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18th of October 2018

Automotive



Honda's Helping GM on Its Quest to Deliver Self-Driving Cars

Cruise, the self-driving car arm of General Motors, has an unexpected new ally in its bid to keep its corporate master at the forefront of an industry enduring its greatest period of change in generations: Honda.

In a deal announced today, the Japanese automaker will help San Francisco-based Cruise and its Detroit owner develop and mass produce a new sort vehicle for a world in which human drivers are no longer needed. Honda is opening its checkbook too, pledging to spend $2 billion on the project over 12 years, and immediately putting a $750 million equity investment into Cruise.

For Honda, the partnership offers entree into a self-driving space where it has thus far spent little time and effort. For Cruise and GM, the newcomer adds engineering know-how, especially with regard to interior design. That may not seem important today, while everyone is still figuring out how to make robots execute left turns and recognize pedestrians. But once the tech is ready, the ridership experience will hinge largely on how it feels to be inside the vehicle, like it does on airlines today.

Perhaps more importantly, Cruise gets Honda’s money. Self-driving research you see, is expensive. Cruise plans to launch a self-driving taxi service (somewhere) in 2019, and it’s hiring hundreds of engineers from a talent pool where demand exceeds supply. Autonomy could be a $7 trillion market by 2045, but nobody’s making money yet—and nobody knows when they will, or how much, or how, exactly. Maybe Waymo’s overseers at Alphabet and Uber’s investors can handle funding such a long term bet, but it’s a tougher sell for GM, which still has to run its existing business, building cars for humans to drive. That’s largely why Cruise and GM struck a deal with Softbank in May, in which the Japanese firm’s Vision Fund swapped $2.25 billion for a 19.6 percent stake in Cruise.

“It will de-risk our path to scale,” Cruise CEO Kyle Vogt said on a conference call. “So once the timing’s right, we can really open up the throttle on this thing and get it going.”

As for the vehicle that will come of this deal, details are scant. GM President Dan Ammann declined to say what it will look like or when it will arrive. But the idea is clear: “It will be the first vehicle produced at scale that is freed from the constraints of having to think about vehicle design, having the driver at the wheel, and all of the traditional approaches to that,” Ammann said. Cruise has been using the electric Chevy Bolt for testing (which it does mostly in San Francisco), and GM plans to start that 2019 service with a version of the Bolt without a steering wheel or pedals. But in the long run, such services will call for vehicles made for riding, not driving. That could mean flexible interiors, new seating arrangements, new entertainment options, or a host of other things nobody has thought up yet.

The bigger takeaway from this newest deal is that, with rare exceptions, nobody thinks they can deliver on this dream alone. Just as today’s automakers rely on global networks of suppliers, dealers, and financiers, they’ll need a new web of similar deals to put robots on the road. From lidar makers to car designers to software developers to manufacturing gurus to the eternally necessary financiers, putting robot-cars on the road demands a new web of agreements, partnerships, revenue sharing schemes. On this ride to the future—as on any road trip—a good buddy or two can make all the difference.

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