Will GM’s Cruise Overcome Setbacks and Take the Lead in Driverless Cars?

General Motors’ autonomous vehicle division, Cruise, was hit with a setback this week as it announced a temporary halt on both manned and unmanned robotaxi trips. The decision followed an accident in San Francisco, where a pedestrian was struck by one of Cruise’s vehicles. This incident prompted the California Department of Motor Vehicles to order Cruise to remove its driverless cars from the roads.

While autonomous vehicles have shown impressive safety records overall, such accidents can erode passenger and regulatory confidence in the technology. Cruise’s latest setback comes just three months after it obtained permission to expand its services, making it a highly publicized blow for the company.

Cruise, which aims to launch driverless cars in Tokyo through a partnership with Honda by 2026, has projected potential revenue of $50 billion by 2030. However, the accident and subsequent pause in operations in San Francisco could significantly hinder the realization of these ambitious goals.

Financially, Cruise is currently in a challenging position. In the first nine months of this year, the division reported only $76 million in sales, resulting in an earnings loss of $1.9 billion. This loss is greater than its available cash and marketable securities, amounting to $1.7 billion.

Despite the setbacks, General Motors remains committed to Cruise. However, the company also faces other battles, including issues with electric vehicle production and ongoing union disputes. As it navigates these challenges, GM may explore alternative strategies for Cruise’s future. The company could follow Uber’s lead by selling the division or mirror Ford’s approach of integrating the driverless car unit into its overall business to develop driver assistance systems.

The road ahead for Cruise remains uncertain, yet the industry’s commitment to advancing autonomous technology persists. As safety concerns continue to be addressed, the ultimate success of driverless cars lies beyond one setback and requires rigorous development and testing.

Frequently Asked Questions (FAQ)

1. Are autonomous vehicles safe?
Autonomous vehicles have demonstrated impressive safety records, but isolated accidents can hinder public confidence in the technology. Continuous improvements are being made to enhance safety features and address potential risks.

2. What impact does a setback like the one faced by Cruise have on the development of driverless cars?
While setbacks can temporarily slow down progress, the industry’s commitment to advancing autonomous technology remains steadfast. Such setbacks highlight the need for further safety measures and testing to ensure public trust in driverless cars.

3. What are some possible future strategies for Cruise?
General Motors may consider various options for Cruise’s future, such as selling the division or integrating it into its overall business to develop driver assistance systems. These decisions will depend on factors like financial viability and market conditions.

4. How can the general public get updates on mergers and acquisitions, like the one involving Cruise?
The FT’s Due Diligence newsletter provides curated briefings on the world of mergers and acquisitions. To sign up for this newsletter, follow this link.