Cruise Automation Accelerates GM’s Autonomous Vehicle Development



Autonomous vehicles

Previously, we looked at how General Motors’ (GM) car-sharing business is rapidly growing. To expand its presence in the car-sharing business, the company relies on its strategic partnership with Lyft and its brand Maven. However, GM hasn’t stopped there. The company has also accelerated its efforts to develop autonomous vehicles. Let’s take a closer look.

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GM’s autonomous vehicle development

In May 2016, GM completed the acquisition of Cruise Automation to accelerate its autonomous vehicle development. For this $581 million deal, GM paid $291 million in cash, and the remaining ~$290 million was paid through the issuance of new common stock.

Cruise Automation is a San Francisco–based technology company that was founded in 2013. The company is known for providing highway autopilot systems for vehicles.

Since the acquisition, GM has already begun testing the self-driving Chevrolet Bolt EV (electric vehicle) on public roads in the San Francisco Bay area.

Note that Google (GOOGL) and other automakers (XLY) including Ford Motor Company (F) and Tesla Motors (TSLA) are also working on the technology for autonomous vehicles.

Management’s comments reflect optimism

Commenting on the Cruise Automation deal, Mary Teresa Barra, GM’s chairman and CEO, said, “Cruise provides the unique software capabilities, and when you take that software technology combined with our own expertise, it is really accelerating our work in fully autonomous driving.”

Therefore, it wouldn’t be surprising to hear updates about GM’s autonomous vehicle technology integration in its vehicles. This could also be one of the key drivers of GM’s stock in the coming quarters.

Continue to the next part of this series for a look at GM’s valuation multiples after its 2Q16 earnings.


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