General Motor’s Cruise Automation is one of the folks building self-driving cars that have raised a lot of money despite still struggling to scale a commercial product. The San Francisco-based autonomous vehicle unit largely owned by General Motors on Tuesday announced it has raised $1.15 billion, pushing the division’s valuation to $19 billion. That’s roughly 30 percent of GM’s total valuation, despite not having a single product in the market.
The new fund comes from the global asset management firm T. Rowe Price Associate – a completely new investor, and some of the existing partners: Honda, GM, and the Softbank Vision Fund, which invested $.2.2 billion into experimental-stage autonomous vehicle unit last year. According to Cruise, it raised a total of $7.25 billion as of last year, which makes the company one of the top autonomous vehicle fund-raisers.
Cruise plans to hire 1,000 engineers this year
Cruise wants to use part of the fund to increase its workforce. The company is concluding plans to hire 200 engineers in Seattle and currently has a total of 1,200 employees. Cruise Automation recently hired a new human resources chief in San Francisco and signed a lease on moves for a new office to accommodate the growth. The company plans to hire 1,000 engineers by the end of the year and also launch a self-driving service in 2019.
“Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation,” Cruise Automation CEO Dan Ammann said in a statement that acknowledged how expensive it is to build self-driving technology. “Having deep resources to draw on as we pursue our mission is a critical competitive advantage.”
Cruise is not the only AV fund-raiser with very large investments
A number of self-driving technology developers have announced raising good investments within the past six months. Ford’s owned autonomous-vehicle startup Argo AI is at a $4 billion valuation after raising $1.7 billion from Volkswagen. Japanese conglomerates Softbank and Honda poured $1 billion into Uber’s self-driving, to push the company’s Advanced Technology Group to $7.3 billion in valuation. Softbank also placed a bet of $940 million on the robot delivery startup Nuro, now valued at $2.7 billion. American electric car manufacturer Tesla recently announced it would raise $2.7 billion to support plans of producing fully functioning self-driving software by 2020.
Google spinoff Waymo is expected to lead another big raise, probably soon. The company plans to seek outside financing to match the company’s hefty spending. Waymo spends roughly $1billion yearly developing autonomous vehicles.
Building autonomous vehicle tech is a pricey business
Developers spend a lot of money on software, processors, cloud computing, sensors – which allow the vehicles to “see,” and high-definition maps that are regularly updated. Self-driving technology manufacturers not only shell out funds to pay highly-skilled engineers but must also pay the operators reasonable. Developing a new machine learning technology that human life will depend on will never be approved without substantial testing.
While developing this ambitious technology might take longer than initially promised, folks developing it would continue to receive checks from optimistic investors, at least for the next few years.