General Motors shared details with investors Tuesday about its decision to merge Cruise with its overall refocused autonomous driving strategy.

“This is the latest in a series of decisions that GM has announced which underscore our focus on having the right technology for the future of our company and the industry and reflects our commitment to execute with speed and efficiency,” said Mary Barra, GM’s CEO and board chair. “And I want to be clear that GM made this decision to refocus our strategy because we believe in the importance of driver assistance and autonomous driving technology in our vehicles.

“This approach would allow us to leverage the strengths of GM and Cruise while simplifying and accelerating the path forward, providing customers meaningful benefits along the way. We know people everywhere love to drive their own vehicles, but not in every situation.”

Shortly after publishing a press release Tuesday announcing the changes, GM sent a notice that a conference call would be held regarding Cruise business plans just minutes before the call. Reuters reports employees were stunned to learn the news of the changes.

“‘Everyone that I’ve talked to is trying to make sense of everything. We had no idea. This is a shock,'” a Cruise source told Reuters, according to the article.

“‘It’s been business as usual, and we were trying to figure out getting cars on the road,” said the source in the article on the condition of anonymity.

According to Mary Barra, GM’s chair and CEO, the Cruise team and GM will work together to pursue Level 3 and Level 4 vehicle autonomy.

“[C]ombining forces would be more efficient and therefore consistent with our capital allocation priorities,” she said during the conference call. “Together, we intend to leverage Cruise’s AI technology, world-class engineering talent, and insights from more than 5 million driverless miles and GM’s strong brands, our scale, manufacturing expertise, and our experience with Super Cruise.”

Dave Richardson, GM’s senior vice president of software and services engineering, will be instrumental going forward, she added.

“I want to first acknowledge what Cruise has accomplished,” Richardson said. “As Mary said, Cruise has been an early innovator in autonomy and a pioneer in the industry. Over the past year, we’ve seen unprecedented advancements in AI that are also reshaping AV development. Cruise has been part of this new wave of technology where traditional modular AI systems built with hand-wired custom logic are being replaced by foundation and end-to-end models.

“Our goal at GM is to bring AV technology safely into millions of GM vehicles and the best way to do this is with a singular strategy that prioritizes the incremental delivery of autonomous capabilities. We plan to first leverage Super Cruise to expand to L3 and beyond on a path to fully autonomous personal vehicles. I believe success on this path is best achieved with a combined focused effort from both the GM and Cruise engineering teams without the complexity of building and operating a robotaxi business.”

Chief Financial Officer Paul Jacobson said the “restructuring” is expected to save GM more than $1 billion, cutting its current annual expenditure in half.

“Over the past year, we’ve been assessing our self-driving technology strategy and we engage with potential investors,” he said. “However, none of these options seem to serve the best interests of the business and our shareholders; mainly because launching and operating a robotaxi business is expected to require a significant amount of incremental time and capital beyond the $10 billion we have already invested.

“Discussions are ongoing with our minority shareholders to explore the acquisition of the shares of Cruise that we do not own. We’ve already reached an agreement with several of the largest minority Cruise shareholders that will raise our ownership to more than 97% and anticipate purchasing the remaining shares by early 2025. We plan to share more information during our Q4 earnings call in January and provide further details in the first half of the year once the Cruise restructuring is finalized.”

GM said in its press release that it will prioritize the development of advanced driver assistance systems on a path to fully autonomous personal vehicles, building on the progress of Super Cruise. Super Cruise is currently offered on more than 20 GM vehicle models and logs over 10 million miles a month.

“As the largest U.S. automotive manufacturer, we’re fully committed to autonomous driving and excited to bring GM customers its benefits — things like enhanced safety, improved traffic flow, increased accessibility, and reduced driver stress,” said Richardson, in the release.

Reuters surmises that Cruise wasn’t able to recover from a 2023 incident in which a pedestrian was dragged 20 feet by one of the company’s robotaxis, which led to halted operations, public outrage, investigations, and a $1.5 million National Highway Traffic Safety Administration (NHTSA) fine.

“With nearly $10 billion from GM, Cruise had launched commercial operations last year and was once considered an industry frontrunner with the potential to generate $50 billion in annual revenue, but it remained a money-losing enterprise,” the Reuters article says.

Images

Featured image of Cruise vehicle fleet provided by Cruise.