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(Bloomberg) -- Honda Motor Co. spent roughly two years checking out the technology belonging to the hottest name in autonomous vehicles: Google’s Waymo. But on Wednesday it surprised the industry and went another route, investing $2.75 billion with General Motors Co.’s self-driving unit.
Honda’s decision was a big victory for GM, and a potentially revealing development for those trying to discern who’s in the pole position in the self-driving car race. GM’s Cruise unit and Waymo have been locked in close competition: The two have been doing ample road testing and have set similar goals for deploying self-driving cars into robotaxi fleets.
Now, both are squaring off in a battle for leadership, having made splashes with two big-name partners. GM won backing from SoftBank Vision Fund a few months before securing Honda’s investment, while Waymo has teamed up with Tata Motors Ltd.’s Jaguar and expanded its alliance with Fiat Chrysler Automobiles NV this year.
“It’s a big vote of confidence in General Motors and Cruise and their technology,” said Mike Ramsey, auto analyst for researcher Gartner Inc. “Every major car company is working on this technology. This really seems to separate GM and Google from the pack.”
Honda wouldn’t talk about what happened to negotiations with Waymo. The Alphabet Inc. unit said it’s still discussing opportunities to work with the Japanese automaker and others.
Honda will make a $750 million equity investment in GM Cruise LLC, plus spend $2 billion over 12 years on jointly developing and deploying autonomous vehicles, the companies said Wednesday in a joint statement.
GM shares jumped as much as 5.3 percent, the biggest intraday advance since it announced SoftBank’s backing. Honda rose as much as 1.9 percent in Tokyo, and was up 1.3 percent as of 9:14 a.m. Honda will get a 5.7 percent stake in Cruise in an investment valuing Cruise at $14.6 billion. That’s up from $11.5 billion when SoftBank made its initial wager.
Honda’s investment marks a sudden turnabout. In April, Waymo Chief Executive Officer John Krafcik said he was nearing a deal with the Tokyo-based carmaker. He told Bloomberg News that the partnership would focus on the delivery and logistics market, rather than human passengers. The vehicle he described at the time was futuristic, too: smaller than a truck and potentially coming without a steering wheel or brake pedal.
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Exactly how that potential deal has unraveled isn’t clear. But Waymo’s lineage may not have helped matters. Even though it’s no longer part of Google, Waymo is still owned by Google parent Alphabet -- and the concern is that it has retained some of Google’s tendency to act as a competitor even to its own partners.