General Motors, the largest automobile manufacturer in the United States, announced on Tuesday (January 30) that it will cut spending on its autonomous vehicle division Cruise by approximately $1 billion in 2024.
General Motors stated that Cruise burned $1.9 billion in cash in 2023, resulting in a pre tax loss of $2.7 billion, excluding the $500 million restructuring costs incurred in the fourth quarter due to layoffs.
Traffic accident controversy
The Cruise autonomous driving project is not only costly, but also caught up in a traffic accident controversy in the fourth quarter of last year.
In early October last year, a woman in San Francisco was hit by a car, and the driver immediately fled. Unfortunately, the woman was hit in the lane of an autonomous Cruise car and was run over by it, causing serious injuries.
The controversy surrounding the accident lies in the fact that the Cruise autonomous vehicle detected an impact and applied emergency brakes, but then activated the "pull over" program, dragging the injured person 20 feet (6.1 meters). After the accident, California regulatory agencies revoked Cruise's autonomous driving license.
Since the accident, Cruise has laid off nine executives and laid off a quarter of its employees.
Last week, Cruise disclosed that the company is under investigation by the US Department of Justice and the US Securities and Exchange Commission. And a technical evaluation conducted by General Motors commissioned engineering consulting firm Exponent found that the autonomous car mistakenly considered hitting the woman as a side wall collision. Currently, Cruise has recalled these vehicles and updated their software.
Still committed to autonomous driving
The subsequent investigation and disclosure of Cruise's improper handling of the accident has increased pressure on General Motors and CEO Mary Barra. But Barra still defended General Motors' investment in autonomous taxi business.
She had previously stated that by 2030, the annual revenue of the business would reach $50 billion.
Barra said on Tuesday that the company will "refocus and relaunch Cruise" and stated that the company will "soon" announce a timetable for resuming operations.
Barra said that Cruise's spending this year will focus on retaining software and engineering talent. She also stated that due to the previous plan to expand Cruise's autonomous taxi business to 20 cities being put on hold, General Motors does not need to spend money on vehicles and operators.
During Tuesday's analyst conference call, Barra also emphasized that Cruise will set higher safety standards for its autonomous driving software than human drivers.
In addition, before the US stock market closed on Tuesday, General Motors announced its financial results for the fourth quarter of 2023. In the fourth quarter, it achieved a revenue of $42.98 billion, a year-on-year decrease of 0.3%, but better than the market expectation of $39.53 billion; And it is expected that profits will increase in 2024 with the improvement of car sales in the US market.