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January 31, 2024
General Motors has confirmed it will reduce spending by a billion dollars on its troubled autonomous driving subsidiary Cruise in 2024.
The figure is larger than first indicated, with Jacobsen saying in November that the cuts could stretch to “hundreds of millions of dollars,” but failing to provide an exact figure.
On the latest call, Jacobsen was more specific, explaining: “Cruise expenses are expected to be around $1 billion lower,” making it clear how the company’s trajectory is to be slowed dramatically, amid the fallout from an incident involving one of its self-driving taxis in October.
$1 billion amounts to around half the previous spend.
However, CEO Mary Barra insisted Cruise still has a future and spelled out what the next steps would be as GM attempts to “refocus and relaunch” the brand.
Barra told analysts: “We are committed to Cruise. When we look at the technology, the foundational technology is sound. We had already demonstrated and validated externally that Cruise technology is already safer than a human driver.”
But she added that the chastening experience of the past few months had provided clear insight into what was required. Barra said GM had learned that people expect robot cars “to be much more safe” than those driven by human operators.
Barra continued: “And with that knowledge, we are already working on what the level of the technology needs to be to meet the consumers' expectations.
“The other big learning was, as you roll out technology that is as transformative as this and has incredible benefits to safety, you have to do it in a way where you’re really working with the regulators at the local, state, and federal level, as well as first responders.
“So, as we roll out anywhere, we are going to make sure we build the right relationships, they understand the technology, they understand the benefit of the technology, and that’s what we’ll do.”
While Barra stopped short of providing a timetable for Cruise’s relaunch, she did provide details of the new strategy.
“Our planned 2024 investment in Cruise reflects our more deliberate and cadence go-to-market strategy, and we are developing new financial targets and a new road map. We will continue to invest in the people who are advancing the software, specialized hardware, and AI capabilities.”
Cruise has been in freefall since the Oct. 2 accident in San Francisco that saw a pedestrian dragged along the road for 20 feet by one of its autonomous vehicles after being struck by a human-driven car.
Amid an ugly aftermath to the incident, key executives left, hundreds of jobs were axed and Cruise was accused of not being transparent about what occurred. An independent investigation commissioned by Cruise criticized the company for “poor leadership, mistakes in judgment, lack of coordination, an ‘us versus them’ mentality with regulators and a fundamental misapprehension of Cruise’s obligations of accountability and transparency to the government and the public.”
The company recorded a $2.7 billion pre-tax loss in 2023, not including restructuring costs of around $500 million.
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