SELF DRIVING CARS. Honda and GM Team Up – By Todd Horwitz, Bubba Trading

 

General Motors is partnering with Honda to speed up the deployment of self-driving cars to major cities in 2019. Honda will contribute about $2 billion over 12 years to the partnership and will finance a $750 million equity investment in Cruise, GM’s self-driving car company.

GM had already promised self-driving car pilots in a ride-sharing capacity in certain U.S. cities by late 2019. The new alliance adds a fresh layer of credibility to that goal, tightening the alliance between the U.S. and Japanese automakers, which were already collaborating to develop electric car batteries and hydrogen fuel cells.

Honda will now work with Cruise and GM to fund and develop a “purpose-built” self-driving car for Cruise that can serve a “wide variety of use cases and be manufactured at high volume for global deployment,” GM said Wednesday in a statement. Honda’s investment boosts the value of Cruise to $14.6 billion – about a third of GM’s $48 billion market cap. GM acquired the San Francisco-based startup in March 2016 for a reported $1 billion.

By comparison, analysts have pegged the value of Waymo as high as $175 billion. Honda has had discussions for two years with Waymo about possible collaboration, but no deal has been announced. In a media briefing on Wednesday, GM President Dan Ammann said 2019 “remains the goal” for GM Cruise to launch a self-driving ride services fleet. He added: “The longstanding relationship we have with Honda will allow us to move very quickly in ramping up our efforts.”

In January, GM filed a petition seeking U.S. government approval for a fully self-driving car – one without a steering wheel, brake pedal or accelerator pedal – to enter the automaker’s first commercial ride-sharing fleet in 2019.

Todd “Bubba” Horwitz

IN ASSOCIATION WITH

Financial Markets and Political Commentary

 

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Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.