If there is one pairing that is proving to be fruitful, it would be the cozy, "first buddy" relationship between President-elect Donald J. Trump and the co-leader of the yet-to-be-established Department of Government Efficiency (DOGE) and Tesla (TSLA) CEO Elon Musk.
The relationship between the two is already bearing fruit that significantly affects Musk's interests.
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According to a report by Bloomberg, first published on the evening of November 17, the Trump transition team members told the financial publication that the upcoming administration plans to make a federal framework for self-driving vehicles a priority for the forthcoming transportation department.
Such a move would effectively streamline companies working to advance robotaxi endeavors — including Tesla. However, one notable company won't be able to reap the benefits if the legal red tape is lifted.
General Motors pulls the plug on Cruise
In a stunning turn of events, General Motors announced late on December 10 that it is shutting down operations of its Cruise robotaxi venture, citing the prohibitively expensive costs of continuing to develop the technology.
“We looked at the amount of money to deploy a robotaxi business and to maintain that business and grow it, it’s quite a bit of capital,” GM CEO Mary Barra told analysts on a call Tuesday. “A robotaxi business is not GM’s core business.”
The move to divest from Cruise is another step in rethinking the "aspirational" goals it made back in 2021. Back then, the goal was to, by 2030, make a sizable chunk of its revenue from running a robotaxi service and by selling electric vehicles. Already, the automaker scaled back its EV production goals, and noted that it would give up on making hybrids if President-Elect Trump makes fuel economy standards easier for automakers to achieve.
In case it was unclear before, it is clear now: GM are a bunch of dummies.
— Kyle Vogt (@kvogt) December 10, 2024
In a post on the social media platform X (formerly known as Twitter) Cruise founder and former CEO Kyle Vogt lambasted Barra's decision, calling the world's second-largest automaker "a bunch of dummies" for what they have done.
"In case it was unclear before, it is clear now: GM are a bunch of dummies," Vogt wrote on X.
GM is expected to combine Cruise operations with its own teams working on autonomous driving technology to share expertise that may lead to more advanced systems in its cars, including fully driverless systems in Chevys and Cadillacs.
Cadillac
Currently, drivers can opt for a "hands-free driving" feature called SuperCruise on select General Motors vehicles such as the Cadillac Escalade and the Chevrolet Tahoe. Like Ford's BlueCruise, the Supercruise system is only compatible with a select number of roads, including major highways and corridors such as major interstates.
According to people familiar with the move who spoke to Bloomberg, the move caught Cruise employees off-guard as they inched closer to fully recovering from an accident in late 2023 in which a pedestrian was dragged approximately 20 feet underneath one of Cruise's autonomous Chevrolet Bolts on the streets of San Francisco.
The incident caused California's Department of Motor Vehicles to revoke Cruise's license to operate its robotaxi fleet in the state, effectively halting driverless operations nationwide. In addition, its founder and then-CEO Kyle Vogt resigned from his position. Subsequently, it laid off a quarter of its workforce and fired nine key execs.
Related: General Motors is scaling back its Google-rivaling AI product
To keep [Cruise] going is to keep spending money
Cruise had been on its way back. In February, reports from Bloomberg and Reuters noted that Cruise would resume operations on public roads in cities like Dallas and Houston with safety drivers ready to take the wheel if necessary.
However, as time progressed, the issue of funding became more apparent. GM spent $10 billion on Cruise since it took the wheel in 2016, $850 million of which came from an injection in June this year.
In a letter penned by General Motors CEO Mary Barra to shareholders alongside its second-quarter 2024 financial results in July, the CEO said that it was ceasing the development of the Cruise Origin autonomous vehicle.
In concept, the Origin predates Tesla's Robotaxi in offering a car without any pedals or steering wheel, however, getting such a vehicle to pass any sort of red tape would be a bureaucratic nightmare, which could hamper any return on investment for GM.
“The Cruise team will also simplify their path to scale by focusing their next autonomous vehicle on the next-generation Chevrolet Bolt, instead of the Origin,” Barra said in the company’s letter.
“This addresses the regulatory uncertainty we faced with the Origin because of its unique design. In addition, per-unit costs will be much lower, which will help Cruise optimize its resources.”
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Analysts see green for GM, opportunity for robotaxi rivals
In a company statement, GM noted that it is ceasing to "fund Cruise’s robotaxi development work given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market," adding that the move should lead "to lower spending by more than $1 billion annually."
In an analyst's note published on December 11, Bank of America analyst John Murphy highlights that GM's exit and annual savings of $1 billion will allow "for greater return of capital to shareholders."
However, he also suggests that GM's exit may prove that its rivals like Tesla and Google-owned Waymo (GOOGL) might be better at the whole robotaxi game.
"We believe GM's move also potentially implies that other companies (Tesla & Waymo) have better tech and/or that the market may not be appealing for later entrants," Murphy said. "Waymo is already offering a robotaxi service across several US cities and Tesla plans to launch its service in 2025."
However, the BofA analyst believes that GM's decision to absorb the Cruise team will work positively for advancing its SuperCruise tech, as the existing team already holds much of the heavy lifting, knowledge, and experience in making advanced autonomous vehicles.
"We expect [SuperCruise tech] will still require meaningful investments, but GM appears confident that this strategy makes more sense than using AV tech developed externally from companies such as Mobileye (MBLY)," that analyst said.
"Interestingly, GM believes that people still like to drive (we do!), and its goal is for the personal AV tech to make driving safer and less stressful. Additionally, it wants to make the AV technology more accessible."
General Motors trades on the New York Stock Exchange under the ticker GM.
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