As we reported earlier this week, General Motors has dropped its Cruise robotaxi subsidiary. There were several reasons for pulling the plug on Cruise. Costs were high, it was a drain on GM’s balance sheet, and the company just couldn’t see a future where Cruise was a profitable part of GM. Now, financial analysts are chiming in about the decision, and they seem to almost unanimously agree that this was the right move for the automaker.
“GM is adjusting to a new reality, and they’re become a leaner and a meaner GM,” Dan Ives, managing director at Wedbush Securities, told the Detroit Free Press on Wednesday. “I’d say they’re quasi-restructuring, meaning they are putting good assets after good and eliminating the bad.”
“The old GM would have been stubborn and kept throwing billions at it,” Freedom Capital Markets managing director of research Mike Ward told the Detroit Free Press. “GM can’t compete with Waymo. GM doesn’t need to be in the robotaxi business. This move shows capital discipline. What got GM into bankruptcy in 2008? Undisciplined capital allocation, plain and simple.”
However, it’s also hard to applaud a company that dumped so much into a doomed venture with nothing to show for it. “It’s bad that they spent all that money and they didn’t get anything,” Ives said.
University of Michigan Ross School of Business professor Erik Gordon said GM CEO Mary Barra is pushing back on analysts’ claims that car companies can’t afford to fall behind on autonomous vehicle technology. “Analysts said that a car company that fell behind in EVs or AVs was doomed,” Gordon said. “GM did what it was pushed to do. Now (Barra) is pushing back. She doesn’t like markets where the company loses piles of money. She never has. That is why she got GM out of Europe in 2017.”
“Capital discipline” is a consistent theme in commentary from analysts applauding GM’s decision to pull out of Cruise. “There’s been a sea change at General Motors. Their lack of capital discipline got them into trouble in the 1990s and 2000s,” Mike Ward said. “They’re doing a restructuring in China, but the Chinese joint venture is paying for it. When you’re looking at a new year and how you’re allocating capital, you look at this robotaxi and say, does this make sense? No, it doesn’t. They made the right call on that.”
Comments
AVs are coming, whether overpaid Barra likes it, or not!
Thats for the customers and politicians who refuse to pay for the infrastructure upgrades to make this work in an entirely full manner when they won’t spend a dime to fix potholes to decide. Not Mary, Elon, and certainly, NOT YOU to decide.
They sure are – in the form of self-driving personal vehicles. And one day it will be offered as standard equipment. There’s a reason car companies don’t set out to build specialized taxis. They build cars and then let the taxi companies repurpose them. GM was smart to cut its losses with Cruise.
Maybe in 50 years. The computing power, even with (biased, flawed)AI, is just isn’t there yet. Period. Despite the puffing of Nvidia and Elin’s vapor. Autonomous driving will evolve as assistance features first to “learn”. This rush to push this without proper research, due diligence and safeguards (not only technical, but legal and ethical) is reckless….
GM’s OnStar division houses the Super Cruise autonomous driving system. As a leader in this segment, it’s logical to integrate Super Cruise more fully into the company’s operations, especially considering its revenue-generating potential. There’s no need for separate, parallel paths.
It’s not necessary to insult Mrs. Barrah.
Self driving is too far off. GM has to stabilize and focus on proven platforms, create better ones and focus on hybridization and perfection of ICEs (NOT EVs for obvious reasons…). Saving the planet and its redources is a more critical priority then the “folly” of self driving cars. The computing power, legal and ethical standards of that pipedream are not rhere.
Autonomous … for little 25 years old snowflakes who want robomommy to drive them to their co-dependant friends house to play video games .
Yeah, instead they are going to waste their money on F1 racing…and continue their EV madness. Between Mary and Mark I don’t know who is worse…
A joke of a company.
How is it a joke of a company? Unless you want to say the entire auto industry is a joke. Japan: Nissan collapsing, Honda stagnant, only Toyota doing well. Europe: VW reeling, Mercedes and BMW profits have plummeted, Stellantis CEO ousted and will be cash flow negative this year. US: Ford can’t make solid money in even good years. GM: very solid margins, increasing profitability, stable to growing market share in ICE and now #2 player in the US in EVs.
GM’s market share is in the toilet and probably not coming back. SA is down, China is down, out of Europe, out of ASEAN, mostly out of Eastern Block, falling in the US. They’ve become a truck and SUV luxury maker and developing countries will cannot afford their products. They make good margins, but only because the US economy is hot. When it goes into recession, they’re screwed.
Because everyone knows this is a nonsense pipedream that won’t amount to anything and is just as good as GM building a fire pit and throwing money into it. Focus on bettering the electric car and ICEs and enough money dumping into this nonsense.
GM should have gone public or sell the Cruise. Instead they just blue $10b off! Idiots at work
Super Cruise works pretty well, and sells well. Some time ago GM was touting “Ultra Cruise” that would provide hands-free driving in urban areas, not only on divided highways/roads, like Super Cruise.
I expect GM will take the software from Cruise and put it toward an “Ultra Cruise” like product, and it will sell well. Note both Super and Ultra Cruise can operate on ICE vehicles. GM is reportedly preparing a major “OTA” software update in early February, which will probably be described in the 2025 earnings guidance at the end of January. The 2025 guidance will probably be the venue for some sort of “Ultra Cruise” announcement. Maybe. We’ll see.
Their way of dealing with the most loyal of customers is discraceful enough that after p purchasing three cars and four GMC Sierra 4 x 4 I left and have my new GMC 2023 serviced with Chev where I will be going
All over a $350 wiring harness left on my trade in!!
Wow