General Motors Reduces Half of its Cruise Division, Abandons Robotaxi Enterprise
As companies like Waymo and Tesla gear up to expand robotaxi services nationwide, General Motors (GM) seems to be hitting the brakes. An email obtained by TechCrunch reveals that the automotive giant is slashing nearly half of its workforce at Cruise, the self-driving car company it had invested in to the tune of $10 billion.
According to Reuters, the layoffs will impact around 1,000 employees, including Cruise's CEO Marc Whitten, who is stepping down this week. Other executives departing are chief safety officer Steve Kenner, global head of public policy Rob Grant, and chief technologist Mo Elshenawy.
GM's acquisition of Cruise becomes complete as the automaker takes full control. However, this change brings a new focus. The robotaxi business takes a backseat as GM prioritizes integrating Cruise's technology into its Super Cruise system, a self-driving feature installed in many of its newer models.
GM's dual purposes for this move are clear. Firstly, they believe Super Cruise could be a revenue generator. Following their earnings call, GM projected that autonomous features in consumer cars might generate up to $2 billion in annual revenue within five years, with monthly or annual fees for access.
Secondly, robotaxi's shaky start leaves much to be desired. Not only have substantial investments failed to fly off the ground, but accidents, such as a 2023 incident where a Cruise robotaxi hit a pedestrian, dragged them 20 feet, causing severe injuries, and a subsequent coverup, have added to the woes.
2022 saw close calls too. About 20 Cruise robotaxis got into a standoff, causing traffic disruptions for nearly two hours, while another got tangled in the city's light rail line. A New York Times report revealed that Cruise vehicles needed human intervention at least once for every 2.5 to 5 miles driven, making them far from fully autonomous.
San Francisco residents might breathe a sigh of relief at this transition. With fewer autonomous vehicles on their streets, comes one less 'autonomous terror' to worry about.
Enrichment Insights:
- GM downsized Cruise due to strategic, operational, and financial considerations, aiming to optimize resources, address regulatory and operational challenges, and drive long-term growth in the autonomous vehicle market. The shift to Super Cruise was motivated by its revenue potential and Cruise's increasing investment costs in the robotaxi market, which faced significant regulatory issues and challenges in scaling operations.
- Cruise's struggles also stemmed from cultural and leadership failures, highlighted in a third-party report, further pushing GM to reevaluate investments in the robotaxi business. The integration of Cruise's autonomous vehicle expertise into Super Cruise will enhance its advanced driver assistance system (ADAS) and solidify GM's position in the autonomous vehicle sector.
- The shift in strategy will enable GM to generate significant revenue by 2027, with autonomous options in consumer cars potentially generating up to $2 billion in annual revenue within the next five years.
In the forthcoming technological landscape, GM aims to leverage Cruise's technology to enhance its Super Cruise system, potentially transforming it into a lucrative revenue source. Despite the promising future of autonomous vehicles, the robotaxi business has faced numerous challenges, including regulatory issues and operational difficulties, leading to GM's strategic shift.
