General Motors Spends $1 Billion on Startup

General Motors recently announced its acquisition of an extremely small startup (composed of around 40 people) called Cruise Automation. It has stated that it’s interested in Cruise’s talent, but there may be more to it than GM’s explanation.

San Francisco start-up Cruise Technologies seemed like exactly the type of innovative group that any major automotive manufacturer might find valuable. GM in particular had been making investments and acquiring start-ups for years in an effort to find and incorporate new technical talent and new technologies that might bring the older company into the innovative wave of the 21st century.

cruise technologyGM has actually shown a lot of development in the past few decades; the company that developed the Hummer also created the Chevy Volt and Bolt series, and its 2016 Bolt is on track to hit the market later this year, beating Tesla to create an affordable electric car that costs somewhere around $30,000 and can travel over 200 miles on a single charge.

Reports have shown that GM actually paid something to the tune of $1 billion for the company. Although GM’s statement didn’t directly disclose the price of the acquisition, it hinted that its major motivation for the purchase was an attempt to bring Cruise’s engineering staff into the GM research and development team. That said, even in the Silicon Valley a price of $25 million per employee is a pretty insane rate.

So what is it that Cruise has that GM wants to desperately? According to a report in the Wall Street Journal, the deal started out as a strategic investment as opposed to a full acquisition.

This information comes from Nabeel Hyatt, a Spark Capital partner that led Cruise’s Series A funding round in 2015. Apparently after seeing Cruise’s latest technology, GM moved to acquire the company all out.

GM also recently made a $500 million investment in the ride-sharing firm Lyft, a major competitor of Uber. Now the two companies are cooperating in an effort to create a framework for future automated ride-sharing services that will use autonomous vehicles. This sort of relationship with cars is said to be the future of consumers and transportation.

2015 Chevrolet Bolt EV Concept all electric vehicle. Front ¾ in city scape. Bolt EV Concept builds upon Chevy’s experience gained from both the Volt and Spark EV to make an affordable, long-range all-electric vehicle to market. The Bolt EV is designed to meet the daily driving needs of Chevrolet customers around the globe with more than 200 miles of range and a price tag around $30,000.

Some analysts believe that GM’s acquisition may imply that Cruise had a crucial piece of the puzzle in terms of solving the many problems that occur when people attempt to create self-driving cars. Cruise’s product is called the “RP-1” system and can apparently be retrofitted to certain Audi models in order to make them capable of limited autonomous driving capabilities. The technology is seen as roughly comparable to Tesla’s “Autopilot” system, allowing for hands-free driving on highways despite the total lack of legislation concerning the topic.

GM has been researching self-driving technology for years and is expected to release a limited version of a similar system, called Super Cruise, later this year as a feature on the Cadillac CT6 luxury sedan.

Unfortunately, GM recently stated this January that the system’s introduction might actually debut in 2017. It claimed it wanted to add additional functionality and work out some potential imperfections and bugs in the system it had currently.

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