Collate | Huawei, Nucleon Cola

General Motors announced, without warning, that it would no longer fund the development of its commercial Robotaxi business, and would instead close its self-driving car subsidiary Cruise and merge it with other technology teams to focus on developing self-driving assistance systems for personal vehicles.

After the news broke, it caused an uproar in the following days. Former Cruise co-founder and CEO Kyle Vogt even directly commented on the social platform, "If it wasn't clear before, it is now clear: General Motors is a bunch of fools," and even Musk came to the comment section to watch the meal.

After all, GM has invested more than $10 billion in Cruise since it bought the company for $1 billion. It is worth mentioning that GM's stock price rose about 3% after the close of trading on the day of the announcement. Gm shares are up about 47% so far this year.

For many years, there was no profit, but "scandals" continued

Cruise is a SAN Francisco-based self-driving car startup that was acquired by General Motors in 2016. Over the years, GM invested billions of dollars in the subsidiary, eventually buying 90% of it from its investors, but with little financial return other than horrendous losses.

According to General Motors' shareholder report filed with the US Securities and Exchange Commission, since it bought a controlling stake in Cruise for $581 million in 2016, the self-driving taxi service has accumulated losses of more than $10 billion (72.6 billion yuan) while generating less than $500 million in revenue.

General Motors said in a statement that it decided to pull out of the self-driving taxi business because "scaling the business requires significant time and resource investment, and the self-driving taxi market is becoming more competitive."

According to GM Chief Financial Officer Paul Jacobson, GM currently spends about $2 billion a year on Cruise, a figure that will be more than halved when the restructuring plan is completed, which is expected to be completed in the first half of 2025.

In addition, GM announced that they currently own about 90 percent of Cruise and expect to complete the purchase of the remaining shares of Cruise from outside shareholders in early 2025, raising their ownership to more than 97 percent. Gm has previously brought in a number of outside investors, including Microsoft, Walmart, SoftBank, T.Rowe Price and Honda, to raise the billions of dollars needed to bring driverless taxis to the public.

Cruise's "curtain call" may have been sudden, but the company has been in a slow but steady decline since its accident that dragged a pedestrian under its car.

On October 2, Cruise was involved in an accident involving a driverless taxi that trapped a pedestrian and then dragged him. Although Cruise took immediate action after the accident, it went through a series of twists and turns, including investigations, fines and layoffs. The National Highway Traffic Safety Administration fined Cruise $1.5 million, Cruise lost its commercial operating license from California regulators, suspended testing in other states, and laid off 900 employees (about 24% of its workforce at the time).

To that end, GM also decided to take direct control of the once-promising self-driving startup and abandoned plans to build a custom driverless taxi called Origin, prompting Cruise's then-co-founder and CEO Kyle Vogt to resign.

In June, GM hired Marc Whitten, a video game veteran who was a founding engineer at Xbox and Xbox Live, to be Cruise's CEO. In July, General Motors announced that it would indefinitely delay production of Origin self-driving cars as its Cruise self-driving unit tries to restart operations.

In November, Cruise pleaded guilty to filing false reports aimed at interfering with a federal investigation into the safety incident last year. According to the Justice Department, the company also paid a $500,000 criminal fine in exchange for a deferred prosecution.

Turning to assisted driving, more than 2,000 employees were stunned

"Over the past year, we have been reviewing our autonomous driving strategy." Paul Jacobson, GM's chief financial officer, said "a better use would be to improve L3, and eventually L4, in a personal model because that's more aligned with the capital and job needs of the business going forward."

Efficiency and the adoption of an incremental approach to autonomous driving are at the heart of GM's transformation, and Dave Richardson, GM's senior vice president of software and services engineering, will be a key driver of this change, with the goal of bringing autonomous driving technology to millions of GM vehicles.

"The best way to achieve this is to adopt a single strategy that prioritizes incremental delivery of autonomous capabilities," Richardson said.

It also means that GM will continue to improve its hands-free driver assistance system, Super Cruise. Technology developed by GM and Cruise engineers will be incorporated into Super Cruise, ultimately creating a system that doesn't need hands on the wheel or eyes on the road ahead. Richardson confirmed this information in an interview with foreign media earlier this year.

These types of systems (known in the industry as Level 3 systems) are not part of the self-driving cars Cruise is developing, nor are they operated by Waymo, which is part of Level 4 driving. Instead, they tend to travel only at lower speeds on highways. Unlike a driverless taxi, the driver will still need to be ready to take control if necessary.

"I want to be clear that GM has made this decision to realign our strategy because we believe in the importance of driver assistance and autonomous driving technology in our vehicles." "This approach will allow us to leverage the strengths of GM and Cruise while simplifying and accelerating the path forward, providing meaningful benefits to customers in the process," said GM Chairman and CEO Mary Barra.

Barra, who is also Cruise's board chairman, said it has not yet been determined how many employees will transfer to GM. According to a GM spokesperson, Cruise currently has nearly 2,300 employees.

"Gm hasn't laid off Cruise yet, and we don't have any details," a Cruise employee who has worked for the company for years told the National Business Daily. According to the employee, before GM's announcement, most people were still working overtime to push forward some new projects and driverless car testing, and it felt like the company had a lot of cooperation.

"From our point of view, there is no big deal, today (December 10) at noon suddenly told everyone that GM is going to cancel the financing and then stop the Robotaxi business." The first few months felt like the company still had a lot of cooperation and business was restarting. I've been working overtime for months on some new projects, and this week I was ready to test the driverless car business when it restarted, and suddenly it was shut down. Most of us feel it's too sudden, but after all, we went through it last year, and today seems OK."

For much of this year, GM has been telling Wall Street that Cruise is gradually restarting its driverless taxi business. Unexpectedly, the announcement of Cruise's closure came on the heels of it.

"Cruise can't compete with Waymo and Tesla right now," he said. "We wanted to catch the heat of these two in the driverless car space, but we went out of business." The Cruise employee added.

What does it mean for the self-driving car industry?

Self-driving cars are proving to be far more difficult to develop than originally expected.

Since General Motors has stopped investing in Cruise and its commercial robotaxis, Cruise's outside investor Honda Motor Co will also stop funding a joint venture with GM and Cruise to launch a robotaxi service in Japan.

Two years ago, rival Ford Motor Co., also from Detroit, dissolved the Argo AI autonomous driving joint venture it co-owned with Volkswagen in Pittsburgh. At the time, Ford said it saw no hope of profitability in the next few years.

Still, other companies are pushing ahead with plans to deploy self-driving cars and expand their services.

Alphabet's Waymo is stepping up its efforts to expand its self-driving taxi service beyond the Phoenix, San Francisco and Los Angeles metro areas. Last week, the company said it would begin testing its driverless Jaguar models in Miami next year, with plans to start charging for service in 2026. The announcement comes less than a month after Waymo began opening its self-driving taxi service to passengers within 80 square miles of Los Angeles. Waymo also plans to partner with ride-hailing service Uber next year to deploy driverless fleets in Atlanta and Austin.

Softbank-funded Wayve is testing its self-driving cars in San Francisco, and Amazon-owned Zoox is also testing its self-driving cars without steering wheels in several U.S. cities, including San Francisco.

Tesla CEO Elon Musk also mentioned that it plans to launch fully driverless Model Y and Model 3 vehicles next year. He said steerless robotaxis using Tesla's "Fully autonomous driving" (FSD) will hit the ground in California and Texas by 2026.

China's driverless taxi manufacturers, Pony Wisdom, Baidu Radish fast Run, AutoX and other companies, are also pushing Robotaxi landing.

Although there are still many manufacturers focused on developing driverless taxis and planning to expand into new markets, the overall scale of this part of the business is likely to continue to shrink. After all, in addition to the idea of eliminating the cost of drivers, the significant increase in research and development and vehicle manufacturing costs is still a small amount of money.

It remains to be seen who becomes the first driverless car rental company to turn a profit in the next few years. The latest to lose the race is GM-backed Cruise.

Reference link:

https://www.siliconvalley.com/2024/12/11/gm-to-retreat-from-robotaxis-and-stop-funding-its-cruise-autonomous-vehicle-uni t/

https://www.forbes.com/sites/gustavo-castillo/2024/12/12/cruise-ing-to-nowhere-gm-halts-cruises-robotaxi-development/

https://techcrunch.com/2024/12/11/microsoft-will-take-an-800m-hit-over-cruise-robotaxi-shutdown/

https://news.ycombinator.com/item?id=42381637

https://mp.weixin.qq.com/s/ezhv_EkyNE7qNWdl_MFFaA