
Honda will use GM’s self-driving technology, invests in Cruise - BooneJS
https://arstechnica.com/cars/2018/10/honda-will-use-gms-self-driving-technology-invest-2-75-billion/
======
ProfessorLayton
What's interesting is that Honda is a company that has always prioritized
being in control of its own destiny. What made them interesting in the past is
that there are many examples where they'd engineer their own solution to a
problem, rather than license IP.

Quote from Mr. Honda:

"We [Honda] refuse to depend on anyone else. We will not copy foreign products
nor pay royalties for the use of other companies’ patents. We don’t intend to
get support from the government, either. I’m making it clear that we will do
it our way." [1]

Notable examples:

\- Hondamatic transmission [1]. For better or for worse, it was only until
recently that Honda started using transmissions from ZF like other automakers.
Arguably because automatic transmissions are on their way out, and they're
focusing on other drivetrains.

\- Honda's hybrid drive: They developed their own two-motor system rather than
license Toyota's (Rather brilliant) solution like other companies. Their first
system in the Insight (gen 1) not withstanding.

\- VTEC

It seems like there's going to be an inevitable commoditization of car
manufacturers in the future. Equally interesting is GM ceding some ownership
of potentially game-changing tech.

[1]
[https://world.honda.com/history/challenge/1968hondamatic/ind...](https://world.honda.com/history/challenge/1968hondamatic/index.html)

~~~
manmal
Commoditization of self-driving tech, yes; I don’t think car manufacturers
will become (more) redundant, but eventually everybody‘s autonomous driving
systems will either be hard to distinguish (like gasoline motor tech), or even
completely regulated by legislation. Can legislators really allow that cars
drive around with a system that is inferior to a competitor‘s? This will put
eg every pedestrian‘s live at risk.

I‘m pretty sure self-driving tech will not be a big differentiator, just like
airbags - almost every car has them, they are a given.

~~~
AnthonyMouse
> Can legislators really allow that cars drive around with a system that is
> inferior to a competitor‘s? This will put eg every pedestrian‘s live at
> risk.

They already do this with everything else. Vehicles like Mercedes and Tesla
are significantly safer than some competitors. Legislation sets the floor, not
the ceiling. Or at least it _shouldn 't_ create a ceiling.

And it's also the case that SUVs and other large vehicles pose a greater risk
to pedestrians and other motorists than smaller ones, but legislators haven't
done _anything_ about that.

~~~
xmzx
> They already do this with everything else. Vehicles like Mercedes and Tesla
> are significantly safer than some competitors. Legislation sets the floor,
> not the ceiling. Or at least it shouldn't create a ceiling.

I think the difference is those are, for the most part, internal safety
features for the car's driver and passengers, whereas self driving effects
mostly people not in that automobile. Sure, there are some features in cars
that aren't, but for the most part, a driver knows (should know) their
vehicle, and someone driving a 1978 station wagon and someone else driving a
2018 Volvo won't make that much of a difference on the roadways. Driving a car
with a bad autonomous mode vs. a car with a good autonomous mode could be a
significantly bigger difference for pedestrians and other drivers than older
and newer cars.

~~~
NeedMoreTea
2018 will be _much_ heavier, bigger, with poorer visibility thanks to huge
crash and rollover resistant A, B and C pillars. It will also have passed the
pedestrian impact tests and have enormously better brakes and handling. So
even though heavier it'll stop a lot quicker, and do less serious damage to a
pedestrian at town speeds.

That's quite apart from any safety features like air bags or ABS.

~~~
ams6110
The big A pillars make it harder to see pedestrians though. Wonder if net
injuries are actually reduced?

------
haaen
With a post money valuation of 14.6 billion dollar, Cruise surpasses Dropbox
as the third most valuable company that YC has invested in. The valuation of
Airbnb is 31 billion, Stripe 20 billion, Cruise 14.6 billion, Dropbox 11
billion.

YC doesn't hold shares in Cruise anymore, since the company as a whole was
sold to GM for 1 billion in 2016. After the acquisition, GM invested another
1.1 billion, Softbank Vision Fund invested 2.25 billion and now Honda invests
2.75 billion. So more than 7.1 billion dollar has been invested into Cruise.
It's the best capitalised YC company. Airbnb has raised 4.4 billion, debt
financing included.

~~~
mcintyre1994
That's a pretty insane multiple on the acquisition price in 2 years, is there
anything you can read into that or is it pretty meaningless because of all the
post-acquisition investment money being pumped in?

~~~
azernik
Almost exactly half of its value is represented by the money that's been
pumped in (7.1B was the sum GP arrived at). The rest...

------
shadowtree
I hope they roll out augmented driving.

I don't need full autonomy everywhere, but there are a few things that
definitely could be rolled out now.

Give me a virtual bumper. Never let me get closer than a meter to the car in
front of me. If it stops, stop my car too. Get moving again? Go.

Stay in the lane at low speeds. Combine with above, get a far more relaxed
experience in stop and go rush hour traffic.

Extend the virtual bumper to parking. Rather than video and beeping or full
autonomy, just stop the car from hitting anything, 5cm distance control.

Or does this exist? Haven't seen it in my Tesla test drive.

~~~
riffic
>Give me a virtual bumper. Never let me get closer than a meter to the car in
front of me. If it stops, stop my car too. Get moving again? Go.

This is Honda's Adaptive Cruise Control (ACC) with Low-Speed Follow

[http://owners.honda.com/vehicles/information/2018/CR-V/featu...](http://owners.honda.com/vehicles/information/2018/CR-V/features/Adaptive-
Cruise-Control)

~~~
MBCook
I have ACC, and it’s great. But adding the Low-Speed Follow makes it SO much
nicer. I’ve driven a Bonda like that.

Otherwise ACC is only useful on freeways that aren’t too crowded. Nice, but
not nearly as nice as being able to hassle traffic jams.

------
Fricken
Honda and Waymo have been 'in talks' for years, with the first formal
announcement of a vaguely defined partnership arriving in April earlier this
year. Supposedly they were going to build a purpose built delivery vehicle
together.

The odds that that deal has gone up in smoke I'm guessing are high.

[https://www.bloomberg.com/news/features/2018-04-02/waymo-
isn...](https://www.bloomberg.com/news/features/2018-04-02/waymo-isn-t-
slowing-down-pact-with-honda-could-include-delivery)

------
lukejduncan
I've noticed in SF at least Cruise seems to have removed branding from their
cars (or I believe they are their cars). I'm curious what that implies --
either about the sentiment of self driving cars or future branding
partnerships.

~~~
notatoad
perhaps it's just about collecting more accurate test data - if self driving
cars are obviously marked as such, the behaviour of other drivers around them
may change.

~~~
ghostwreck
The turret of sensors mounted on top still might be a bit of a giveaway.

~~~
dotBen
Well there's many companies doing AV testing with sensors on their marked +
unmarked cars. Not just Cruise.

------
tedsanders
Interesting. If GM were super optimistic about Cruise's technology based on
internal metrics, you'd think they'd invest their own money, or at least take
on debt financing at GM's cost of capital. That they are taking outside
investment from Softbank and now Honda suggests there is enough uncertainty
that they want to limit their downside.

A quick search suggests that GM is mostly debt financed, with a weighted
average cost of capital of only 5%.[1]

[1] [https://www.gurufocus.com/term/wacc/GM/WACC-/General-
Motors-...](https://www.gurufocus.com/term/wacc/GM/WACC-/General-Motors-Co)

~~~
Fricken
Bringing Robotaxis to market is very capital intensive. I don't know how much
money GM has to throw around, but I'm pretty sure it's a lot less than their
nearest competitor, Alphabet.

Waymo announced purchasing orders for 60,000 FCA Pacificas and 20,000 Jaguar
IPaces to be converted into robotaxis. If we're to assume a crude ballpark
estimate of $150K apiece for those vehicles, then we're talking a $12 billion
just for that. GM can't go up against those kinds of capital investments
without help.

Argo.ai, Ford's answer to GM Cruise, is also seeking partners/funding from
outside Ford. Wish them luck.

~~~
mikeyouse
> Waymo announced purchasing orders for 60,000 FCA Pacificas and 20,000 Jaguar
> IPaces to be converted into robotaxis. If we're to assume a crude ballpark
> estimate of $150K apiece for those vehicles, then we're talking a $12
> billion just for that.

You do know that GM _makes_ automobiles right? If GM wants 60,000 Chevy
Cruises to use for robotaxis, they can just keep their lines running for a few
extra shifts. Their cost for the same vehicles is COGS, which is something
like half the MSRP of an automobile. Doing so would actual increase the profit
margin on their products that are sold to outside customers. GM also has ~40%
more revenue than Alphabet and could easily borrow $12 billion if it were
strategically important.

Man people really don't understand the weight of traditional autos.

~~~
hef19898
Also, if you buy 20k cars from Jaguar (mind, 20k iPace is more than a month
worth of Tesla Model 3s) you will be paying a lot less than 150k per car.

~~~
Fricken
There's a lot of extra hardware that goes into a robotaxi. Waymo doesn't just
sprinkle pixie dust on them to make them drive themselves. The vehicles, their
sensors, compute, adn the 100 miles of wiring needed to hook it all up is just
hardware costs. There's all sorts of logistics and real estate that needs to
be acquired. Every new area needs to be mapped and tested. They run call
centres, and pay thousands of people just to do data annotation.

The plan for all these companies is to scale up to deployments of millions of
vehicles, they won't see ROI for a decade or more, and that's only if
everything works like it's supposed to, it's still technically and unproven
business model built on an unproven technology.

And sure GM can raise funds if they really want to, but they've gone from 0 to
$60b in debt in the last 6 years, with $20 accumulated just over the last
year. They have to deal with converting their fleet to electric over the next
decade. Very expensive. Lots of risk. GM needs to pick and choose which risks
are worth taking.

------
MBCook
Sounds good to me. I’ve heard VERY good things about Cruise. And I like their
approach much better than Tesla’s.

~~~
viraj_shah
How is their approach different from Tesla's?

~~~
CardenB
They use 3D sensors (lidar) and dense, 3D maps and scans of the operational
area. Also they plan to own the vehicles and operate in a designated service
area rather than sell a vehicle that works everywhere.

------
cjhanks
Can somebody explain why GM would want to provide competitive advantage to its
competitor for a fixed price?

Either GM has licensing fees in its future, or the project is proving to be
too capital intensive. Or could there be an effort towards a consortium?

Most of the major talent in the field is gainfully employed. I simply do not
fully understand the objective of all of this capital raising. I look forward
to better understanding the strategy in the rear view mirror.

~~~
wittyusername
I think one issue is that, like VR, one bad actor sours the consumer appetite
for the entire concept. I think a safer road for GM is to become the de facto
A+ supplier of tech that works well than for 2/3 of the legacy industry to
have janky half-working sorta-dangerous solutions in 2025.

------
twblalock
It's interesting that American automakers are ahead of the Japanese automakers
in the areas of self-driving and electric cars. Not really what I would have
expected if you had asked me 10 years ago.

~~~
qubax
Why? We lead the world in software by a long margin. It's one of the reasons
english is the lingua franca of software development. As for electric cars,
it's only the US and the chinese who are heavily invested in it. The japanese
have a presence in EVs but they are more heavily invested in hydrogen cars.

~~~
distances
European manufacturers are heavily investing in electric cars. You're perhaps
blinded by local news -- then again I'm surely too, as I don't know of US
companies other than Tesla that are doing something with electric.

~~~
twblalock
GM has the Bolt and Volt, and a Cadillac hybrid. Ford has the C-Max plug-in
and a few other hybrids, and is going to build a hybrid F-150 and Mustang in
the next few years. And for some reason Chrysler managed to beat Toyota and
Honda to market with the first hybrid minivan.

Given that the F-150 is the bestselling vehicle in the United States, Ford
might become one of the world's top sellers of hybrid cars when they release
it. And the hybrid Mustang is supposed to be one of the fastest Mustang
models.

~~~
thrower123
I'm skeptical that a hybrid F150 would be much of a success, outside of people
that probably don't need to have a full-size truck anyway.

It might be mildly interesting if any batteries were stashed in the rear - in
the winter I have to put about 1000 pounds of sandbags to make it safe to
drive on snow and ice.

~~~
sjwright
The hybrid F150 will sell well based on one feature alone: using the vehicle’s
engine and electric motors to function as a powerful worksite generator. Of
course most people won’t use it for that but it gives them the excuse to buy
it.

~~~
justtopost
That and fleet sales are huge for f150 iirc. A more efficient, even if more
boring to drive option exists, they will procure it en masse.

------
stephengillie
Automakers use each others parts all the time. Dodge used Mitsubishi engines
in the K cars and early minivans. Rolls Royce use Mercedes engines today.
Nissan used Toyota's hybrid transmission in early-2010s Altimas.

This is a good sign for Criuse being a competitor in the self-driving space,
and a sign of self-driving market health in general. Much better than Toyota
investing $500 billion in Uber for self driving.[∆]

[∆][https://news.ycombinator.com/item?id=17853248](https://news.ycombinator.com/item?id=17853248)

~~~
atvatar
Rolls Royce is owned by BMW, they definitely don't use Mercedes engines today

~~~
fredoralive
Perhaps they are thinking of Aston Martin, who have fairly recently entered
into an engine deal with Mercedes.

------
mmanfrin
Honestly this makes sense, and I hope the rest of the industry follows suit.
I'd rather all car companies be working towards one, strong implementation of
self-driving, than for every individual company to work on their own.

It would also mean liability could be diffused to the industry rather than
companies.

------
jameslk
So GM bought Cruise for $500MM in 2016 and Honda just invested in Cruise,
valuing Cruse at $14.6B. Therefore the value of GM should be an extra $14B,
and yet GM's stock has been flat since the purchase. What's going on here?

~~~
jedberg
It could be that the stock market doesn't agree with that private valuation.
Also, that valuation is a little odd because some of the investment doesn't
kick in until they launch a product, and in the case of Honda, some of it is
in machines and other non-monetary things.

Or it could be that as Cruise's value goes up, GMs goes down. Look at what was
Yahoo for an example -- for a while the stock was worth less than just the
value of their Alibaba shares, meaning the stock market attributed a
_negative_ value to what was left of Yahoo.

~~~
vonmoltke
> Look at what was Yahoo for an example -- for a while the stock was worth
> less than just the value of their Alibaba shares, meaning the stock market
> attributed a negative value to what was left of Yahoo.

That _is not_ what the situation meant.

Yahoo was trading at less than their book value per share. The vast majority
of their book value was the share of Alibaba the company owned. This asset was
not generating revenue for Yahoo, nor was it a liquid investment that Yahoo
could convert into cash whenever it wanted to. There may have also been other
conditions on sale of the stake that meant, in at last some circumstances, the
liquidation value of the stake was significantly less than the paper value on
the books.

Therefore, it gets discounted by the market. Since it comprised such a large
portion of Yahoo's book value, the size of the discount was greater than the
value of Yahoo's operations, leading to a price/book ratio less than 1.
Yahoo's other operations still had positive value.

------
mrnobody_67
How does any autonomous driving startup compete against that pile of cash?

~~~
leesec
Lol, cash does not equal innovation. Comma.ai has only raised 8~ million and
already has a product you can buy today on par ( or better ) with GM's
supercruise.

~~~
rootusrootus
Do you work for comma.ai? Because I can't imagine any other reason for the
absurdity of your cheerleading. On par with Super Cruise? Gimme a break.

~~~
leesec
Lol no just a big fan and someone who ported one of their cars. Just most of
the self driving car news lately seems scammy to me (by that I mean a lot of
hype and no product), and I wish more people knew about the actual state of
the industry.

Have you tried both systems? SuperCruise is really good at where it's able to
drive, maybe better than openpilot but not by much. Openpilot is also getting
really good and can be enabled anywhere, tho most of it's usage is still on
highways.

------
MH15
This is interesting... GM bought Cruise for what, $2 billion? And now Honda
buys a minuscule stake in Cruise company for the same price GM bought the
whole thing for.

~~~
devy
> And now Honda buys a minuscule stake in Cruise company for the same price GM
> bought the whole thing for.

No. The Honda investment is $750M. The rest of $2B commitment are for Honda to
implement/integrate with Cruise's hardware/software technologies - not really
payments to Cruise.

------
kristianp
I figure that by the time this self driving tech makes it to Honda's vehicles,
few people will be buying them, because Honda has failed to get on the EV
bandwagon. Honda and Mazda may be victims of the surge of EVs soon to come
from China, Europe and Tesla.

Other Asian carmakers such as Toyota and Hyundai are doing much better getting
onboard the EV/Hybrid train though.

~~~
justtopost
Honda is doing fine, and was early into the hybrid market. Whatever are you on
about?

The only missteps was their zev hydrogen tech which doesn't make engineering
sense (to me), and a black eye from bad v6 transmissions for way too long in
the 90s thru 00s, and a departure from small, low-displacement, high
efficiency, well handling cars with sla suspension for pigfat appliances with
cheap mcstrut suspension and more wings.

Lucky for them, the world is a bit pigfat and risk adverse themselves, and
still buy CRVs like crazy. While the 88-01 civic, and s2000 still somehow
support their reputation in enthusiast circles thanks to those now purely
nostalgic qualities.

But I digress. I think ICE cars will continue to serve a purpose. Mazda just
announced a new rotary ICE hybrid engine design this week! If self-driving
tech takes off, it will be applied just as easily to either tech. I see Honda
at no major positional disadvantage here.

~~~
mywittyname
MacPherson struts are fine. Even the most ardent enthusiast has difficulty
telling the difference between a MP setup and a double wishbone.

BMW uses them and Porsche uses them on their GT# 911s. You'd think if there
were a case to be made for the performance demerits of a MP setup, Porsche
wouldn't be using them on their halo cars (or their class-winning race cars).

------
yalogin
I thought GM bought Cruise. Is that not the case?

~~~
tedsanders
GM did buy Cruise. Then GM sold stakes to SoftBank and now Honda. Cruise is
structured as an independent entity with, as of now, three owners. GM remains
the majority owner.

~~~
devy
IMMO, this is a good strategy from GM. The more big autos to adopt / invest in
Cruise, the better.

~~~
threeseed
Especially since it’s on track to being a commodity technology.

------
syntaxing
What does these kind of investment mean for a company like Cruise? Does it
provide them with more financial liquidity or does this only fatten up GM's
numbers since Cruise was an investment after all? I've been stalking their NYC
career opportunities but nothing yet even after the Softbank investment :/

~~~
fma
I saw an interview with the GM president Dan Annman (sp?). $750mill in cash...
Who doesn't like cash?

$2 billion in other resources. Honda has a good European and Japanese market
to sell cars.

He said timetable for initial launch is same... 2019, all depends on safety.
But the investment is more for after that.

------
protomyth
Makes sense since Honda went in with GM on On-Star. I guess they view it as
needed, but better as a partnership with a company they have dealt with
before.

------
samfisher83
Why doesn't anyone do a deal with comma.ai? They actually have a product that
kind of works with just handful of people.

Edit: Why all the down votes. Go check out some of the videos. It works pretty
well. Its a level 2 system so the user still needs to pay attention to the
roads which is true with any lkas system out now days.

~~~
maym86
They have built a single, forward looking, camera system on an Android
platform and are using python for the control system. No serious auto
manufacturer would trust a system like that for vehicle safety.

It's a less reliable version of the lane keeping systems that the automotive
manufacturers already have and nothing close to the autonomous system that
George Hotz was promising would be easy a few years back.

I also doubt automotive manufacturers want to deal with the drama around
comma.ai and its publicity given they have a reputation to maintain as
serious, safety conscious, organizations.

~~~
samfisher83
For all current LKAS systems you need to pay attention to the road including
the Tesla. The LKAS most manufactures use aren't that good.

~~~
maym86
Comma.ai has the same constraints. No monocular camera system works without
careful user supervision. Even lidar based systems are not that reliable yet
that you could trust them to the point of not paying attention.

------
person_of_color
Anyone know whether it's too late to join Cruise?

------
alexnewman
The great boondoggle continues

------
lawrenceyan
Masayoshi Son strikes again.

------
madengr
2030 for full autonomous driving? That is much later than all the hype. So is
Honda being pragmatic, and most everyone else is blowing smoke? Or has self
driving had a big setback in the last year?

~~~
zhobbs
In my experience, American companies tend to be overly optimistic, and
Japanese companies tend to be overly cautious about timelines.

See uncertainty avoidance and long-term orientation: [https://www.hofstede-
insights.com/country-comparison/japan,t...](https://www.hofstede-
insights.com/country-comparison/japan,the-usa/)

