GM’s Cruise Automation Division Could Become A Cash Cow

General Motors is looking for the best way to make its Cruise Automation division a very profitable business.

Bloomberg reports that GM is researching a potential public offering, spinning off Cruise Automation into a new company or listing a separate tracking stock reflective of its value. This research is reportedly in its very early stages and a final decision may not come for a couple of years.

Beyond its work developing self-driving technologies for GM, Cruise Automation intends on launching a ride-hailing service next year.

Founded by Kyle Vogt, Cruise is challenging Waymo for autonomous supremacy.

In 2016, GM acquired Cruise for $581 million in cash when it was just a 50-person firm. Last month, SoftBank Vision Fund said it would invest $2.25 billion in Cruise Automation at an $11.5 billion valuation. This investment will see $900 million funneled into the company this year, while a further $1.35 billion will be invested when its autonomous vehicles are set for business use. In return for its investment, the fund will own 19.6 per cent of the stock.

Cruise Automation has been aggressively testing its self-driving prototypes throughout the United States, particularly in San Francisco, and has even tested its cars without a safety driver behind the wheel.

Last year, the company shot down claims from Tesla chief executive Elon Musk that the electric automaker could achieve Level 5 autonomy with only cameras and radars. Cruise Automation is developing LiDAR to fulfill its self-driving goals and, to that end, purchased LiDAR specialists Strobe last October.