General Motors’ latest announcement of a major strategic change deciding to terminate its funding for its autonomous taxi project Cruise and refocus its research and development on autonomous driving technology for personal vehicles, citing the time and cost required for business expansion and increased competition. The company added that it plans to refocus its autonomous driving strategy on advanced driver assistance systems and autonomous driving systems for personal vehicles.
General Motors will prioritize the development of its advanced driver assistance system Super Cruise for personal vehicles. Dave, senior vice president of software and service engineering at GM, said Cruise will bring its software, artificial intelligence and sensor development results to GM to jointly improve GM’s driver assistance system. Like almost all major automakers, GM is struggling to cope with sluggish car demand and is under pressure to invest in new technologies, including electric vehicles. Behind this shift is the company’s deep consideration of high operating costs and market competition.
Reasons for Exiting The Autonomous Taxi Market
As a subsidiary of General Motors, Cruise has suffered serious financial difficulties in the past year, with losses of up to $3.48 billion in 2023. This figure not only highlights the speed at which the project is consuming funds, but also raises widespread doubts among shareholders about the profitability of the project. GM CEO Mary Barra frankly stated that competition in the autonomous taxi market is becoming increasingly fierce, and it will take a lot of time and money to achieve large-scale operations. She pointed out that in order to use capital more effectively, the company decided to integrate resources and shift its focus to the more promising field of personal autonomous vehicles. Although this decision means the temporary suspension of the Cruise project, it does not mark GM’s complete abandonment of autonomous driving technology.
Mary Barra stressed that the company still believes in the future potential of autonomous driving technology and looks forward to launching fully autonomous vehicles for consumers in the mid-2020s. She said that this vision has never changed, but the path to achieve it needs to be adjusted. At the same time, GM’s Chief Financial Officer Paul Jacobson revealed that by integrating the Cruise project, the company expects to save about $1 billion in costs each year. This move will not only help ease the company’s financial pressure, but also provide more room for the company to find new profit growth points. He emphasized that GM will continue to focus on its core business while actively exploring new technology fields and market opportunities to maintain the company’s continued competitiveness.
At the organizational level, GM intends to merge its holding Cruise and GM technical teams into one whole to jointly promote the development of autonomous driving and assisted driving technologies. Regarding this adjustment, GM explained that, on the one hand, according to GM’s capital allocation priorities, GM will no longer fund Cruise’s Robotaxi development work, because it takes a lot of time and resources to expand the scale of Robotaxi business; on the other hand, the competition in the Robotaxi market is becoming increasingly fierce. GM expects the reorganization to be completed in the first half of 2025. After the proposed reorganization plan is completed, it will save the company more than $1 billion in expenditures each year.
Development History of Cruise
Cruise is a pioneer in the field of global autonomous driving. Cruise was founded by Kyle Vogt in San Francisco, USA in 2013 and was acquired by General Motors in 2016. After the acquisition, it remained independently operated. This acquisition worth $1 billion made Cruise the talk of the town. After joining GM, Cruise quickly expanded the company’s scale to thousands of people, and successively acquired two technology and chip companies, while also starting to significantly launch road testing and simulation training for unmanned vehicles.
In 2018, GM began to allow Cruise to accept external investment, and successively received investments from SoftBank Vision Fund, Honda Motor, Microsoft, Walmart, etc., with a total financing amount of nearly 10 billion US dollars, and a valuation of more than 30 billion US dollars.
In terms of technology development and operation in the autonomous taxi industry, Cruise has actually made significant progress. At the end of January 2022, Cruise officially provided fully unmanned driving services to public passengers in San Francisco, and in June it was approved by California regulators to provide Robotaxi charging services; in August 2023, the California Public Utilities Commission voted to allow it to operate Robotaxi commercially around the clock in San Francisco.
As an early entrant in the US autonomous taxi market, Cruise faltered and suspended its autonomous taxi business in October 2023. This decision was made after Cruise’s autonomous taxis had a hit-and-run incident in San Francisco, clashed with regulators, and its license to operate autonomous taxi services in California was suspended. Subsequently, the two founders of Cruise resigned, causing a great shock to the company. Until April 9 this year, Cruise began to redeploy a small number of test fleets equipped with safety officers in Phoenix and planned to expand to other cities in the United States; in June, General Motors also announced an investment of $850 million in Cruise to maintain its operations. In July this year, General Motors announced that it would indefinitely postpone the production of the self-driving truck Cruise Origin, although Cruise is trying to restart operations.
Self-driving Taxi Services Continue to Develop
While Cruise’s self-driving taxi business has stagnated, its competitors have made progress. Waymo, a subsidiary of Alphabet, has begun operating self-driving taxi services in several major metropolitan areas in the United States. The company also announced plans to expand its business to Miami last week. Meanwhile, Tesla demonstrated the design concept of its self-driving taxi at an event in October, and CEO Musk said in an October earnings call that the company will launch self-driving travel services in California and Texas as early as 2025. In addition, Wayve, invested by SoftBank, is testing its self-driving cars in San Francisco, and Zoox, a subsidiary of Amazon, is also testing its self-driving cars without steering wheels in several US cities including San Francisco.
