A Cruise autonomous taxi in San Francisco, California, USA, Thursday, August 10, 2023.
David Paul Morris | David Paul Morris Bloomberg | Getty Images
DETROIT – Over the years, General Motors CEO and Chairman Mary Barra has promised a new future for the company, transforming it from a staid metal-bending automaker into a technology-driven, forward-thinking company poised for growth.
Part of the plan is for GM’s innovation arm to identify trillions of dollars — yes, trillions — in new market opportunities such as electric commercial vehicles, auto insurance, military defense, autonomous vehicles and eventually The potential of “flying cars”, also known as urban air transportation.
“We are creating world-class technology solutions and services, as well as new fleet solutions and entirely new business models, that will change the way people travel,” Barra told a conference. Virtual CES Keynote January 2022.
While GM declined to say how much revenue those operations generated, as it wound down its Cruise self-driving taxi business on Tuesday, Barra made clear the automaker’s plans to continue operations amid broader industry-wide austerity measures to preserve capital. Growth priorities have shifted. Companies including General Motors are now focusing on more “core” businesses and related business opportunities, including software, electric vehicles and “personal self-driving cars.”
“You have to really look at the cost of operating a robotaxi fleet, which is quite significant and, again, it’s not our core business,” Barra said on a conference call with Wall Street analysts on Tuesday.
Self-driving rides were supposed to be a shining star in GM’s growth opportunities, with executives calling it an $8 trillion market opportunity the automaker would lead just a few years ago. These include claims by former executives that revenue will reach $50 billion by the end of the decade, and that Cruise will be valued at more than $30 billion.
Instead, GM, which has spent more than $10 billion on the company since acquiring Cruise in 2016, is winding down its self-driving taxi business and folding Cruise’s operations and an undetermined number of its nearly 2,300 employees into the company manufacturer.
save money
As part of the layoffs, GM is expected to reveal additional costs next year from employee separation plans and the repurchase of equity investments from outside investors.
GM cited the increasingly competitive robo-taxi market, capital allocation priorities and the significant time and resources required to grow the business as reasons for its decision.
The automaker’s main competitors are letter– Backed by Waymo, currently the last entity with any significant public business. Others, most notably Teslahas ambitions for robotaxi businesses but has so far failed to commercialize them.
To its credit, Wall Street, which previously pushed such growth businesses, applauded GM’s decision to end its Cruise robotaxi ambitions. The company’s shares initially moved higher, eventually ending up at levels they were at the time of the announcement.
GM inventory as of December 9, 2024
Like other companies, GM has quickly pivoted from trying to impress Wall Street with growth initiatives, including creating $280 billion in new business by 2030, to refocusing on its core business amid economic and recession concerns to create profits.
Analysts generally viewed GM’s decision as a positive, saving the automaker more than $1 billion in annual capital, which they expect can be used for additional stock buybacks, including lowering its outstanding shares below 1 billion shares. Target.
“It’s been clear that most investors have priced Cruise out of GM’s valuation for some time, so today’s news doesn’t mean it’s the same,” Wells Fargo analyst Colin Langan wrote in a note to investors on Tuesday. Not surprising.
No more cruising
General Motors CEO Mary Barra speaks during a visit by the President of the United States to General Motors’ zero-electric vehicle assembly plant in Detroit, Michigan, on November 17, 2021.
Mandel and | AFP | Getty Images
GM will merge majority-owned Cruise LLC with GM’s technology group. Barra said several times last week that the automaker would not give up on vehicle autonomy; it would focus on personal self-driving cars rather than robo-taxis.
But it’s hard to ignore that Cruise is the latest mobility or growth business from GM to either fail or not live up to expectations.
General Motors plans to diversify its business into fashionable industries such as ride-sharing and other “mobility” companies – Popular terms previously used by the industry to describe “growth initiatives” or “new ventures” have largely stalled since the automaker began investing in such growth areas in 2016.
Earlier this year, the automaker folded its BrightDrop EV commercial van into Chevrolet amid sluggish sales. The company has also failed to announce any meaningful plans for fuel cells to work with ships, trains and planes, and has shuttered several previous “mobility” businesses.
Not all of the non-core businesses GM has launched in recent years have failed. General Motors Energy and BrightDrop’s commercial electric vehicle division continue to operate under the automaker’s “Envolve” fleet business.
At the same time, GM’s financial arm continues to operate the insurance business launched at the end of 2020 as part of the growth plan of its OnStar remote information processing and data unit. GM said Friday that operations now span 12 states and remain “well-positioned for long-term success.”
GM also continues to operate its military defense segment and fuel cell business, which have recently announced new contracts or partnerships. These include contracts worth hundreds of millions of dollars to General Motors Defense.
super cruise ship
In addition to saving capital, the silver lining of GM’s cancellation of Cruise’s robo-taxi business is that it sees more hope in continuing to grow its robo-taxi business. Super Cruise is a hands-free advanced driver assistance system. This includes more semi-automation and eventually autonomous capabilities.
General Motors was the first automaker to offer such a hands-free system in 2016. The program began in 2021 and continues to expand to more than 20 vehicle models, including high-volume vehicles such as full-size pickup trucks and SUVs.
The interior of the 2025 Cadillac Optiq equipped with General Motors’ Super Cruise hands-free driver assistance system.
General Motors
“This shift in strategy demonstrates that GM continues to believe in the potential of self-driving technology for personal vehicles. Going forward, GM will focus on improving SuperCruise’s capabilities, and continued technological advancements in areas such as artificial intelligence (AI) will further drive SuperCruise.” function.
On the other hand, Murphy also pointed out that this move may mean that Waymo and Tesla “Having better technology and/or markets may not be attractive to later entrants.”
First mover advantage lost
General Motors not expected to be a “latecomer” in the field Robot axis. In fact, it was the first company to offer such rides to the public, and many considered it one of the leaders until last year, when it was suspended in October 2023 after a car crash involving a pedestrian in San Francisco autonomous driving business.
The National Highway Traffic Safety Administration fined Cruise $1.5 million for failing to disclose details of the crash, which included a pedestrian being dragged 20 feet by a Cruise robotaxi after being hit by another vehicle.
A third-party investigation into the incident ordered by GM and Cruise found that cultural issues, incompetence and poor leadership exacerbated supervisory negligence that ultimately led to the crash. The investigation also looked into allegations of a cover-up by Cruise’s leadership but found no evidence to support those claims.
The report outlines multiple instances in which then-CEO and co-founder Kyle Vogt, who left the company in November 2023, made final decisions to withhold information, particularly from the media. Resign.
Vogt isn’t enthusiastic about GM’s decision to end its robotaxi business. he Posted on X After the announcement, “If it wasn’t clear before, it’s clear now: GM is a bunch of fools.”
Vogt pointed out earlier this year that GM had a technological first-mover advantage (as it had with Cruise and Super Cruise) but squandered it. General Motors has taken a similar approach with electric vehicle technology, such as the EV1, a battery electric vehicle produced in the 1990s, and the Chevrolet Volt plug-in hybrid electric vehicle produced in the 2010s, both of which were abandoned by the company.
GM follows several other companies in abandoning robotaxis, including its closest cross-town rival Ford Motor Companythe company shut down its Argo AI self-driving car unit in 2022 in partnership with Volkswagen.
The U.S. robo-taxi leader remains Waymo, which continues to expand its public fleet operations in Los Angeles, Phoenix and San Francisco and will soon debut in Miami, Atlanta and Austin, Texas.
“In many ways, this announcement highlights the economic challenges of expanding a robo-taxi network and the role that ride-sharing platforms can play in trying to commercialize autonomous vehicles (a bullish indicator), but we believe that given the Waymo Bernstein analyst Daniel Roeska said in an investor note last week that Tesla is already scaling up despite high costs and has the ambition to do so.
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