Late last year, General Motors announced a new corporate restructuring plan that would see the automaker close down a handful of its North American manufacturing plants and discontinue several vehicles, including the Chevrolet Cruze and Chevrolet Impala, among others.
One of the main reasons GM felt the need to undergo such a major restructuring was due to predicted changes in the automotive industry. By closing plants and discontinuing slow-selling vehicles, GM freed up some cash to invest in its Cruise subsidiary, which is currently working on a self-driving robotaxi.

A Cruise prototype testing on public roads
But why does GM see autonomous vehicles and a robotaxi service as being important to its future? To get an answer, we have to look to an unexpected place: Brazil.
As we covered in a separate story published earlier this week, GM is struggling to turn a profit in Brazil despite Chevrolet being the best-selling brand in the entire country. This is because a good portion of new cars sold in the country go to rental agencies, who then lease the cars out to people who use them to drive Uber. This situation is a one-two punch to GM’s pocketbook. Not only does this mean it’s selling lots of low-profit base model cars to rental agencies, the cars are then being used to run a service that is making it so many people do not even need to own a car.
In North America, GM’s most profitable vehicles are full-size, body-on-frame trucks and SUVs, like the Chevrolet Silverado and GMC Yukon. Most Uber and Lyft drivers don’t choose to drive vehicles like these – instead opting for small, fuel efficient cars. With this in mind, it’s easy to see why GM would be in trouble if the situation in Brazil were to come about in North America. Not only would less people be buying its profit-heavy trucks and SUVs, it wouldn’t have any inexpensive compact cars to sell to Uber drivers or rental agencies, as it has discontinued many of them.
It’s not a direct comparison, as vehicle ownership in South America is quite a bit different than in North America. While having a new car in the US and Canada is relatively common, it’s much more of a luxury in South America. The situation still gives us a good idea of why GM is pouring so much cash into Cruise, though. If the company can ever launch a truly driverless taxi service, it could leapfrog Uber and Lyft and take over the massively valuable mobility space. Most of the money Uber and Lyft make goes to paying drivers, but an autonomous ride-hailing app would circumvent this problem.
GM has originally planned to launch Cruise before the end of 2019, but it pushed back the launch after experiencing setbacks in the development of its self-driving technology. It’s currently not clear when the service will launch, with development still ongoing in San Francisco. You can bet GM won’t be giving up on its self-driving mission, though, with the automaker previously acknowledging that the self-driving space could eventually prove to be a multi trillion dollar industry.
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Source: Reuters
Comments
GM Cruise news has been sparse lately so to have this detailed update is welcome. Thanks Sam.
I wrote the following about a week ago. It sort of matches with the above.
The trend is evident – The American middle class is slowly being priced out of the new-car market. The same trend is happening in other “developed” countries. So, what is GM doing about it? The answer is lots. For them the future is electric AVs. They have been very plain about this, especially Barra.
What will most AVs be? Before long many will be autonomous taxis (ATs). Eventually their fares will only be about 20 cents per mile. It will no longer make sense to pay 70 cents per mile to be a car owner. Most people will stop owning cars and just use ATs instead. More convenient and much cheaper.
what can be more convenient than walking into my garage whenever i want and driving to my destination?
and this year, 17 million cars will be sold in the US alone. someone is buying them.
@Steve
I think we are many Decades from not having a personal vehicle or vehicles. I do believe Autonomous will become a Standard on the Freeways in probably no more than 20 years maybe sooner. The Automakers Data will be able to show when vehicles are moving at that speed, Autonomy will dramatically reduce Traffic and most importantly accidents. When Cars can talk to each other the Freeway Autonomy will become Super Easy. I mean GM’s Super Cruise and Teslas Autopilot are basically doing it today. Just imagine when all cars have V2V Communications on the Highways. Now Full Blown Autonomy in my opinion is further away. I think Robotaxi’s will be first and then when people get used to it maybe we all will be able to have them as Standard Fare in all of our cars.
That is my opinion anyways.
So the GM strategy is to cancel the products that people can afford, then price them out of the market so most will no longer have the personal freedom to jump into their own car and drive. Will Americans stand for that?
I have always thought that GM should have been doing what Tesla is with leased Model 3’s with their Chevy Bolts. And that is the following. If someone leases a Bolt, they cannot purchase it but have to turn it back in. Those Leased Model 3’s is what Tesla will utilize for their Robotaxi Fleets. That means they most likely won’t have to spend money on Producing All New Models right away to start their Program. This is a great idea and I think GM should start now with Bolts. The main difference between the Bolt and Model 3 is that every Model 3 has the hardware already implemented into every single vehicle and all Tesla has to do is to Download the Full Self Driving Software when they get those leased vehicles back. This is why Tesla will most likely be first to market or at least have a Bigger Footprint quicker in the Marketplace.
Tesla thinks 10 years ahead and the Rest of the Auto Makers are thinking one Model Generation at a time.
But if GM at least starts now with Leased Bolts, they will at least have the Car to retrofit in two and three years time instead of having to build All New Models right away. This would have gotten more Cruise Bolts on the Streets gaining critical Date.
The Data is the most important part right now and nobody is even close to the Miles collected that Tesla has. Not even Waymo.
what ever happened to tesla’s army of robo-taxis making tens of thousands for their owners? didn’t musk say that would happen next year?
The year that was told to Tesla owners is 2020 which is a month away and the year 2020 has 12 months. We shall see how close to that Date they get too. I have always thought 2020 was a pipe dream and 2022 was most likely but he is still stating 2020. I will be floored if that comes to fruition though. I doubt the Government will allow it that quickly. The Government will require a lot of Data to allow Full Blown Autonomous Robotaxi vehicles driving on our streets. I think Tesla might get the Software fully Bakes by 2020. And as far as the Data is concerned, no other Company has anywhere near the Miles Driven Data that Tesla has. Their lead in that Department is actually insane. And remember that Waymo which is second in Date only has their Data in Geofenced areas. Tesla has Billions of miles throughout the World. \They are definitely in the lead.
Not even a close competition.
Tesla has over 2 Billion Autonomous Driven Real World Miles around the World. Waymo has a little over 15 Million Geofenced. miles.
I forgot to mention. Tesla didn’t start leasing Model 3’s until Mid year 2019. All leases are three years so that would put my prediction of 2022 right on Target. I think Elon will have their Software ready sometime in 2020 and it will take the Government at least a year or two to sign off on it.
I think in late 2020 or early 2021 Tesla will apply for Geofenced Robotaxi routes to collect Data for the Government.
That would be my prediction.
2022 … yeah sure.
https://www.autoblog.com/2019/12/13/tesla-autopilot-crash-nhtsa/
@Steve
Oh ok. There was an accident with Autopilot? How original of an article.
If you read what I wrote I said Freeway Autonomous will take place first when Cars have V2V. Computers don’t look backwards to see what their Dog is doing. Autopilot is proven to be much safer on the Freeway than Humans. The point you are missing is the following…Autopilot and Super Cruise are now on our Interstates but they are being used with Humans driving all around them. Do you now understand the difference?