General Motors Company (NYSE:GM) said Thursday that SoftBank Vision Fund plans to invest US$2.25bn in its self-driving unit, sending rival Tesla Inc’s (NASDAQ:TSLA) shares tumbling.
The investment comes as Silicon Valley electric-car maker Tesla and Alphabet's Waymo unit are pushing to gain an advantage in the autonomous vehicle space.
SoftBank Vision Fund will invest around US$2.25bn into GM Cruise Holdings LLC, the automaker’s autonomous driving segment as GM looks to commercialize automated driving.
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“GM has made significant progress toward realizing the dream of completely automated driving to dramatically reduce fatalities, emissions and congestion,” said Softbank managing partner Michael Ronen in a press release.
Ronen added that he was impressed by GM Cruise and that its hardware and software present “a unique competitive advantage.”
The investment will be split into two tranches, US$900mln at the close of the transaction and then the remaining US$1.35bn once the Cruise AVs are ready for commercial deployment.
With this new investment, the companies expect to have enough capital to reach commercialization at scale by the beginning of 2019.
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The competition could be a problem for Tesla whose own self-driving fleet has been involved in multiple accidents, including a fatal crash in Florida that led to an investigation by the National Transportation Safety Board.
Shares of GM jumped more than 10% to US$41.98 in Thursday morning trading.
New additions to the Tesla team
Tesla welcomed two new executives to its team.
Sanjay Shah, Amazon.com Inc’s former vice president of its North American fulfillment centers, has been named the new senior vice president of energy operations and will oversee Tesla’s energy products.
Jan Oehmicke, the current CEO of BMW Financial Services France, will leave that position in July to assume the role of vice president of Tesla Europe to manage operations in that region.
“We’re excited for Sanjay and Jan to bring their significant experience to Tesla,” said Tesla in a blog post.
India hasn’t won over Elon Musk
Tesla has been looking to expand overseas, getting closer by the day to establishing a factory in China as regulations on automakers ease.
India has been trying to lure Tesla to build a factory but Musk doesn’t seem interested, according to a Bloomberg report.
Would love to be in India. Some challenging government regulations, unfortunately. Deepak Ahuja, our CFO, is from India. Tesla will be there as soon as he believes we should.
— Elon Musk (@elonmusk) May 30, 2018
Musk tweeted that India’s restrictive policies were an impediment to local production.
Shares of Tesla fell less than a percent to US$290.29.