GM acquires Cruise, Ford creates mobile subsidiary as connected car market heats up
The connected car market heated up this morning with news that General Motors will reportedly spend roughly $1 billion to buy Cruise Automation, which develops technology for autonomous vehicles. Separately, Ford announced it will break out its mobility programs into a separate subsidiary.
Fortune reported that GM had considered making a strategic investment in Cruise, but "that quickly morphed into an acquisition discussion" that was finalized within several weeks. Cruise makes aftermarket kits to convert specific models into autonomous cars for highway driving. It had raised $18 million in funding and saw a recent valuation in the range of $90 million. GM announced this morning it had purchased Cruise, though it did not disclose the purchase price.
Meanwhile, Re/code reported that Ford will create Ford Smart Mobility LLC, a subsidiary that will include mobility programs including car-sharing and autonomous vehicles. A Ford board member will oversee the entity as chairman, but the company is looking to the West Coast -- specifically Silicon Valley -- for candidates to take the helm as CEO.
Finally, Reuters said the U.S. Transportation Department and NXP Semiconductors NV are partnering on a pilot project to investigate in-vehicle communications systems and other technologies to reduce congestion and traffic. The department had said previously it would award as much as $40 million to a mid-sized U.S. city willing to participate in the effort, which is part of a larger smart cities movement.
Mobile network operators see connected cars as a massive opportunity as the IoT emerges and connectivity becomes ubiquitous. And they're not alone: Tech companies such as Apple and Google are also working to play in the connected car space with their own software platforms.
As with other IoT segments, though, network operators face challenges as they expand beyond smartphones and other traditional devices. Capitalizing on the connected car will require carriers to employ complex new partnerships and business models that go far beyond monthly buckets of data.
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