GM’s Cruise robotaxi business is latest growth initiative to falter | Global News Avenue

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 even eventually the potential for “flying cars” (also known as urban air mobility).

“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, Barra End of Cruise robot taxi business On Tuesday, it made clear the automaker’s growth priorities have changed Wider industry-wide retrenchment to preserve capital. Companies including General Motors are now focusing on more “core” operations and related business opportunities, including software, electric vehicles and “personal autonomous vehicles.”

“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.

Driverless ride-hailing services were supposed to be shining star GM’s growth opportunity is what just a few years ago executives described as an $8 trillion market opportunity the automaker would lead. These include touted by former executives $50 billion in revenue by the end of this decade, and Cruise ships are taken seriously 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.

The automaker’s main competitors are letter– Backed by Waymo, currently the last entity with any significant public business. Others, most notably Teslaambitious Robot taxi businessbut have so far failed to commercialize these businesses.

To its credit, Wall Street, which had previously pushed for 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.

Like other companies, GM quickly stopped trying to impress Wall Street with growth initiatives, including power generation $280 billion in new business By 2030, refocus efforts on core business to generate profits amid economic and recession concerns.

Analysts generally viewed GM’s decision as a positive, saving the automaker more than $1 billion annually in capital they expect can be used to Additional share repurchasesincluding the goal of reducing its outstanding shares to less than 1 billion shares.

“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.”

GM plans to diversify business into trendy industries like ride-sharing and other “mobility” ventures – buzz words The industry has previously used it for growth plans, or the start-up has largely underwhelmed 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. It has also failed to announce any meaningful plans for fuel cells to work with ships, trains and planes, and Several have been closed before “Mobile” business.

Not all of the non-core businesses GM has launched in recent years have failed. General Motors Energy and BrightDrop commercial electric vehicle division continue to Automaker’s ‘Envolve’ fleet business.

Meanwhile, GM’s financial arm continues to operate insurance business The product was launched in late 2020 as part of growth plans for its OnStar telematics and data division. 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, both of which have recently announced new contracts or partnerships. That includes hundreds of millions of dollars in contracts from General Motors Defense.

The silver lining to GM’s cancellation of Cruise’s robotaxi business, besides saving capital, is that it sees more hope in continuing to grow its robotaxi business. super cruise ship No need for advanced driver assistance systems. This includes more semi-automation and eventually autonomous capabilities.

General Motors was the first automaker to offer such a hands-free system in 2016. However, until recently the automaker began rolling out the system across its lineup, development was extremely slow. 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.

“This shift in strategy demonstrates that GM continues to believe in the potential of autonomous technology for personal vehicles. Going forward, GM will focus on improving SuperCruise’s capabilities, and continued technological advances in areas such as artificial intelligence (AI) will further drive SuperCruise feature,” BofA Securities’ John Murphy said in an investor note on Wednesday.

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.”

General Motors not expected to be a “latecomer” in the field robot axis. In fact, this is The first to offer such rides Considered by many to be one of the leaders until last year, the company grounded its autonomous operations in October 2023. Accidents involving pedestrians In San Francisco.

National Highway Traffic Safety Administration Cruise fined $1.5 million The company failed to disclose details of the incident, which included a pedestrian being dragged 20 feet by a Cruise robotaxi after being struck by another vehicle.

A third-party investigation into the incident ordered by GM and Cruise found that cultural issues, incompetence and poor leadership exacerbated regulatory oversight, cause accidents. 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 of then-CEO and co-founder Kyle Vogt, who left the company in November 2023, making the final decision to withhold information, particularly about the media. The company resigned.

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 earlier this year Pointing out GM’s history of having first-mover advantages in technology, as it did with Cruise and Super Cruise, but then squandering it. GM 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 the company abandoned.

GM follows several other companies in abandoning robotaxis, including its closest cross-town rival Ford Motor Companywhich closes its Argo AI autonomous driving unit 2022 with Volkswagen.

The leader in robotaxis in the United States 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 scaling a robo-taxi network and the role that ride-sharing platforms can play (a bullish indicator) as self-driving cars try to commercialize, but we think given Waymo’s 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.