General Motors, another 6 billion transfusion

After burning through 50 billion in 7 years, can Cruise still "come back"?

2023 was a year full of twists and turns for Cruise. Not only did it face huge losses, but several accidents also triggered a series of chain reactions, including license revocation, emergency recall, business suspension, and team turmoil, which brought this "Robotaxi star" back to the pre-liberation era overnight...

However, parent company General Motors is unwilling to let its investment go to waste. After announcing budget cuts in early 2024, it recently invested another $850 million (about 6.17 billion yuan) in Cruise at Deutsche Bank's Global Automotive Industry Conference.

It is worth noting that in the face of weakening demand, in order to save costs and avoid inventory backlogs, GM also announced a reduction in this year's electric vehicle production forecast from 300,000 to 200,000-250,000. Under such circumstances, it also decided to increase capital to fill Cruise's funding gap, which is really "no matter how hard it is, you can't let your children suffer."

However, GM Vice President of Public Relations Patrick Morrisey said that "despite the additional capital injection, the previously announced budget cuts remain in effect," and GM spokeswoman Tiffany Testo also said that the company will "look for potential new partners and external funding."

Therefore, this increase in investment does not rule out the possibility of increasing Cruise's bargaining chips in seeking external financing through "support from its own family."

Since its establishment in 2013, Cruise has received $15 billion (RMB 108.8 billion) in external financing. General Motors, which spent $1 billion to acquire Cruise in 2016, has spent $8.2 billion (about RMB 59.5 billion) on Cruise, and $3.48 billion in 2023 alone, which shows how big the appetite of this "money-eating beast" is.

In August 2023, Cruise obtained the qualification to operate Robotaxi around the clock in San Francisco, allowing the industry to see the dawn of its commercialization.

However, in October 2023, a Cruise self-driving vehicle hit a pedestrian in San Francisco and then dragged her for 20 feet.

Afterwards, the California Department of Motor Vehicles conducted a serious investigation into the accident and eventually suspended Cruise's driverless testing license in California in November. Cruise was also accused of concealing some key information, and the cause of the accident sparked widespread doubts, ushering in a crisis of trust in the company.

Faced with numerous difficulties, Cruise had to suspend its driverless operations across the United States and conduct internal rectification to rebuild public trust. Subsequently, many core executives, including founder and CEO Kyle Vogt, resigned and the company laid off 25% of its employees. Coupled with the dismal performance, it is hard not to worry about Cruise's prospects, and the outside world generally speculated whether General Motors would "abandon its children to cut losses."

However, Cruise did not fall into despair.

In April this year, Cruise resumed driving tests in Phoenix to collect road data. In May, Cruise reached a settlement agreement with the accident victim. The company will compensate the woman who was hit by the accident with 8 million to 12 million US dollars. In the same month, Cruise resumed unmanned driving in Phoenix, with safety officers equipped to take over at any time. In June, the test scope was expanded, and Robotaxi drove into Dallas and Houston...

The capital injection from GM is like a shot in the arm, sending a positive signal for Cruise's return. However, Cruise still has a long way to go to completely get rid of the haze. After all, even Musk, who is surfing on 5G, believes that GM "did not take the right actions to succeed."

What do you think about this?