General Motors To Cut Spending On Robotaxi Unit Cruise By $1 Billion In 2024!

Autonomous vehicles or self-driving vehicles are all the rage in the automobile industry!

The arena has witnessed offerings from industry giants like Mercedes, BMW and Tesla to new entrants such as Xiaomi and Alibaba, all trying to surf the rising interest in autonomous mobility.

In fact, the autonomous automobile industry is also getting a push from governments, like in China, the world’s largest automobile market, where the government is opening dedicated roads for automakers to trial their self-driving technology.

On the flip side, some automakers are facing the brunt of strict regulations.

For instance, General Motors (GM) owned Cruise, which had deployed a range of self-driving taxis AKA robotaxis on San Francisco roads ran into some troubles (literally!).

This led to the DMV suspending the company’s permit to deploy and test its self-driving vehicles on public roads, GM halting its robotaxi services and the company’s CEO and Co-founder, Kyle Vogt, resigning. However, Cruise remains positive about bouncing back.

Now, the company has a new announcement regarding its project. What’s it all about? Let’s explore!
 

What Did Cruise Announce?

 

• On January 30, 2024, General Motors announced the release of its fourth-quarter and full-year 2023 financial results, in which the company conveyed its intention to revive the suspended Cruise autonomous vehicles.

• At the same time, it also announced it expects to reduce the expenses incurred by Cruise by around $1 billion while also curbing the cash spend to align with the company’s new area of focus in 2024.

• Furthermore, the report also mentioned the Year To Date (YTD) revenue for Cruise standing at $100 million and the Earnings Before Interest and Taxes (EBIT)-adjusted loss at $2.7 billion.

• This, however, "excludes $0.5 billion in restructuring costs in the quarter and year ended December 31, 2023, and $1.1 billion in compensation expense in the year and quarter ended December 31, 2022.”

 

What Did General Motors Say?

 

• In the company’s Q4 2023 Letter to Shareholders, General Motors conveyed its intention to “refocus and relaunch Cruise.” 

• The company even said, “At Cruise, we are committed to earning back the trust of regulators and the public through our commitments and our actions. Last week we released the results of the third-party reviews and we’ve already begun to implement significant changes because of these reviews.”

• GM’s CEO, Mary Barra, even reiterated, “We are committed to Cruise.”

 

How Did Cruise Get Here?

 

• Post the unfortunate accident on October 2, 2023, Cruise found itself at the center of investigations, which resulted in a 105-page report that found the company was embroiled in regulatory oversight and coverups. 

• The three-month investigation was carried out by Quinn Emanuel Urquhart & Sullivan, a business law firm that GM and Cruise retained, in which the firm interviewed 88 Cruise employees and inspected over 200,000 documents, consisting of texts, emails and more.

• An excerpt from the report read as, “This conduct has caused both regulators and the media to accuse Cruise of misleading them ... The reasons for Cruise’s failings in this instance are numerous: poor leadership, mistakes in judgment, lack of coordination, an ‘us versus them’ mentality with regulators, and a fundamental misapprehension of Cruise’s obligations of accountability and transparency to the government and the public. Cruise must take decisive steps to address these issues in order to restore trust and credibility”

• Regarding the report, General Motors said it “accepted conclusions from the report and will act upon all the recommendations” and “to successfully move forward, Cruise must do so in full partnership with regulators and the communities it serves.”

• Ahead of this Cruise remains under investigation by several entities, including the US Department of Justice and the US Securities and Exchange Commission.

Do you think other autonomous automakers should conduct robust testing before being allowed to deploy more such vehicles? Will Cruise make a comeback or will new entrants dominate the emerging self-driving market?

Let us know in the comments below!