General Motors once envisioned its self-driving car division, Cruise, as a future goldmine, projecting billions in revenue. However, the reality was far from the dream. Instead of generating profit, Cruise became a significant financial drain, leading GM to ultimately absorb it into its engineering operations. This shift raises crucial questions about the viability of autonomous vehicle technology and the future of GM’s investment in this space, particularly concerning its “Gm Cruise” initiative.
Industry experts point to a confluence of factors that transformed Cruise from a promising venture into a financial burden. These include leadership missteps, substantial capital expenditures, regulatory obstacles, and growing public apprehension regarding safety. A pedestrian accident resulting in a nationwide recall, coupled with the departure of key executives and regulatory investigations into initial transparency issues, significantly damaged Cruise’s public perception and internal stability. But fundamentally, analysts suggest GM pulled back because they encountered problems in autonomous driving technology that lacked readily available, cost-effective solutions. The escalating expenses to overcome these technological hurdles likely outweighed the perceived future returns for GM, leading to the strategic shift away from Cruise as an independent entity.
On February 4th, GM finalized its acquisition of the remaining 3% stake in Cruise and subsequently laid off half of its workforce, impacting approximately 1,000 positions, primarily in the Bay Area. At its peak, Cruise had operations in San Francisco, Austin, and Phoenix, demonstrating an ambitious expansion which preceded its recent contraction. Further demonstrating the scale of the restructuring, key figures including CEO Marc Whitten, Chief Human Resources Officer Nilka Thomas, Chief Safety Officer Steve Kenner, and Chief Government Affairs Officer Rob Grant were also reportedly dismissed. Mo Elshenawy, Cruise’s president and chief technology officer, is expected to stay on until the end of April to facilitate the transition, signaling a period of significant organizational change within the “gm cruise” project.
The Money Pit Reality of GM Cruise
GM had optimistically projected Cruise to generate $50 billion annually by 2030. However, the stark reality was that Cruise was costing GM around $2 billion each year, accumulating to a staggering $10 billion since 2016. This enormous expenditure without any revenue generation underscores the financial pressure that led to GM’s decision to restructure its “gm cruise” strategy.
General Motors: History, innovation, and legacy
Alt text: A video thumbnail showcasing General Motors’ history, innovation, and legacy, highlighting their journey in the automotive industry, including ventures like GM Cruise.
A pivotal moment that arguably marked the beginning of the end for Cruise’s independent operation was the highly publicized accident in San Francisco. On October 2, 2023, a pedestrian was struck by a Nissan Sentra and propelled into the path of an approaching Cruise driverless vehicle. Despite braking, the Cruise car hit her and then continued to move forward approximately 20 feet at 7 mph, dragging the injured woman. This incident triggered a cascade of negative consequences for “gm cruise”.
The fallout from the accident was significant. Cruise terminated nine executives and reduced its workforce by roughly 24%, or 900 full-time employees. Adding to the turmoil, Cruise CEO Kyle Vogt and Chief Product Officer Dan Kan resigned. GM also halted production at Factory Zero in Detroit-Hamtramck on the Origin, Cruise’s planned six-seat autonomous vehicle, a project that was intended to be the next phase of “gm cruise” development.
Despite these setbacks, GM initially maintained a public stance of unwavering support for Cruise’s mission. While investment in commercial autonomous vehicle technology slowed, it did not stop completely. In a November 2023 statement, GM affirmed its belief in the “profound, positive impact” of autonomous vehicles and reiterated its “steadfast” commitment to Cruise and its commercialization goals. However, this public commitment shifted dramatically by December, signaling a significant change in GM’s strategic direction for “gm cruise”.
Jennifer Dukarski, an automotive technology attorney, expressed that GM’s decision, while perhaps surprising in its timing, was not entirely unexpected. She drew parallels to GM’s earlier withdrawal from the Maven car-sharing service in 2020. Dukarski also speculated that broader political and economic factors, such as the current administration’s perceived support for Elon Musk’s ventures like Tesla, might have influenced GM’s calculus. Tesla, a major player in electric vehicles, is also actively pursuing autonomous vehicle technology, both for commercial and private use.
John Murphy, a Bank of America Securities analyst, noted the apparent contradiction in GM’s decision. While pulling back from robotaxis, GM seems to be doubling down on advanced driver-assistance systems internally. This move raised eyebrows on Wall Street, as advanced driver-assistance systems are considered crucial for future competitiveness in the automotive industry. Murphy questioned whether exiting the robotaxi space might ultimately force GM to become reliant on external providers like Tesla for full self-driving technology in the long run, impacting their “gm cruise” derived expertise.
Transparency and Technology Troubles at GM Cruise
Beyond the San Francisco accident itself, Cruise and GM faced accusations of lacking transparency and potentially misleading regulators about the role of Cruise’s autonomous technology in the incident. This damaged the credibility of “gm cruise” and eroded public trust.
Cruise and GM engaged the law firm Quinn Emanuel Urquhart & Sullivan to conduct a three-month investigation into the accident response. The investigation, involving interviews with 88 Cruise employees and a review of over 200,000 documents, revealed that Cruise’s flawed response was rooted in leadership failures and a confrontational culture when dealing with regulatory bodies. The Quinn report, spanning 105 pages, recommended a “dramatic overhaul” of Cruise’s leadership and personnel to effectively manage future crises and achieve its safety goals.
Despite the mishandling of the accident aftermath, the Quinn report also highlighted that the incident was the first pedestrian injury involving a Cruise autonomous vehicle in over 5 million miles of driving. This detail, while not excusing the incident, provided some context to the overall safety record of “gm cruise” prior to the accident.
However, the most significant financial drain on GM’s “gm cruise” venture was the immense computing power required for autonomous driving technology, according to Murphy. The substantial capital investment wasn’t just in the vehicle fleets themselves but primarily in the underlying technology infrastructure.
Murphy pointed to Tesla’s substantial investment in Nvidia H-100 GPUs as an example of the escalating costs. These specialized chips, crucial for training machine learning models and AI, represent a significant financial barrier. Sam Abuelsamid from Telemetry Insights explained that while powerful GPUs like the H-100 are essential for AI training, their effectiveness is contingent on achieving true autonomy, minimizing the need for human programming. Nvidia’s next-generation B-200 chip promises even greater capabilities but at an even higher cost, further amplifying the financial challenges for “gm cruise” and other autonomous vehicle programs.
The Autonomous Vehicle Landscape: Who Leads the Pack Beyond GM Cruise?
The autonomous vehicle sector remains broad and competitive, but genuine breakthroughs in full autonomy are still limited. Defining “autonomy” itself is a challenge, as current driver-assistance features, while advanced, fall short of true “hands-off, eyes-off, brain-off” driving.
Waymo, backed by Alphabet, appears to be leading the autonomous vehicle race, currently operating driverless fleets. Traditional automakers, including GM with its “gm cruise” initiative, are not yet producing fully self-driving personal vehicles, despite claims made by some, like Tesla, about their systems.
The driver-assistance systems offered by the Detroit Three – GM’s SuperCruise, Ford’s BlueCruise, and Stellantis’ Active Driving Assist – provide hands-free driving on designated roads, primarily highways, but still require driver attention. The shift away from “gm cruise” as an independent entity doesn’t necessarily signal a complete abandonment of autonomous technology by GM, as they are integrating learnings into SuperCruise.
While the pedestrian accident was a serious setback for “gm cruise”, experts like Dukarski argue it wasn’t the sole reason for the program’s restructuring. She suggests the core issue might be unresolved technological challenges in achieving reliable and safe autonomous driving AI. However, GM’s continued application of autonomous technology to consumer vehicles through SuperCruise indicates that the technology itself isn’t the primary obstacle, but rather the economic viability and scalability of the robotaxi model pursued by “gm cruise”.
Lessons from History and Future Paths for GM
GM’s decision to refocus on its core business following the “gm cruise” setback aligns with its historical responses to high-risk ventures. Kyle Vogt, former Cruise co-founder, noted GM’s pattern of early leads in innovation followed by pullbacks, citing the EV1 electric vehicle program from the 1990s as a past example.
However, prioritizing core business makes strategic sense for GM. Recent financial results demonstrate the company’s strength in traditional automotive operations, with significant profits and record profit-sharing for UAW workers.
GM is not alone in reassessing autonomous vehicle ambitions. Ford and Volkswagen also scaled back or abandoned their autonomous vehicle projects before GM. Ford, after significant investment in Argo AI, ultimately terminated the partnership. However, Ford CEO Jim Farley recently indicated a renewed interest in full self-driving technology, suggesting the industry might be poised for another wave of investment.
Sam Fiorani from Auto Forecast Solutions argues that GM’s experience with “gm cruise” is not necessarily a “mistake” but a valuable learning opportunity. The current economic climate, with higher interest rates, makes the massive capital expenditure required for autonomous vehicle development even harder to justify. Fiorani suggests GM’s step back allows startups to navigate the initial high-risk phases of autonomous technology development. Should these startups succeed, GM could potentially re-enter the market at a later stage, acquiring proven technologies and companies.
Fiorani emphasizes the inherent advantages of traditional automakers in vehicle manufacturing, sales, and logistics compared to asset-light tech companies. The initial rush into autonomous vehicles by established automakers was partly driven by the fear of disruption – the potential obsolescence of personal car ownership if robotaxi fleets became a viable and widespread transportation solution. However, the path to profitable and scalable autonomous vehicle technology remains complex and uncertain, leading companies like GM to reassess their “gm cruise” strategies and prioritize near-term business objectives.
Jackie Charniga covers General Motors for the Free Press.
