GM challenges Tesla, buys self-driving tech company

Anita Balakrishnan

General Motors is teaming up with a California tech company in the race to dominate the self-driving car market.

GM announced an agreement on Monday to acquire Strobe, and will acquire the start-up's engineering team to work for Cruise Automation. The terms of the deal were not disclosed.

Tesla gets the high-tech attention. But GM became the first automaker to build self-driving cars in a regular assembly plant in June, when it completed a production run of 130 self-driving Chevrolet Bolts for testing. Many more are expected to follow.

"Strobe's … technology will significantly improve the cost and capabilities of our vehicles so that we can more quickly accomplish our mission to deploy driverless vehicles at scale," Cruise Automation founder Kyle Vogt said in a statement.

Strobe makes its own version of Lidar, one of the key sensors used by self-driving cars to recognize surroundings. The falling cost and improving accuracy of these sensors is one of the primary factors that could make it possible to produce self-driving cars at scale, experts say.

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The deal comes as GM is increasingly viewed as a formidable foe for Silicon Valley companies, like Alphabet and Tesla, that have their own self-driving car projects. GM agreed to acquire Cruise in 2016, and has also invested in self-driving car start-ups like Nauto.

California regulatory filings from earlier this year indicated that GM was a far second to Alphabet's Waymo in some aspects of autonomous vehicle testing. But some Wall Street analysts have already predicted that GM is catching up. Indeed, based purely on accident reports at the California DMV, GM is certainly logging plenty of miles.

"GM's AV's will be ready for commercial deployment, without human drivers, much sooner than widely expected (within quarters, not years), and potentially years ahead of competitors," Deutsche Bank analyst Rod Lache wrote in a September research note. He predicted General Motors can snag a 17.5 percent share of the autonomous mobility market.

Last week Vogt told reporters — including CNBC's Phil LeBeau — that GM was prepared to deploy its cars rapidly because it has been testing them in more complex urban environments.

"Driving in San Francisco is almost nothing like driving in the suburbs, or other places where self-driving cars are tested," said Vogt.