Three months ago, General Motors (GM) was forced to make one of those gut-wrenching corporate decisions.
After having spent $10 billion over eight years on its Cruise subsidiary, it had very little to show for it.
“The auto industry will never be the same,” we wrote at the time – somewhat tongue in cheek…
Cruise, an autonomous driving startup, was meant to be GM’s play on autonomous ride-hailing services – or robotaxis.
GM, ridiculously weak in electric vehicle technology, needed a way to ensure that driverless cars would be General Motors cars. That’s why GM acquired Cruise. If it owned the company that would eventually operate a robotaxi network, it could ensure that the robotaxis would be GM cars.
That bet didn’t pan out.
After eight years, GM lost patience and couldn’t suffer any more pain on research and development costs with no path to real revenue.
Cruise’s autonomous technology continued to lag behind the industry, and there wasn’t a clear time frame as to when Cruise might be able to overcome its technological limitations.
Cruise chose an approach to autonomous driving quite similar to Google’s Waymo, and Amazon’s Zoox – specifically that of requiring expensive sensor arrays and extremely high-resolution mapping of a geofenced area to offer autonomous ride-hailing services.
The main difference of course is that Google and Amazon do not have any real financial constraints. They both ooze free cash flow, are sitting on mountains of cash, and can afford to invest billions for as long as it takes without any real concern about the impact on share price.
GM doesn’t have the luxury.
Which is what precipitated the decision to shut down Cruise in December 2024.
GM decided to exit its strategy of having control over a robotaxi network and hinted at a future autonomous driving strategy at the time:
General Motors plans to realign its autonomous driving strategy and prioritize development of advanced driver assistance systems on a path to fully autonomous personal vehicles.
GM will build on the progress of Super Cruise, the company’s hands-off, eyes-on driving feature, now offered on more than 20 GM vehicle models and currently logging over 10 million miles per month.
In February, the car company announced that it acquired full ownership of Cruise.
The “acquisition” itself was widely misunderstood…
Cruise had raised $18.8 billion in total since its founding. GM was simply cleaning up its mess. It acquired the outstanding stakes that companies like Honda, Microsoft, Walmart, and some funds had in Cruise.
The amount it paid wasn’t announced, but I’m confident it’s peanuts. Cruise/GM burned through $18.8 billion and was unable to develop the technology in a way that it could be commercialized. And the competition had – meaning there were no buyers for Cruise. The only option was to shut it down and absorb anything of value into General Motors.
This week, we can now see what GM believes is its path forward.
At NVIDIA’s annual GTC conference yesterday, GM announced its partnership with NVIDIA around using artificial intelligence (AI) in its business.
That means using NVIDIA’s technology for simulation and AI model training, for factory operations and automation…
And at some point in the future, for launching what GM is calling personal autonomous vehicles (PAVs).
Sounds impressive!
But it was an embarrassment.
GM already had a partnership with NVIDIA, and it is already using its technology for AI and its Super Cruise advanced driver assistance system (ADAS). Nothing new here. And there was no timeframe whatsoever for GM’s launch of PAVs.
To be fair, GM isn’t starting from scratch. After all, it has Super Cruise – which it claims its customers are logging over 10 million miles a month “driving” hands-free on highways. But that’s a long way from fully autonomous driving on any road, anywhere.
No company can do that. No company other than Tesla…
At the same time that GM is pressing the reset button on its autonomous driving technology, Tesla is moving forward with the launch of its own robotaxi network. No geofencing is required.
This week, the California Public Utilities Commission (CPUC) approved Tesla’s application for a transportation charter-party carrier permit, which gives Tesla a license to operate ride-hailing and chauffeur services in the state.
The permit itself isn’t a big deal, as it allows Tesla to operate a fleet of autonomous vehicles with a safety driver in the front seat. It will be used/tested with Tesla employees in the immediate future and then rolled out to the public.
The real significance is that this permit is a prerequisite for permit applications with the CPUC and the Department of Motor Vehicles (DMV) to allow for a fully autonomous robotaxi service that can charge for transportation to the public. No safety driver will be required.
It’s happening now – the wheels are turning, and we won’t have to wait long.
Tesla’s latest full self-driving software (FSD) version 13.2.8 is ridiculously good.
Not only is it a better driving experience compared to Google’s Waymo, but it also comes with a massive difference… there is no geofencing. If you’d like to be driven from an address in San Francisco to a home in San Diego, a Tesla with FSD will have no problem at all. A feat like that is impossible, however, for a Waymo.
And the robotaxi software is already complete. It’s a sleeker, cleaner look and feel compared to an Uber or Lyft application, and just as intuitive to use.
Source: Tesla
Tesla is already using this ride-hailing app internally with employees being autonomously shuttled around the San Francisco Bay area in Teslas. In other words, the tech and the app are already working.
And Teslas are already driving their “owners” around using FSD to the tune of more than 10 million miles a day.
June is right around the corner when Musk expects to be launching “unsupervised” ride-hailing services in Austin, the home of Tesla’s corporate headquarters.
Given the permit just received in California, I expect similar services will begin in that state in a matter of months after the Austin launch of services happens. After that, it will be easy for other states to follow in the U.S.
It’s very hard to communicate the urgency of these developments. Unsupervised autonomous transportation will result in an entire shift in public transportation. It will draw riders away from public buses, trains, and subways as it will be cheaper, cleaner, and safer. No schedules to contend with other than your own. And it will open up entirely new businesses and job opportunities for managing shared autonomous fleets of Teslas.
And we’re now less than 12 months away from seeing these shiny new, two-seat golden chariots – the Cybercab – without a steering wheel or pedals. Nothing for the passengers to do but sit back, relax, and enjoy the ride…
General Motors’ announcement is a tacit acknowledgment of the necessity of autonomous technology. Without a clear path toward autonomy, a car company will quickly find itself at a severe competitive disadvantage.
The pundits still don’t understand this. The “killer app” for the automotive industry isn’t a new design, a modern color palette, or a clever folding tailgate on a pickup truck.
The killer app is autonomy – the freedom to not have to drive, the freedom to not have to worry about the traffic, and the freedom to reclaim our time.
And when Tesla gains regulatory approval and its robotaxi services are available to the general public, everything about ground transportation will change.
To our autonomous future,
Jeff
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
