehicle Development

Honda Motor Co Ltd (NYSE: HMC) announced a 5.7-percent stake in and partnership with General Motors Company (NYSE: GM)’s Cruise subsidiary to advance autonomous vehicle development.

"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," GM Chairman and CEO Mary Barra said in a press release.

What Happened

On top of an initial $750 million investment in Cruise, Honda will contribute about $2 billion to joint AV initiatives over the next 12 years.

"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 and Representative Director COO Seiji Kuraishi said in a press release. "We will complement their strengths through our expertise in space efficiency and design to develop the most desirable and effective shared autonomous vehicle."

The pair intends to jointly build a new AV and pursue global opportunities for commercial deployment.

Why It’s Important

Honda’s investment in Cruise brings the unit’s valuation to $14.6 billion. The international network and pursuit to produce AVs at scale threaten Tesla Inc (NASDAQ: TSLA) and Ford Motor Company (NYSE: F) with veritable competition.

Experts view the partnership as a reinforcement of traditional OEM power.

“The future of transportation belongs to today’s automakers,” Autotrader Executive Editor Brian Moody said. “All the talk of tech companies stealing transportation is nonsense. Today’s automakers have the scale, knowledge and R&D dollars, plus they know how to manage a broad network of suppliers and can work with policy officials to get things done. This Honda / GM partnership holds the potential of two top global brands working together. And let’s be honest, the future isn’t going to be brand agnostic: The name ‘Honda’ or ‘Chevrolet’ will still be important to many.”

Price Action

At time of publication, GM was set to open up 5.2 percent at $35.03. Honda shares were down 1.8 percent at $29.91.

Ford and Tesla share were both up marginally.

Related Links:

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Toyota's $500M Uber Investment: What You Need to Know

Photo courtesy of GM.


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