General Motors announced a significant reduction in its investment in its troubled autonomous vehicle subsidiary, Cruise, on Tuesday. Despite slashing funding by approximately $1 billion in 2024, General Motors assures its dedication to the self-driving initiative remains unshaken.
Following an unfortunate accident involving a Cruise robo-taxi last October, which resulted in a pedestrian being struck and dragged 20 feet, several investigations have been opened by the U.S. Justice Department and the Securities and Exchange Commission. As a consequence, the California Department of Motor Vehicles has revoked Cruise's driverless vehicle operational permit.
CEO Mary Barra of GM stated the leading U.S. auto manufacturer plans to "reorient and relaunch Cruise." She added that an announcement detailing the schedule for restarting operations would be forthcoming.
During 2023, Cruise experienced a financial burn rate of $1.9 billion, in addition to a pre-tax loss of $2.7 billion. A further $500 million was incurred in restructuring costs in Q4 as the company reduced its workforce.
Barra reaffirmed GM's commitment to Cruise and its cooperation with the ongoing government investigations. She indicated that future funding will be directed towards software development and engineering expertise retention, rather than fleet expansion and operational staff.
A commissioned technical review by engineering firm Exponent identified mapping errors in the Cruise vehicle involved in the accident and inaccurately classified the collision's nature. In response, Cruise has updated its vehicle software and initiated recalls.
The incident has led to the termination of nine executive staff members, including CEO Vogt and company co-founder Dan Kan. This recent event amplifies the pressure on GM and Barra, who previously predicted the robo-taxi initiative could produce an annual revenue of $50 billion by 2030. Despite the considerable investment and $8 billion loss performance, she continues to back the self-driving venture.