General Motors is gearing up for a significant strategic pivot as it announced the decision to cease funding for Cruise's robotaxi deployment work. This move marks a decisive turn in GM's approach to autonomous vehicles, emerging from the firm's assessment of long development timelines, substantial costs, and the highly competitive nature of the robotaxi market.
Since its acquisition of the promising self-driving startup Cruise in 2016, GM has invested over $10 billion, showcasing its commitment to autonomy. The substantial financial backing, including an $850 million injection as recently as June 2023, was aimed at achieving breakthroughs in the autonomous driving sector. However, as Cruise's losses mounted, recording a staggering $3.48 billion deficit in 2023 alone, GM has reevaluated its strategy.
The announcement indicates GM's intention to integrate the technical competencies of Cruise and GM's existing teams to forge a unified effort in advancing autonomous and assisted driving innovations. However, it remains unclear how the structural rearrangement will affect Cruise's workforce, with no specific details yet on the number of employees that will transition to GM.
Mary Barra, GM's chair and CEO, emphasized the company's steadfast commitment to delivering cutting-edge driving experiences in a financially disciplined manner. "Cruise has been an early innovator in autonomy, and the deeper integration of our teams, paired with GM’s strong brands, scale, and manufacturing strength, will help advance our vision for the future of transportation," stated Barra.
Currently holding approximately 90% ownership in Cruise, GM is poised to increase its stake to 97% through existing agreements with other shareholders. The ultimate goal is to gain full control by acquiring the remaining shares, a transaction projected to be complete by the first half of 2025. This would allow GM to restructure Cruise’s operations meticulously and focus its efforts on developing advanced driver-assistance systems (ADAS) and eventually fully autonomous personal vehicles.
The backdrop to GM's decision includes several setbacks for Cruise in 2023, most prominently an incident involving one of its vehicles that resulted in a pedestrian being dragged 20 feet after an initial collision by another driver. The aftermath saw the California Department of Motor Vehicles (DMV) suspending Cruise's permits, citing allegations of withheld incident footage. Despite Cruise contesting these claims and even halting operations nationwide to mend public trust, the suspensions marked a critical roadblock for the company.
In response, the city of San Francisco pursued legal action against the California Public Utilities Commission (CPUC), aiming to restrict the number of robotaxis operating on its streets. By May 2024, Cruise had settled with the affected pedestrian for a sum ranging from $8 million to $12 million, as reported by Bloomberg News. Though operations resumed on a supervised manual basis in regions like Houston, Dallas, and Phoenix, these efforts were insufficient to alter GM's course.
Meanwhile, competitors within the robotaxi sector have been making strides. Waymo, a self-driving division of Alphabet, has emerged as a formidable leader. Recently, it declared plans to initiate robotaxi testing in Miami by early 2025, following a year of expansion across key urban centers including San Francisco and Phoenix. Waymo's advancements include the deployment of their sixth generation robotaxi, boasting an improved sensor suite designed for enhanced performance and lower costs.
Other notable industry players like Nuro and Zoox are also advancing their autonomous vehicle technologies. Nuro has advanced its zero-occupant vehicle capabilities with its Nuro Driver system, while Zoox has expanded its operations across California and Nevada.
As GM realigns its vision, the automotive giant's renewed focus on refining ADAS and leveraging its strengths in brand influence and manufacturing capacity could redefine its trajectory in the increasingly competitive field of autonomous vehicles. This shift may ultimately lead to innovations that redefine personal transportation, standing as a testament to the evolving dynamics within the self-driving space.
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