SoftBank Vision Fund will invest $2.25 billion in General Motors Co.’s driverless-car unit, as the auto maker battles technology companies and startups in a race to commercialize autonomous vehicles.
GM said Thursday the technology-investment fund, an affiliate of Japan’s SoftBank Group Corp. , will take a 19.6% stake in GM Cruise Holdings LLC, a newly formed entity primarily made up of Cruise Automation, the driverless-car developer that GM acquired in early 2016 for around $1 billion, including undisclosed milestone payments.
The Vision Fund’s investment values the business at $11.5 billion. GM shares surged 11% to $42.07 in morning trading.
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The Vision Fund’s investment will come in two tranches: an initial $900 million payment, and another of $1.35 billion once Cruise’s autonomous vehicles are ready for commercial deployment, GM said.
The deal will “afford GM increased flexibility with respect to capital allocation” as it plows more money into developing a network of autonomous ride-share vehicles, targeted for sometime next year, the company said.
For years, GM’s shares have languished as valuations for upstarts like electric-car maker Tesla Inc. and ride-share firm Uber Technologies Inc. soared on expectations of heady growth.
Opening the Cruise subsidiary to SoftBank’s giant fund allows it to access capital that investors have been reluctant to grant the 110-year-old auto maker.
GM will retain an 80.4% stake in GM Cruise and invest $1.1 billion in the business.
During a press conference Thursday morning, GM Chief Executive Mary Barra called it a “landmark” investment that gives GM Cruise the capital it needs to get its driverless-car business to market.
SoftBank Chief Executive Masayoshi Son and the firm’s nearly $100 billion tech-focused Vision Fund have already been making huge bets on a changing transportation landscape. The fund has invested some $20 billion globally into several ride-hailing companies, including Uber and Chinese ride-hailing company Didi Chuxing Technology Co.
Mr. Son aims to build a global network of ride-sharing companies that command fleets of self-driving vehicles, people briefed on Mr. Son’s strategy say.
It has some holdings related to self-driving cars, including an investment in chip maker Nvidia Corp. , which has an artificial-intelligence computing platform for driverless cars and a $164 million investment in Mapbox Inc., a startup that provides mapping and location-search technology.
The GM Cruise deal is its most direct shot at the budding autonomous-vehicle space. Michael Ronen, managing partner of SoftBank Investment Advisers, said the fund was attracted to the speed of GM’s progress since it acquired San Francisco-based Cruise.
GM Cruise has grown to more than 800 employees, from about 40, and is testing about 180 autonomous Chevrolet Bolt electric vehicles in its hometown as well as the Phoenix and Detroit areas.
Talking to reporters, Mr. Ronen said he believes GM’s ability to produce driverless cars at scale, as well as its focus on deploying the vehicles safely, will be a “huge differentiator” as GM vies for leadership in the space with Waymo, the driverless-car unit of Google-parent Alphabet Inc., along with other car companies, auto suppliers and dozens of startups.
Many analysts have tabbed Waymo and GM Cruise as the leaders in deploying a technology that likely will take years to reach a large scale, given significant technical and regulatory hurdles. Analysts have cited a fatal accident in March involving an autonomous Uber test vehicle in Arizona as a reminder of the risks inherent in getting autonomous vehicles safely to market.
GM is gearing up a suburban Detroit factory to build autonomous Chevy Bolts. The company is on track to launch a commercial autonomous-taxi business, without human drivers, sometime in 2019 across multiple cities, executives said Thursday.
Waymo has already deployed vehicles without drivers behind the wheel in suburban Phoenix and plans to begin a commercial robot ride-hail service this year.
Large global investors of all types are placing big bets on the forces reshaping the auto industry and broader technology sector. Warren Buffett earlier this year sought to invest $3 billion in Uber, but the deal fell through, according to a person familiar with the matter.
GM’s stock rallied last summer amid growing enthusiasm for the potential of a future robot-taxi business and other transportation services. Several Wall Street analysts cited the auto maker’s technical prowess and ability to eventually mass produce driverless vehicles as an advantage over technology companies encroaching into the auto sector.
On Thursday, Deutsche Bank analyst Rod Lache called the Vision Fund’s investment “a very big deal,” and said breaking out GM Cruise as a separate entity from the car company should give GM access to capital that it wouldn’t have on its own.
—Tim Higgins and Mayumi Negishi contributed to this article.
Write to Mike Colias at Mike.Colias@wsj.com