Honda Teams with GM on Autonomous Vehicles

Honda Motor Co. plans to invest nearly $2.8 billion into General Motors Co.’s Cruise automation subsidiary to co-develop and launch autonomous vehicles.

Under the deal, Honda will acquire a nearly 6% stake in GM Cruise LLC for $750 million. The other $2 billion will be invested into Cruise over the next 12 years to help fund development and commercialization initiatives.

Honda will work with GM to develop a purpose-built autonomous vehicle for Cruise that can serve a wide variety of uses and be manufactured in high volumes. The partners also plan to explore opportunities for global commercial deployment of the Cruise network.

The investment increases Cruise’s valuation to $14.6 billion. Earlier this year, Japan’s SoftBank Vision Fund spent $2.3 billion to acquire nearly 20% of GM Cruise Holdings, which oversees Cruise and GM’s Strobe Inc. lidar unit.

GM previously said it plans to begin testing autonomous vehicles this year in New York City and launch public ride-hailing services with self-driving vehicles in 2019. Cruise says it has been “quietly prototyping” a new autonomous vehicle system for the past two years.

GM and Honda, which have been collaborating on fuel cell development since 2013, expanded the partnership to electric vehicle technology this year. In June, the companies agreed to further develop GM’s next-generation EV battery technology, which GM would use to supply to Honda with modules.