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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Autonomous vehicles have logged millions of road miles. Collectively, companies including Tesla, Alphabet, General Motors, Uber, Baidu and Ford have invested billions of dollars in the technology. Safety records are impressive. But one eye-catching accident is all it takes to spook passengers and regulators.
This week GM’s Cruise announced that it would pause all manned and unmanned robotaxi trips. It will also expand a safety investigation following an accident in San Francisco in which a pedestrian was hit by a vehicle and dragged along the road.
The California Department of Motor Vehicles had already ordered Cruise to take its driverless cars off the roads. The rollback comes just three months after the company triumphed in winning permission to expand its service. It is working with Honda to launch driverless cars in Tokyo by 2026. GM has frequently projected that Cruise revenue could reach $50bn by 2030.
Failure in San Francisco, a high-profile test ground for driverless cars, nixes some of those plans. With zero revenue, Cruise becomes an expensive money pit. In the first nine months of this year, Cruise reported just $76mn in sales and an earnings before interest and tax loss of $1.9bn — up 36 per cent on the previous year. That exceeds the $1.7bn in cash and marketable securities.
Previous accidents have slowed down but not stopped development of autonomous cars, including a fatal crash in Arizona in 2018. Concern for public safety is high, but so is public curiosity.
GM says it is committed to Cruise. But it is simultaneously fighting battles on multiple fronts, including slow electric vehicle production and union disagreements. It may expand its outlook.
Last year, it bought out SoftBank’s stake in Cruise. It could sell the unit, as Uber did with its driverless car division. Or, like Ford, it could absorb the driverless car unit into its business and develop driver assistance. As a standalone robotaxi business, Cruise has yet to prove itself roadworthy.
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