General Motors is looking forward to scaling back its self-driving unit cruise after a pedestrian’s injury last month, which led to its testing being suspended. The automaker, recognized for Chevrolet and Buick, is set to unveil the extent of its reduced spending on self-driving technology that was previously a focal point in its investor presentations.
For years, the company has traded under the slogan “zero crashes, zero emissions, zero congestion,” reflecting its commitment to a future featuring electric and autonomous vehicles. While not expected to officially discard this slogan, GM plans to curtail spending on the unit in light of anticipated slower testing progress. Quarterly investments in Cruise by GM amount to approximately $700 million, with their driverless vehicles operating in select U.S. cities such as San Francisco as a taxi service.
Despite previous commitments to Cruise, GM’s strategy now involves relaunching in one city to demonstrate performance improvements in safety before expanding. This adjustment may impact GM’s long-term revenue targets, earlier estimated at $80 billion by 2030, primarily driven by new segments like self-driving income and software.
Cruise suspended all self-driving operations in October following a publicized accident in San Francisco. The California Department of Motor Vehicles criticized Cruise, claiming the cars were “not safe” and that the incident details had been misrepresented. Cruise, however, stated it proactively shared information with relevant authorities.
Consequently, Cruise engaged law firm Quinn Emanuel to investigate its response to the accident. GM’s decisions regarding Cruise spending do not align with the law firm’s investigation timeline. However, analysts anticipate inquiries into the feasibility of GM’s long-term aspirations considering recent events.
Cruise’s testing approach has been scrutinized post-accident, with questions raised about the rush to be first. Transportation labor organizations have highlighted safety concerns regarding the expanded testing of autonomous vehicles, urging regulatory intervention.
Despite GM’s substantial investments in Cruise, including the acquisition of Softbank’s minority stake for $2.1 billion last year, some investors have grown apprehensive about its prospects post-incident. The investor sentiment suggests a dependency on Cruise for GM’s software revenue targets, yet uncertainty prevails regarding its profitability.
