MSFT / GM
Microsoft Bets Bigger on Driverless-Car Space With Investment in GM's Cruise
Microsoft Corp. (MSFT) is investing in General Motors Co.'s(GM) driverless-car startup Cruise as part of a strategic tie-up, another sign of renewed interest in the autonomous-technology space after a relatively quiet period.
Microsoft (MSFT) is among a group of companies that will invest more than $2 billion in San Francisco-based Cruise, which has been majority owned by GM since early 2016. The financing brings Cruise's valuation to $30 billion, Cruise said Tuesday, up from an estimated $19 billion in spring 2019.
GM is adding to its Cruise investment as part of the funding round and will retain a majority stake, a Cruise spokesman said. The investment also includes current stakeholder Honda Motor Co. and other institutional investors that Cruise declined to name.
Under terms of Tuesday's deal, Cruise will use Microsoft's(MSFT) Azure cloud-computing service to help it roll out autonomous-vehicle services. Cruise for years has been testing driverless cars in San Francisco and plans an eventual robot-taxi service. It is also is exploring commercial delivery.
Driverless cars are expected to throw off troves of data for autonomous-service operators to capture, store and eventually monetize, analysts say. Even on today's cars, auto makers and tech companies are mobilizing to harness data from the growing number of vehicles with internet connections.
In a statement, Cruise Chief Executive Dan Ammann said Microsoft's(MSFT) involvement will help Cruise commercialize its technology. Microsoft(MSFT) Chief Executive Satya Nadella said the tech giant wants to help autonomous cars go mainstream.
GM also said Microsoft(MSFT) would be its preferred cloud provider and help it streamline supply chains and roll out new digital services to customers.
The investment is Cruise's first significant infusion in more than 18 months. The company pulled in about $7 billion in 2018 and 2019 from big investors including Japan's SoftBank Group and Honda.
Cruise missed its target of introducing an autonomous ride-hailing service to paying customers by the end of 2019 and hasn't set a new timetable. It has signaled recently that it is getting closer to commercializing its technology, though, including the hiring this month of Delta Air Lines Inc.'s former operations chief to oversee aspects like customer service and fleet management.
There are signs that investor appetite for autonomous-driving companies has grown following a lull amid challenges in transforming the technology into viable business plans.
Startup Aurora Innovation Inc. had a valuation of around $10 billion following its recent acquisition of Uber Technologies Inc.'s autonomous unit, up from about $2.5 billion in 2019. The market value of Luminar Technologies Inc., which makes laser-based sensing technology for self-driving cars, has rocketed to around $10 billion following its initial public offering last month.
Waymo LLC, the autonomous-vehicle division of Google parent Alphabet Inc., raised at least $3 billion last year and recently began providing rides to the general public in the Phoenix area.
RBC Capital analyst Joseph Spak said in a recent research note that the pace of deals and technical milestones in the autonomous-vehicle sector are drawing investor interest after "a tough few years."
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