For an industry that has yet to scale a commercial product, the folks building self-driving cars sure have raised a lot of money. The latest eye-popping investment comes via Cruise, the San Francisco-based autonomous vehicle unit that is mostly owned by General Motors. The company announced Tuesday that it had raised $1.15 billion, at a valuation of $19 billion—roughly one-third of the valuation of GM, despite not having sold a single car. The infusion comes from one new investor, the global asset management firm T. Rowe Price Associates, Inc., plus existing partners GM, Honda, and the Softbank Vision Fund, which poured $2.25 billion into the self-driving unit a year ago. Cruise says it has raised $7.25 billion in the past year, which places it in the top tier of AV fundraisers.
Aarian Marshall covers autonomous vehicles, transportation policy, and urban planning for WIRED.
Cruise will use the money to, in part, pick up more people. The company’s headcount sits at 1,200, with 200 engineers working out of a new Seattle office. It plans to hire 1,000 engineers by the end of the year. In San Francisco, Cruise just hired a new human resources chief and signed a lease on new office digs to accommodate the growth. The company has previously said that it plans to launch a self-driving service this year.
In a statement, Cruise CEO Dan Ammann acknowledged that the race to build self-driving tech is expensive. “Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation,” he said. “Having deep resources to draw on as we pursue our mission is a critical competitive advantage.”
Other companies seem to think the tech is worth the expense, too. In just the past six months, a number of self-driving tech developers have announced very large investments. Argo AI, the autonomous vehicle startup in which Ford has a majority stake, raised $1.7 billion from Volkswagen, at a $4 billion valuation. Uber’s self-driving unit raised $1 billion from a Japanse consortium that includes Softbank and Honda, valuing the company’s Advanced Technology Group at $7.3 billion. Softbank also pumped $940 million into the robotic delivery startup Nuro, at a $2.7 billion valuation. The startup Aurora announced a $530 million raise at a $2 billion valuation, with an alley-oop from self-driving investing newcomer Amazon. Electric carmaker Tesla, whose CEO, Elon Musk, has promised to produce fully functioning self-driving software by 2020, announced it would raise $2.7 billion just last week.
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Another big raise is probably coming. In March, The Information reported that Google spinoff Waymo, the putative leader in self-driving, intends to seek outside financing—and that Waymo is currently spending about $1 billion a year to develop autonomous vehicles.
The larger implication is that building autonomous vehicle tech costs a pretty penny. Most developers currently spend on pricey sensors, which help self-driving vehicles “see,” and on processors, software, cloud computing, and high definition maps, which need to be constantly updated—all worth tens of thousands per vehicle. They not only must pay highly skilled (and highly bonused) engineers to make advancements in machine learning, but also shell out for all of the operators who currently monitor self-driving technology as it tests in all sorts of conditions, at all times of day.
What’s more, developing this ambitious technology might take a few more years than prognosticators once promised—which means someone will have to keep writing checks for some time. “To the richest go the spoils” is not always a surefire maxim. But in the spendy world of autonomous vehicle development, money certainly can’t hurt.