General Motors Company (NYSE: GM) announced Friday it is buying Cruise Automation, a Silicon Valley startup, which could help the company speed their development of autonomous technology for self-driving cars.
Cruise Automation, founded in 2013, is one of a handful of companies with a permit from the California Department of Motor Vehicles to pilot run autonomous vehicles on the road. The company is testing their technology around San Francisco and has raised about $20 million in venture capital.
GM intends to use Cruise’s technology and employee to accelerate its effort to develop self-driving vehicles as soon as possible. “We will be committing considerable resources to recruit and grow the capability of the team,” GM President Dan Ammann said in an interview.
GM’s efforts follow a broader industry push to prepare for shifts in consumer behavior. As vehicles become more automated and younger consumers delay getting licenses or move to urban centers, auto companies expect car sharing, ride-hailing services and the demand of autonomous cars increased sharply.
Moreover, Ford Motor Company (NYSE: F) said on Friday it would build a new unit focused on autonomous vehicles development and other mobility solutions, such as on-demand rides and car-sharing.
A flurry of investments by traditional auto companies reflects a fear among industry executives that the century-old business of building and selling cars that people drive themselves is at risk, even though global vehicle demand is strong.
Back to early January, GM said it would invest $500 million in ride-hailing company Lyft Inc. and followed that by forming a new car-sharing operation called Maven. The company has also established a separate unit for self-driving vehicle development.
GM’s acquisition plan discloses two days after Toyota Motor Corp (ADR) (NYSE: TM) announced hiring the entire staff of Cambridge, Mass.-based Jaybridge Robotics Inc., which providing technology for autonomous tractors and mining device. The so-called “acqui-hire” has become an expedient way for auto companies to gain hard-to-get talent.