General Motors’ (GM) ambitious foray into the world of autonomous vehicles has hit a roadblock with the departure of the co-founders of its self-driving subsidiary, Cruise. The resignation of Daniel Kan, the Chief Product Officer, and Kyle Vogt, the Chief Executive Officer, raises questions about the future of GM’s autonomous division and its ability to compete with industry leader Tesla.
GM acquired Cruise in 2016 and garnered the support of major investors such as SoftBank’s Vision Fund, Honda Motor, and Microsoft. While other autonomous-driving ventures faltered, Cruise made significant strides, transitioning from limited rides in San Francisco to providing all-day self-driving services. However, in a major setback, the California authorities suspended Cruise’s license after one of its vehicles was involved in an accident that resulted in a pedestrian fatality. The company was accused of withholding evidence, further damaging its relationship with regulators.
The departures of the co-founders, within a day of each other, can have a profound impact on the autonomous division’s momentum and recovery prospects. Leadership schisms, as demonstrated by recent events at OpenAI, can have dire consequences. Mary Barra, GM’s CEO, remains optimistic about the future of Cruise and has enlisted an external law firm to review the division’s processes and controls.
While GM’s position may seem precarious, there are potential silver linings. The parent company currently trades at a lower multiple of operating profit compared to rivals like Ford. Additionally, despite the setbacks, GM has not lost faith in Cruise. However, with SoftBank divesting its investment and Honda showing reluctance to further fund the division, Cruise may face financial challenges in the near future.
The autonomous-driving industry is highly dependent on its relationship with regulators, and GM’s recent setbacks highlight the risks associated with nascent technologies. It remains to be seen how GM will navigate this obstacle and if it can still pose a serious competition to Tesla in the electric and autonomous vehicle space.
1. What is Cruise?
Cruise is General Motors’ autonomous vehicle subsidiary.
2. Why did Cruise suspend its self-driving service?
Cruise suspended its self-driving service after one of its vehicles was involved in an accident that resulted in a pedestrian fatality. The company also faced accusations of withholding evidence from regulators.
3. Who are the co-founders of Cruise?
The co-founders of Cruise are Kyle Vogt, the former CEO, and Daniel Kan, the former Chief Product Officer.
4. Has Cruise faced additional challenges apart from the accident?
Yes, the U.S. National Highway Traffic Safety Administration opened a safety report into Cruise following reports of crashes due to sudden braking by its autonomous vehicles. Furthermore, California’s Department of Motor Vehicles suspended Cruise’s autonomous license in the state, citing concerns over the safety of its technology.
5. What steps are being taken to address the challenges faced by Cruise?
GM’s CEO, Mary Barra, has initiated a review of Cruise’s processes and controls through the engagement of an external law firm. The company is seeking to regain the trust of regulators and investors.