GM Cruise Lands a Multibillion Investment From SoftBank

By Chris Lange Updated Jan 11, 10:57PM EST · Published May 31, 10:25AM EDT

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GM Cruise Lands a Multibillion Investment From SoftBank — © General Motors Co.

General Motors Co. (NYSE: GM) shares saw a solid gain on Thursday after it was announced that SoftBank Vision Fund would be making a sizable investment in the GM Cruise. Overall, SoftBank is investing $2.25 billion to further strengthen GM Cruise’s plans to commercialize AV technology at a large scale. Note that GM also will be investing $1.1 billion in this as well.

On the other hand, one car company is struggling on this news, and could really use the investment. Tesla Inc. (NASDAQ: TSLA) shares continue to slide, not only on this news but also closing out a disappointing month. Tesla is now facing even more problems regarding its Autopilot mode after another crash was reported this week, this time in California.

Back to the GM deal: the SoftBank Vision Fund investment will be made in two tranches. At the closing of the transaction, the Vision Fund will invest the first tranche of $900 million. At the time that Cruise AVs are ready for commercial deployment, the Vision Fund will complete the second tranche of $1.35 billion, subject to regulatory approval. Together, this will result in the SoftBank Vision Fund owning a 19.6% equity stake in GM Cruise and will afford GM increased flexibility with respect to capital allocation.

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Michael Ronen, managing partner, SoftBank Investment Advisers, commented:

GM has made significant progress toward realizing the dream of completely automated driving to dramatically reduce fatalities, emissions and congestion. The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage. We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.

Shares of GM were last seen up over 10% at $41.86, with a consensus analyst price target of $47.52 and a 52-week trading range of $33.05 to $46.76.

Tesla shares were last seen down 2% at $286.01, with a consensus price target of $309.09 and a 52-week range of $244.59 to $389.61.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.