The Verge – GM pumps $850 million in Cruise to keep struggling robotaxi company afloat
Editors note: we had previously posted that Cruise was approaching a financial cliff. Prediction was that Cruise did not have enough money on hand to make it past Q3 2024. Turns out we were totally right. But for some reason GM has decided to double down on their $8.2 billion waste of money by burning another $850 million. But that will only get them through another 2 quarters. That means they have enough cash through Q1 2025. There is no hope in GM finding outside investors. Therefore at the end of the year GM will have to decide if they will burn even more money or finally just drop the fiasco. Given GM’s lack of ability in cutting their losses, I predict that end of the year GM will make one more ~$1 billion investment and then be done with it.
See original article by Andrew J. Hawkins at The Verge
The company is expanding its manual testing to Houston as it slowly inches its way back to driverless operations following a pedestrian injury.
General Motors is investing $850 million into Cruise to help cover the company’s operational costs after it was forced to shut down its robotaxi service when one of its driverless cars struck a pedestrian.
GM chief financial officer Paul Jacobson announced the investment onstage at Deutsche Bank’s Global Auto Industry Conference in New York City today. The money would be used to cover Cruise’s operational costs as it slowly resumes testing its autonomous vehicles in several US cities. The company says it is also looking for new external investors to help bolster its financial situation.
Cruise was a big money loser for GM, even prior to the incident last year in which one of its driverless vehicles dragged a pedestrian 20 feet in San Francisco after she was struck by a hit-and-run driver. The automaker has lost $8.2 billion on Cruise since 2017, with $3.48 billion lost in 2023 alone. Cruise recently agreed to pay at least $8 million in a settlement with the woman who was injured in the October 2nd incident.
Cruise was a big money loser for GM
In the aftermath of the incident, Cruise grounded its vehicles and launched a comprehensive safety review. The company hired two outside law firms to review its safety protocols and determine whether Cruise purposefully withheld video footage from the California DMV of its driverless vehicle dragging the hit-and-run victim to the side of the road. (The law firm concluded that the footage was inadvertently withheld.) The company issued a voluntary recall of all 950 Cruise vehicles last year to update the software and prevent similar incidents in the future.
Several top executives resigned, including co-founders Kyle Vogt and Dan Kan. And a quarter of the company’s staff was laid off. Several GM executives stepped in to right the ship, including general counsel Craig Glidden as Cruise’s co-president, alongside Mo Elshenawy, who will also become chief technology officer. Former Tesla president Jon McNeill, who’s been a board member at GM for several years, was named vice chair of the Cruise board alongside GM CEO Mary Barra.
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Last year, GM’s Jacobson told investors that the automaker would reduce its spending on Cruise by “hundreds of millions” of dollars. But rather than completely cut ties with GM, like Ford and Volkswagen did with Argo AI, GM has said it remains committed to the struggling robotaxi company in the hopes that it will eventually see a return on its massive investment.
Meanwhile, Cruise has been slowly deploying more cars on the road, though still with human safety drivers behind the wheel. The latest city to host its vehicles is Houston, where the company says it will begin with human-driven vehicles. In the coming weeks, Cruise says it will transition to supervised autonomous driving with safety drivers ready to take over if needed. The company is also operating vehicles in Phoenix and Dallas.
See original article by Andrew J. Hawkins at The Verge
