General Motors Co (GM) is having early discussions internally and with banks about strategic options for its self-driving car unit Cruise Automation, people familiar with the matter said.
The largest US automaker is researching possibilities including a public offering of shares, listing a separate tracking stock to reflect its value, or spinning off the unit, said the people, who asked not to be identified because the discussions are private.
GM would not make a decision until Cruise is further along in development and might not take any action for a couple of years, if at all, they said.
Photo: Reuters
The company, whose autonomous vehicle prototypes are still in the testing phase, wants to demonstrate commercial viability and build out a business before moving forward with any plans, two of the people said.
GM declined to comment.
GM chief executive Mary Barra sees Cruise, which develops self-driving cars in San Francisco, as a huge strategic asset and a potential source of profits.
Last month, Softbank Vision Fund announced plans to invest US$2.25 billion in Cruise at an US$11.5 billion valuation.
The Softbank fund is putting an initial US$900 million into Cruise this year, followed by US$1.35 billion once its autonomous vehicles are ready for business use. The fund is to own 19.6 percent of Cruise once the entire investment is completed.
If the unit does not have an initial public offering, spinoff, sale or dissolution within seven years of closing the Softbank investment, the fund may convert its stake into GM common stock, a regulatory filing said.
“Softbank’s investment is a huge mile marker for them in this process,” Bank of America Merrill Lynch auto analyst John Murphy said in a speech in Detroit on Thursday.
“GM is way out in the lead” on autonomous vehicles, he said.
GM in 2016 acquired Cruise for US$581 million in cash. The value of the deal was nearly US$1 billion including incentives for key talent, including Cruise CEO Kyle Vogt.
The purchase was a coup for company, which is racing Alphabet Inc’s Waymo and others to develop self-driving vehicle technology that has the potential to transform transportation.
Cruise has been testing autonomous Chevrolet Bolt prototypes in San Francisco and Phoenix, and outside Detroit.
Of the options that GM is considering, it is unlikely to spin off Cruise, because that would risk ceding control and leaving the more than century-old automaker with less of a tech story to tell.
An offering of less than 20 percent of Cruise’s equity would enable the automaker to maintain control while potentially making it easier for the unit to hire talent or make acquisitions.
The Softbank deal ensured that Cruise will have the funding it needs for the next several years. GM’s future moves with the unit will depend on how quickly the public embraces the technology and its use for the ride-hailing business.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to