GM’s self-driving car unit pulls in $1 billion in race to launch ride-hailing service

General Motors Co.’s self-driving unit drew $1.15 billion in fresh investment, with T. Rowe Price Associates Inc. joining existing backers that include Honda Motor Co. and SoftBank Vision Fund.

With its third major injection of capital in the last year, GM’s Cruise LLC unit is now valued at $19 billion, according to a statement. Cruise raised $2.25 billion from the SoftBank Vision Fund and $2.75 billion from Honda last year.

Cruise continues to tap outside investors as it races the likes of Alphabet Inc.’s Waymo to develop self-driving vehicles. GM wants to start an autonomous ride-hailing service at the end of this year and needs cash to bring along the technology and build out an infrastructure for that business. The automaker is spending about $1 billion a year on Cruise.

“This is probably the most direct way you can invest in autonomous vehicles currently, outside of investing in Google, which is pretty diffuse,” said Mike Ramsey, an automotive consultant with researcher Gartner Inc. “Autonomous vehicles could become a super massive segment of the economy and be an industry-changing technology.”

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GM shares closed, up 1%, at $38.53 on Tuesday.

GM owned about 85% of Cruise before the latest investment and still has a large majority of the shares. The carmaker may at some point spin off Cruise through an initial public offering or sale: The unit’s chief executive officer, former GM President Dan Ammann, is incentivized to arrange such a deal as part of his compensation package.

“Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation,” Ammann said in a statement. “Having deep resources to draw on as we pursue our mission is a critical competitive advantage.”

Cruise lost $728 million last year, and GM expects the tab to be about $1 billion this year, the company said in January.

Kyle Vogt, Cruise’s chief technology officer, and Dan Kan, chief operating officer, co-founded the San Francisco-based company in 2013. GM acquired it for $581 million in May 2016, paying $291 million in cash and the remainder in stock. The total value of the deal was about $1.5 billion when taking into account agreements tied to key personnel staying on and reaching certain performance targets.

As of October, when Honda invested in Cruise, the company was valued at $14.5 billion.