Honda announced today that it is upping its self-driving game with a $2.75 billion investment in General Motor's Cruise Automation unit. The two auto giants are joining together to build self-driving vehicles for ride service fleets on a high-volume, global scale, according to Reuters. Honda will invest $750 million up front and another $2 billion over the next 12 years, giving them a 5.7 percent minority stake.
The move is big for both companies. Honda has been behind its rivals when it comes to self-driving technology. For GM's Cruise, the investment follows on the heels of a $2.25 billion investment from SoftBank Vision Fund. The two investments bring Cruise's post-money valuation to $14.6 billion. GM shares climbed up 2.4 percent in the morning after the announcement.
"Just four months ago we announced that SoftBank agreed to invest $2.25 billion in Cruise for a 19.6 percent stake in the company. Today we're announcing that Honda is also joining the party. They're bringing chips, dip, and $2.75 billion," CEO Kyle Vogt said in a press release for General Motors.
Honda had been in discussions with Cruise's biggest competitor -- Alphabet Inc's Waymo -- about a potential collaboration. Waymo, for comparison, is valued at $175 billion. Cruise and Waymo are generally thought of as the two industry leaders when it comes to autonomous technology. Honda decided to pair up with Cruise, calling the partnership "exclusive," but declining to comment on any further collaborations.
"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," said Honda COO and Vice President Seiji Kuraishi.
GM President Dan Ammann said that the company hopes to launch the self-driving ride services fleet -- which will use cars without steering wheels or pedals -- in 2019.
"The longstanding relationship we have with Honda will allow us to move very quickly in ramping up our efforts," he said in a media briefing.Honda and GM haven't released any details on what the new vehicle will look like. Vogt suggested in a post on Medium that the company envisions self-driving cars with giant TV screens, lay-flat seats, and a minibar. What's certain is that there are still many hurdles to overcome before an autonomous fleet can hit the road in the US. The GM and Honda partnership will put extra muscle behind the technology.
"Building a new vehicle that has an incredible user experience, optimal operational parameters, and efficient use of space is the ultimate engineering challenge. We're going to do this right, and by joining forces with Honda we've found the perfect partner to help make it happen," Vogt said.
GM acquired Cruise in 2016 for $1 billion.