General Motors recently announced it’ll stop funding Cruise, its robotaxi division. The project has cost the company more than $10 billion since it acquired it in 2016. GM’s decision marks the end of an era in the development of self-driving cars. However, Cruise is said to be exploring a different approach moving forward.
Why it matters. GM’s decision to no longer fund the Cruise service represents a turning point in the autonomous car race. In a sector where economic viability is beginning to outweigh technological development, the company can no longer afford to incur losses continuously.
Key figures:
- Cruise lost $3.48 billion in 2023 alone.
- GM will save $1 billion annually after shutting the project down.
- GM employed 3,800 people at its peak before last year’s layoffs.
Context. GM announced the decision to the Cruise employees via a Slack message. Importantly, it follows a serious car accident in San Francisco in October 2023, when a Cruise robotaxi dragged a woman for 65 feet after she’d been hit by another vehicle. The crash caused her serious injuries and resulted in a million-dollar settlement as compensation.
The incident hurt Cruise’s reputation and increased public distrust of its robotaxi service. Additionally, it led to the suspension of its operating license and significant costs to reinstate its vehicles on the streets. This may have been the first nail in the coffin for the division.
Overview. The autonomous cab market, which is still unprofitable, has become very competitive:
- Waymo is successfully operating in several U.S. territories and recently announced plans to expand into a new city: Miami.
- Tesla announced its own autonomous service a few months ago, with plans to begin operations in 2025. The company believes it has a competitive advantage over its rivals.
- Chinese companies are making rapid advancements in the sector.
New direction. GM is refocusing its efforts on developing autonomous driving technology specifically for private cars. To achieve this, it’ll capitalize on its Super Cruise system, which is already available in more than 20 models.
Cruise’s response. “GM are a bunch of dummies,” Kyle Vogt, Cruise’s co-founder and former CEO, shared in an X post in response to the recent announcement. Vogt resigned as CEO more than a year ago, shortly after the car accident.
According to The New York Times, GM CEO Mary Barra defended the company’s decision in a call with Wall Street analysts on Tuesday. “You have to understand the cost of running a robotaxi fleet, which is not our core business and is very expensive,” she said.
In depth. GM’s decision reflects a broader trend in the industry. Traditional automakers must strive to keep pace with the technological revolution impacting the automotive sector. However, they also face significant financial pressures and intense competition.
Image | Remy Gieling
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