Honda and GM collaborate to develop self-driving cars

Auto industry giants Honda and General Motors (GM) have joined forces to develop a new generation of self-driving vehicles. GM’s autonomous vehicle subsidiary, Cruise, received over USD$2.75 billion from Honda’s investors.

Honda’s investment will be invaluable to GM’s objectives to be a front-runner in the race to develop autonomous vehicles. The Japanese car company will invest USD$750 million in equity, and the further USD$2 billion in order to develop and deploy the vehicles.

The terms of the agreement indicate that Honda will receive a 5.7% share in Cruise. GM’s major contender in this market is Waymo, Alphabet Inc.’s Google autonomous vehicle unit, whose potential enterprise value is somewhere around USD$175 billion.

Since the announcement on Wednesday, GM’s stock gain has been as high as 5.3%, its biggest stock hike since it received its $USD2.25 billion investment from SoftBank Vision Fund.

According to Seiji Kuraishi, Honda’s Chief Operating Officer, claimed in a conference call with reporters that this deal was exclusive. Many have already raised questions as to Honda’s previous plans to work with Waymo, however Kuraishi didn’t discuss any of the negotiations that occurred between Honda and Waymo.

Since GM acquired Cruise two years ago for USD$581 billion, Cruise’s worth has been on a continuous rise. Following Honda’s investment, the vehicle subsidiary is now valued at USD$11.6 billion.

GM will manufacture the car, which will be an electric vehicle according to GM president Dan Ammann. Since Honda and GM already work jointly on battery technology and hydrogen powered fuel cells, some suspect they might develop a fully autonomous car that runs on hydrogen fuel cell technology.

According to Mark Reuss, executive vice-president of product development, no decision of that sort has been made. However, he does state that such an initiative would make sense, considering that if an automated car was on a specific route in a contained area, they could find a strategic location for the hydrogen fueling station. Considering the shorter refuel times for hydrogen fuel cells, it might be something to pursue.

As of yet, neither company has commented on the time and location of the autonomous car’s eventual production.