Honda Joins with Cruise, GM to Build Autonomous Vehicles

The company will invest $2.75 billion over 12 years to develop vehicles designed from the ground up for autonomous operation.

By Murray Slovick, Contributing Editor

Honda and Cruise, General Motor’s self-driving venture, have partnered up to pursue the shared goal of large-scale deployment of autonomous-vehicle technology. They will combine to fund and develop a purpose-built, space-efficient autonomous vehicle that can serve “a wide variety of use cases and be manufactured at high volume for global deployment,” according to a statement from Honda.

Honda will contribute approximately $2 billion over 12 years to these initiatives, which, together with a $750 million equity investment in Cruise, brings its total commitment to the project to $2.75 billion. The Japanese automaker will receive a 5.7% stake in GM Cruise LLC for the investment.

Earlier this year, Japan’s SoftBank Vision Fund, a technology investment firm, placed a $2.25 billion bet on Cruise. GM also invested an additional $1.1 billion of its own money at that time. Taken together, the multiple investments are expected to inject enough capital into Cruise for it to reach commercialization beginning in 2019. (Cruise, which was sold to GM for more than $1 billion in 2016, previously said that it will launch a self-driving ride-hailing service with SAE Level 5 autonomous vehicles next year).

While Cruise has focused on modifying the Chevy Bolt (shown) for autonomous operation, Honda’s plan is to build self-driving cars from scratch. (Source: Cruise)

The Honda investment gives it access to advanced self-driving car technology. As part of the announcement, Honda Representative Director and COO Seiji Kuraishi said, “We will complement their strengths through our expertise in space efficiency and design to develop the most desirable and effective shared autonomous vehicle.”

In turn, General Motors Chairman and CEO Mary Barra remarked, “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.” Barra added, “Honda will provide Cruise with additional engineering, design, and technology expertise.”

Commenting on the deal in a blog post in Medium, Cruise CEO Kyle Vogt said, “A rule of thumb in the auto industry is that a new production vehicle takes four years and about a billion dollars to design and bring to market. That’s assuming you have an existing assembly plant (if not, add another billion dollars) and an experienced team ready to spring into action.”

Vogt also wrote, “So we made the decision a couple of years ago to shave years off our timeline and build our first wave of self-driving cars by starting with GM’s existing proven electric-vehicle platform. We’re now manufacturing them on a production assembly line, which enables us to work through the issues unique to manufacturing self-driving cars, to make iterative improvements, and to significantly de-risk (sic) our path to scale.

“Our intent is to go pretty quickly on this as we have with everything else. I would not look to the 12 years (the length of the Honda-GM agreement) as an indication of when our next vehicle may become available.”

Back in March, GM announced that it would spend $100 million to upgrade two plants in Michigan to produce self-driving cars. The 4.3 million sq. ft. Orion Assembly plant, currently producing the Chevrolet Sonic and Chevrolet Bolt EV, has already been used to produce Cruise test vehicles.

To date, Cruise has focused on modifying the Chevy Bolt for autonomous capabilities. Honda’s plan is to build self-driving cars designed from the ground up for autonomous operation but still based on Cruise’s hardware and software designs.

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