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Autonomous Vehicles

Published on March 15th, 2016 | by Steve Hanley


GM Will Pay $1 Billion For Cruise Automation, An Autonomous Driving Startup

March 15th, 2016 by  

Originally published on Gas2.

Cruise Automation is a San Francisco based startup with 10 employees. Today, all 10 have an extra spring in their step, especially founder Kyle Vogt, who dropped out of MIT in 2013 to sell an aftermarket system of sensors and software that allows late model Audi A4’s to drive themselves on the highway. According to Automotive News, the $10,000 system uses roof mounted radar and other sensors to control actuators for the car’s steering, brakes, and throttle.

Cruise-AutomationThis week, General Motors decided to buy the company outright. While GM will not confirm details of the transaction, reliable press reports suggest the purchase price is $1 billion. The deal is supposed to close in the second quarter of this year. In a statement, GM said it is buying Cruise automation for its “deep software talent and rapid development capability to further accelerate” GM’s development of autonomous vehicles.

GM is certainly not hanging around waiting for Elon Musk and his merry band to lead the way into the autonomous driving future. Just a few weeks ago, it announced it would invest a half billion dollars into ride sharing service Lyft.

GM initially planned an investment in the company but moved within five weeks to buy Cruise outright, said venture partner Nabeel Hyatt of Spark Capital, an investor in Cruise. “They moved faster than most Silicon Valley companies would move,” he said. Vogt impressed Silicon Valley venture capital fund Signia Venture Partners by demonstrating an Audi A4 that could be controlled by a game console, said Signia principal Sunny Dhillon.

Vogt told Reuters recently that his company is working on a system that will allow production cars to operate in fully autonomous mode. GM says Cruise Automation will remain based in San Francisco and operate independently within GM’s Autonomous Vehicle Development Team, created earlier this year and led by longtime engineering executive Doug Parks.

GM global product development chief Mark Reuss tells the press that GM will invest “significantly” in the Cruise team and its technology. “Cruise provides our company with a unique technology advantage that is unmatched in our industry,” he said. Newly minted billionaire Vogt says, “GM’s commitment to autonomous vehicles is inspiring, deliberate and completely in line with our vision to make transportation safer and more accessible.”

Is this a good deal for GM or just a boondoggle like the one that saw The General invest in Segway a few years ago? Is whatever Cruise Automation has worth a billion dollars? Doesn’t GM have some pretty sharp engineers on its payroll already?  After all, the Volt and the Bolt didn’t just spring full grown from the brow of Bob Lutz. Tell us what you think about this acquisition in the comments section.

Reprinted with permission.

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About the Author

Steve writes about the interface between technology and sustainability from his home in Rhode Island. You can follow him on Google + and on Twitter.

  • Robert Pollock

    GM continues to pull ultra expensive blunders, then ‘we the people’ write them billion dollar checks. Maybe if we stop writing the checks they’ll save the Titanic.
    Musk is a software writer first, a car builder and rocket scientist 2nd. He’s about to do to automated driving software what Bill Gates and Microsoft did to PCs. He’s going to establish a platform, that everyone will share for free at first, no patents. Hee hee, it’s all so obvious. Meanwhile, back at the ICE ranch, GM (IBM and Bill Gates story) knows there is something important about software and cars so they invest $1 Billion right away. But the software they buy is designed to run ICE cars. When Bill zinged IBM is was because IBM thought the “money was in the hardware”. This is 25 years later so it’s all software but the ICE system has to run all sorts of mechanical bits and pieces, whereas the Tesla stuff is all digital. Night and day.

    • Bob_Wallace

      GM had no role in the financial meltdown that required their bailout.

      GM had been improving the quality of its cars, introducing more efficient models and had started selling the Volt.

      Lack of adequate regulation for large financial institutions and the Bush administration not paying attention to what was happening caused GM’s problem.

      If you’ve paid any attention to the software world a billion dollars is a pretty common price to pay for someone’s programs that work. The EV/ICEV stuff is not important. What GM is buying is the ability for cars to drive themselves. GM, and other car companies, already have the software that controls the ICE.

  • Freddy D

    Yeah, bring on those golden handcuffs. I can’t get over this sum. This intellectual property better be very good! Maybe it is.

    It’s not nearly as ridiculous as constellation beverage paying a billion for Ballast Point brewing, who makes great beer but barriers to entry for a great IPA are very low. At least Cruise Automation could theroretically have great IP.

    10 people. Damn. Dr Evil, with little finger in mouth….

  • Don’t know much about the Cruise Automation technology but $1billion sure sounds like a hefty sum.

    • Matt

      I’m guessing there are some golden handcuffs in that deal for the 10 employees.

      • Robert Pollock

        Those poor sob’s will have to pay 28% of $100,000,000 first thing to the IRS. They should buy a Tesla and get the $7500 federal tax credit.

        • Bob_Wallace

          Marginal tax rates should be higher.

          It should be harder to earn the second million than the first million and harder to earn the third than the second. We’ve got things turned around the wrong way.

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