Car stuff (public number: chedongxi)
Author | The Way
Edited | Mumi
According to foreign media reports, General Motors is acquiring a stake in Cruise, a GM-owned self-driving company, held by SoftBank for $2.1 billion (about 13.4 billion yuan).
If the deal is completed, it means that one of Cruise's most important investors, SoftBank, will exit completely, and GM's stake in Cruise will expand to 80%.
According to people familiar with the matter, SoftBank invested a total of about $1.2 billion (about 7.6 billion yuan) in Cruise, which is equivalent to making $900 million (about 5.7 billion yuan). SoftBank's exit comes as GM will continue to invest $1.35 billion (about 8.6 billion yuan) in Cruise's commercial automotive deployment.
Foreign media analysis believes that SoftBank's withdrawal from Cruise may be related to its own capital chain problems. Over the past few years, SoftBank has experienced several big investment failures such as WeWork, resulting in a shortage of funds, and it is clear that SoftBank is going back and forth by selling some equity.
Whether it is in terms of company valuation, team size, test fleet size or technical level, GM Cruise is the second largest self-driving company in the United States, after Google Waymo.
For the American self-driving "second oldest", it is now at an important crossroads.
Last December, cruise CEO Dan Ammann left the company due to disagreements with GM's development ideas, and his role was taken over by Cruise founder and CTO Kyle Vogt, which is equivalent to GM's increased control over Cruise.
▲Kyle Vogt
Now after SoftBank sells its stake, GM's shareholding will be as high as 80%, and it can even be said that Cruise has become a "self-driving" division of GM, and its development will be completely around GM.
With the support of such a big guy as GM, Cruise will obviously gain a lot of advantages in terms of funds and orders for mass production autonomous driving. At a time when L4 unmanned driving is still far away, Cruise's move is likely to find a new and stable development path for itself.
It is to provide car companies with various L2 collection data to ensure that they survive, and then slowly develop L4. This is also a new way of playing that includes Tesla and many Chinese self-driving companies.
1. GM buys back Cruise shares and employees can also sell
The SoftBank Vision Fund acquired a minority stake in Cruise for the first time in 2018 through a $2.25 billion (about 14.3 billion yuan) transaction. The money will be transferred to Cruise in two installments, with the first $900 million (about 5.7 billion yuan) already in the account, and the remaining $1.35 billion (about 8.6 billion yuan) planned to be paid later, but in the end, the investment seems to be over, and SoftBank is already about to exit.
GM said it would continue to invest $1.35 billion (about 8.6 billion yuan) in Cruise after recovering its stake in SoftBank and compensating it for a second round of invested funds.
Cruise has seen a series of recent changes. Cruise CEO Dan Ammann abruptly left the company last December. Due to strategic disagreements over when to go public, GM CEO and chairman Mary Barra reportedly fired Dan Ammann from Cruise. General Motors, for its part, said it will go public soon.
Ammann is replaced by Cruise founder and CTO Kyle Vogt, who recently tweeted that an IPO would be the biggest disruption at the moment as Cruise expands its newly launched driverless ride-hailing service in San Francisco.
GM and Cruise also recently announced the launch of an "employee share buyback program," which means Cruise employees can sell their stake to GM. Kyle Vogt said employees can sell any number of shares at a third-party price, or continue to hold them and wait for the appreciation. The plan is clearly to retain Cruise's employees, as employees want the company to get a return when it goes public, which is what Wall Street investors hope for Cruise.
▲General Motors Building
Second, SoftBank or withdraw due to financial problems In recent years, many investment failures have been made
Recently, the head of General Motors said that SoftBank's exit is not related to the employee share repurchase plan, and the head of SoftBank declined to comment on it.
It is understood that since SoftBank's initial investment in Cruise, the capital chain has encountered some problems, and some progress in the project has also made the optimism of its investors gradually disappear, including General Motors and Cruise missed the opportunity to deploy self-driving cars for the first time in San Francisco in 2019.
In addition, the sharp decline in technology stocks since the end of 2021 has caused Great financial problems for SoftBank. You know, for the past five years, SoftBank has been one of the largest investors in pre-IPO companies around the world. After SoftBank sells its stake to General Motors, it can alleviate the financial problem and get the opportunity to invest elsewhere.
In addition, in 2019, SoftBank's investment department also suffered significant financial losses. At the time, WeWork, the office-sharing company backed by SoftBank, had to cancel its IPO and massively scale down its business to prevent it from going out of business.
In order to save WeWork, SoftBank acquired most of its equity, which cost SoftBank billions of dollars, but weWork's subsequent development is not optimistic, the market is not optimistic about it, it can be said that this is one of SoftBank's failed investments.
While SoftBank has struggled with its investments during the pandemic, softbank's position hasn't been particularly tough thanks to its large holdings in DoorDash, OpenDoor and other companies. However, this year, SoftBank's preference for high-growth technology stocks has declined rapidly, which has once again caused trouble for SoftBank.
The two companies in which SoftBank is the largest shareholder, South Korean e-commerce site Coupang and Chinese ride-hailing software Didi, both fell sharply. With the indefinite closure of the IPO market, SoftBank's access to liquidity is limited.
▲SoftBank CEO Masayoshi Son
Conclusion: Universal is more tightly bound to Cruise
At a time when SoftBank is pulling out, Cruise is awaiting regulatory clearance to allow it to charge riders for a driverless ride-hailing service launched in San Francisco. Previously, Cruise's application to U.S. regulators to allow self-driving cars to no longer be equipped with steering wheels and other requirements have also been approved, and this type of self-driving car will soon be launched, and the future development is very good.
GM's acquisition of SoftBank's Cruise equity may indicate that it is confident in the future development of autonomous driving and is no longer willing to let Cruise develop independently. Its further acquisition of Cruise's stake from employees is also sending a positive signal to the market that Cruise will soon go public.
At this juncture, SoftBank sells its equity at a low price and withdraws from cruise, which is a good development, and should also have its own comprehensive considerations. The impact of the epidemic and the downturn in technology stocks may take Sun Zhengyi a long time to recover, after all, not every company is Ali.