After nearly a decade and $10 billion in development, General Motors is ending its robotaxi program. WSJ’s Christopher Otts explains why Cruise wasn’t working for the legacy car company. Further Reading: -General Motors Scraps Cruise Robotaxi Program -GM’s Self-Driving Car Unit Skids Off Course Further Listening: -How Waymo Won Over San Francisco Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the future of robo-taxis?
In the transportation industry, there's a dream some people have. Robo-taxis. Self-driving cars that people can just call up and it'll take them wherever they need to go.
Yeah, it's been a big aspiration and it has huge implications for the traditional auto industry.
Our colleague Chris Otts covers the auto industry. And he says that maybe someday, if this technology gets good enough, people won't even need to own cars anymore.
If you think about it, your personal vehicle is idle the vast, vast majority of the time. If you have reliable self-driving cars, that changes the entire paradigm in terms of what the auto industry is. You could have cars that are owned centrally by a fleet instead of people owning personal vehicles.
So to move into a world where you have on-demand transportation that could totally upend transportation as we know it,
One of the companies that's been trying to do that is called Cruise. It's owned by General Motors.
Cruise is an autonomous vehicle startup that General Motors bought and has invested heavily in over the last decade, billions of dollars. General Motors, you know, only a few years ago predicted that Cruise would generate $50 billion a year in revenue by the end of the decade. And GM had hoped that Cruise was a big part of its future.
— But last week, GM said that after investing $10 billion over the last decade, it's killing its robotaxi program.
Cruise, the autonomous vehicle company, they're pulling their cars from the streets. General Motors, which owns Cruise, says it's moving away from the robo-taxi business.
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Chapter 2: Why did GM invest in Cruise?
It would be extremely difficult for a company like General Motors to come up with this self-driving technology in-house. This is a wholly different business than GM is in. So it was much simpler for GM to just spend a billion dollars and acquire this technology than it would be for them to try to build it themselves.
In late 2021, GM launched a small fleet of cruise robo-taxis in San Francisco. One of the people who took a ride was GM CEO Mary Barra. Plant a little camera here. Starting your trip. Let's cruise. Oh my gosh. This is incredible. Here we go. Cruise was one of several startups working on robo-taxis at the time. The other main player was Waymo, which is owned by Google's parent company Alphabet.
Did it look at that point that like Cruise was like doing well, like it had a chance to like compete or even win against the race against Waymo?
Cruise and Waymo were neck and neck essentially for a while in the race to really commercialize this technology. It wasn't at all clear that one company or the other company was ahead necessarily. At that time, they were both, you know, putting more cars out on the road and slowly rolling this out to customers.
Even though both companies had robo-taxis on the road, perfecting the technology for a wider rollout was still a challenge, in part because of the way its artificial intelligence worked. Sometimes, when the car found itself in an unusual situation, it didn't always do the right thing.
It is all of the unforeseen edge cases that make self-driving such a thorny problem to solve. Can you pre-program that your self-driving vehicle may end up behind another vehicle that is transporting stoplights that have not been installed yet?
but are on the way to where they're going to be installed and to understand that these are not traffic lights that the vehicle needs to pay attention to, right? There's all kinds of situations where humans can reason through what is going on in front of them that are a challenge for artificial intelligence. Right.
And one of those unusual situations that AI wasn't quite ready to solve happened last fall.
A woman is hospitalized in serious condition after being hit by an autonomous car in San Francisco. Rescuers were able to lift the car off the victim and the fire department used the jaws of life to free her. Firefighters say it was the most serious incident they are aware of involving a self-driving car.
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Chapter 3: What challenges did Cruise face?
And so one of the things that they've been saying is, well, you know, owning a fleet of vehicles and renting them out as taxis is not our core business.
While GM is pulling back on Cruise's Robotaxi program, Waymo, at Alphabet, is still forging ahead. Chris says that's because Alphabet has several advantages in the Robotaxi race. The first is money. While GM's market cap is just over $55 billion, Google's is almost $2.5 trillion.
For a tech company with a very generous valuation like Alphabet has, there's a lot more room to do experimentation and aspirational projects like self-driving. And then the other aspect of this too is the artificial intelligence that powers the brains of these self-driving cars, the cloud infrastructure that is needed to develop this AI.
All of those are obviously where Google's core competencies are more aligned with this enterprise than General Motors. General Motors never got to the part where they really have the inherent advantage, which is building the car.
In other words, it seems like if you're a robotaxi company, it might be better to be owned by a tech giant than a car company.
Exactly. So GM is not a tech company. GM is not in the cloud business. That was another thing that they recognized in making this decision that they don't have any special advantage when it comes to compute power and cloud infrastructure. So that sets them a little farther behind the competitors who are in this space.
Jem says that while it's stepping back from the robo-taxi business, it's still working on self-driving technology for personal cars, an area the company says is a more promising business opportunity.
They say that everything they spent on cruise was not for naught. Like, they're still going to salvage this technology, and it's going to make their personal vehicle autonomy efforts better and faster. But, you know, it's clear that it's a far, far cry from the ambitions that they had.
If the idea that fleets of robo-taxis are an existential threat to a car company— Where does that leave GM if they're no longer saying that they're going to be in that business?
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Chapter 5: How does self-driving technology work?
For a tech company with a very generous valuation like Alphabet has, there's a lot more room to do experimentation and aspirational projects like self-driving. And then the other aspect of this too is the artificial intelligence that powers the brains of these self-driving cars, the cloud infrastructure that is needed to develop this AI.
All of those are obviously where Google's core competencies are more aligned with this enterprise than General Motors. General Motors never got to the part where they really have the inherent advantage, which is building the car.
Chapter 6: What was the incident involving Cruise's autonomous vehicle?
In other words, it seems like if you're a robotaxi company, it might be better to be owned by a tech giant than a car company.
Exactly. So GM is not a tech company. GM is not in the cloud business. That was another thing that they recognized in making this decision that they don't have any special advantage when it comes to compute power and cloud infrastructure. So that sets them a little farther behind the competitors who are in this space.
Jem says that while it's stepping back from the robo-taxi business, it's still working on self-driving technology for personal cars, an area the company says is a more promising business opportunity.
They say that everything they spent on cruise was not for naught. Like, they're still going to salvage this technology, and it's going to make their personal vehicle autonomy efforts better and faster. But, you know, it's clear that it's a far, far cry from the ambitions that they had.
If the idea that fleets of robo-taxis are an existential threat to a car company— Where does that leave GM if they're no longer saying that they're going to be in that business?
Most of the industry is stepping back from this. GM's ultimate competitor, Ford, crosstown rival, they got out of the autonomous driving game in 2022. They were a part of a startup called Argo AI and decided that that was beyond their desires and capabilities. Other automakers are also not pursuing the robo-taxi business,
Some auto executives, Mary Barra included, are saying things now like, people are always going to want to have their own vehicles. They're always going to want to own, you know, even if the vehicle can drive itself, personal vehicle ownership is not going away anytime soon.
Does this story say more about GM or about how hard it is to create a fleet of autonomous robo-taxis?
Well, it's a harder problem than many people may have assumed several years ago. And it's definitely too soon to say that it will not happen. But certainly GM didn't see a path to commercialization in a way that made sense for them to keep investing.
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