Honda Motor Co. is making a $2.75 billion wager on autonomous vehicles by buying a stake in rival General Motors' self-driving vehicle unit this week.
Honda is taking a 5.7 percent stake in Cruise, which is developing autonomous cars for ride service fleets worldwide. The Japanese car manufacturer is paying $750 million for an equity stake in Cruise and will contribute an additional $2 billion in development work and fees over the next 12 years, Honda and GM said in a press release.
Cruise CEO and co-founder Kyle Vogt told Reuters that the vehicle they are developing would autonomous rather a traditional car. Vogt said the first version of the vehicle should be out in 2019.
It may seem strange to have rival car manufacturers partner on projects. Analysts say because of high development costs and any profits from autonomous vehicles are years away, car manufacturers are partnering to share costs and reduce risk.
Cruise, a startup which GM acquired for $1 billion in 2016, is considered one of the leaders in self-driving technology along with Alphabet-backed Waymo. Honda has been in talks for a collaboration with Waymo but no deals have been announced, Reuters said.
In its deal with Cruise, Honda will contribute its engineering knowledge to help build a global ride services business. Both Honda and GM have worked together on technology-focused products including fuel cells. Earlier this year Honda signed a deal to buy battery packs from General Motors for use in its own battery-electric vehicles.
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