Fortune – General Motors has sliced Cruise’s budget by $1B, but says it may bring on new Cruise investors when it starts rolling robo-taxis back on the streets
Editors note: GM is exploring whether they can get others to bail out Cruise by claiming that it is an AI company, since that is where the money currently is. And still, no plan for restarting actual service.
See full original article by JESSICA MATHEWS at Fortune
After an accident last fall that led General Motors-owned Cruise to pull its robo-taxis off the streets, GM is weighing whether it will bring more outside capital into its autonomous robo-taxi subsidiary when it’s finally ready to start putting its vehicles back on the road, a GM executive said earlier this week.
While speaking at a Bank of America event on March 26, General Motors CFO Paul Jacobson said that GM was considering bringing in other strategic partners for capital investment.
“Yes, we’re really looking at everything,” he said in response to a question about new strategic capital in Cruise. “There’s obviously been a lot of capital available for AI. And this is one of the most complex AI implementation[s] that’s out there. So we’re looking at that,” Jacobson said.
Cruise has recorded $9.2 billion in pre-tax losses since GM acquired the company in 2016, according to filings. In recent months GM has overhauled Cruise’s executive team and slashed its budget by $1 billion following an incident last fall in which a pedestrian that had been struck in a hit-and-run was subsequently dragged by one of Cruise’s autonomous robo-taxis in San Francisco. Regulators determined Cruise had not been forthcoming enough with them about the incident, and ordered Cruise to halt its taxi service in San Francisco. Cruise subsequently pulled all of its vehicles off the road across the U.S., and has not yet issued any kind of timeline for putting them back on.
Even so, investors are getting antsy, as GM has poured billions of dollars into the company, and GM’s commitment to Cruise technology—which uses advanced sensors and machine learning systems to help its vehicles navigate and respond to objects around them—has distinguished GM from competitors in the marketplace.
For now, General Motors has turned most of its current attention with Cruise to rebuilding public trust, addressing safety concerns, and handling ongoing government and agency investigations. Despite the havoc, General Motors has maintained it is still publicly committed to Cruise, though it has been extraordinarily cautious with timing of relaunching vehicles on public roads and has made it clear Cruise will move at a slower pace in the future.
Jacobson specified that GM has been undergoing a “strategic review” of the Cruise business to determine what the business will look like going forward. Without giving many details on that review, Jacobson said that GM knows it will need to be more disciplined with its spending than it had been.
“We want to maintain both the urgency of getting the technology, because we do think that it is really strong, and we’ve built a good lead over many of the others that are out there. But we’ve also got to be capital-disciplined and find the right way to be strategic about it. So that work is ongoing,” he said.
GM has added Honda, Microsoft, and Walmart as strategic investors in Cruise in the years since it acquired the robo-taxi company in 2016. But it’s been about three years since any kind of partnership has been struck.
“Cruise doesn’t require additional capital now,” a GM spokesperson says. “Where we source capital from in the future will depend on what the plan is to relaunch the business.”
See full original article by JESSICA MATHEWS at Fortune
