Two from Business Insider. First up, the headline story:
Jul. 10, 2018, 09:42 AM
And their follow-up:
- General Motors' self-driving unit, Cruise, could be worth $43 billion, RBC Capital Markets estimates.
- The autonomous arm received a valuation of $11.5 billion from Japan's SoftBank in May.
- GM is reportedly eyeing a spin-off or tracking stock for Cruise, Bloomberg reported last month.
- Follow GM's stock price in real-time here.
Cruise, the self-driving car company bought by General Motors in 2016, could be worth a whopping $43 billion, RBC Capital Markets estimates.
That new valuation is nearly four times the figure eyed by Japan’s SoftBank when it invested $2.25 billion in the autonomous driving unit in May. Since then, Bloomberg reported that GM was eyeing a possible spin-off or tracking stock for Cruise.
"We doubt SoftBank would have invested if they didn’t see a much larger opportunity," Joseph Spak, RBC’s autos analyst, said in a note to clients Tuesday.
"For now, it appears GM’s plans are to run its own transportation network company (TNC). If they can get the technology right and execute on this plan, then when we run this scenario, we see them having a fleet of ~800,000 vehicles by 2030 driving ~58 billion miles that year. At $0.55/mile and 29% EBIT margins, we see ~$17 billion of EBITDA. In our DCF (11x exit multiple) this values Cruise at $43 billion."...MORE
GM's $2 billion deal with a Japanese tech giant may give the automaker a big advantage in the race to develop self-driving cars
- GM's $2.25-billion SoftBank investment in the Cruise division has given the company equity value that it can use to attract new talent.
- Cruise has grown dramatically since GM bought it in 2016. What started as a 40-employee startup now has 800 people working it.
- GM President Dan Ammann said that another leg of significant growth is on the way as Cruise heads into commercialization in 2019.
In May, General Motors announced that the Vision Fund of Japan's SoftBank would invest $2.25 billion the carmaker's Cruise self-driving division.
GM kicked in an additional $1.1 billion, bringing the total funding to $3.35 billion and giving Cruise a stand-alone value of $11.5 billion. GM acquired Cruise in 2016 for about $600 million, with follow-on growth expenditure bringing the total deal up to $1 billion.
In an interview with Business Insider, GM President Dan Ammann explained why the carmaker pursued the SoftBank investment.
"We'd been talking to them for a pretty extended period of time," Ammann said. "They'd done a lot of work on the autonomous-vehicle space and a lot of work on us. So there's a very robust foundation to this alignment."
"This wasn't a show-up and 'Here's some money' kind of thing," he said. ...MORE
