Tesla drops after GM's competing self-driving unit gets a $2.25 billion boost
- Tesla sank about 2% Thursday morning after Cruise, General Motors' self-driving unit, got a $2.25 billion investment from SoftBank.
- The deal values Cruise at $11.5 billion.
- A report of new tariffs on imported European steel and aluminum also weighed on the stock early Thursday.
- Follow Tesla's stock price in real-time here.
Tesla sank as much as 2.1% in early trading Thursday after Japan's SoftBank announced a $2.25 billion investment in General Motor's Cruise self-driving unit that values the business at $11.5 billion, or about 40% of Tesla's market value.
While Tesla is known to be working on self-driving cars to power its "Tesla Network" of ridesharing vehicles, its budget or timeline has never been disclosed. A number of high-profile crashes involving Tesla's Autopilot feature, a precursor to fully autonomous driving, have brought new scrutiny to the software.
GM purchased Cruise, then a San Francisco self-driving startup, back in 2016 for $581 million. Together, the two have focused on a fully-integrated hardware and software solution to the challenge of establishing an autonomous ride-hailing/sharing network that can operate in urban environments.
The combined unit has already rolled out a fully integrated autonomous electric car - the tech is being built into Chevy Bolt electric vehicles - that's being fleet-tested in San Francisco, Detroit, and Phoenix, with New York City to follow in 2018.
Shares of Tesla got a boost on Wednesday after Consumer Reports reversed its stance on the Model 3, which had previously failed to get the magazine's recommendation, thanks to a software update that shortened its emergency stopping distance.
But reports out early Thursday, near the same time as SoftBank's GM investment was announced, that President Donald Trump was planning to announce tariffs on imported steel and aluminum from Europe, Mexico and Canada, also weighed on the stock.
Monthly auto sales numbers are expected to be reported Friday by major automakers, including both Tesla and GM. Investors will be watching for Tesla to reach its goal of 5,000 Model 3's per month. On it's most recent update, it was producing at less than half of that rate.
That "production hell," along with questions of Tesla's potential need to raise cash - something CEO Elon Musk has repeatedly said will not be necessary - have weighed on the stock in recent months, with shares down 10% since the beginning of the year.
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