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GM’s Cruise plans small relaunch of driverless robotaxis

A Cruise self-driving car, which is owned by General Motors Corp, is seen outside the company’s headquarters in San Francisco where it does most of its testing, in California, U.S., September 26, 2018. REUTERS/Heather Somerville/File Photo

GM’s Cruise plans small relaunch of driverless robotaxis. Just a few weeks after California banned its self-driving vehicles off public roads in the aftermath of an accident last month, the robotaxi subsidiary of General Motors (GM.N.) is preparing to relaunch in one city before spreading to others. The location has not been revealed.

As a result of the turmoil that was caused within the firm as a result of Cruise’s decision to halt all supervised and manual automobile journeys in the United States last week while also conducting a safety evaluation of its robotaxis, the company’s CEO Kyle Vogt and chief product officer Daniel Kan were forced to step down from their positions.

It is also a setback for a sector that relies on the cooperation of authorities and the general public’s trust. During the previous few months, Cruise has been touting its ambitious aspirations to expand to more cities and deliver autonomous taxi trips.

“Once we have taken steps to improve our safety culture and rebuild trust, our strategy is to relaunch in one city and prove our performance there before expanding,” according to a statement released by the firm.

A spokesperson for the GM unit stated that the company’s immediate attention would be directed toward the Cruise AVs based on the Bolt. In contrast, the company’s longer-term strategy would revolve around Origin. The Origin is a multi-passenger vehicle developed without a steering wheel or other controls for operation by a human driver.

It informed staff in an email, which was seen by Reuters, that it will also be cutting some jobs, “primarily in non-engineering roles,” and will provide additional specifics in the middle of December.

A representative for General Motors stated that the company’s chief financial officer, Paul Jacobson, will most likely discuss the financial effect on the manufacturer during a teleconference with analysts that is set to take place on November 29.

Before Cruise ceased operations, GM CEO Mary Barra predicted that the company and its autonomous car technology might earn $50 billion in revenue by 2030. This would have made the robotaxi business a significant component of her plan to quadruple sales to $280 billion.

Cruise was responsible for more than $700 million in losses for GM during the third quarter, and the division has lost more than $8 billion overall since 2016.

Meanwhile, it is already dealing with more extraordinary labor expenses due to a new contract with the United Auto Workers, slower-than-expected sales of its electric vehicles, and expensive new pollution rules from the federal government.

The problems plaguing General Motors have resulted in a drop of 16% for the company’s stock so far in 2019, compared to an increase of nearly 19% for the S&P 500 index.

“Investors will be watching closely to evaluate whether management sees GM’s challenges as limited to Cruise or if there is broader discussion about capital allocation across GM’s portfolio,” an analyst from Morgan Stanley said in a note on Wednesday. “Investors will be watching closely to evaluate whether management sees GM’s challenges as limited to Cruise.”

NOT IN SACRAMENTO OR SAN FRANCISCO

Although GM and Cruise have not disclosed the city’s location where they will relaunch operations, it is highly improbable that it would be in San Francisco because that is where the disaster occurred.

During the incident, another car was engaged, culminating with one of the company’s autonomous taxis pulling a pedestrian. The authorities revoked the company’s permission to run autonomous trips in the state of California.

Cruise operates in Phoenix and Austin, two cities where local authorities have proven to be more friendly. Its main competitor, Waymo, also has a significant presence in urban areas.

As part of its prior growth plans, Cruise had submitted an application to the National Highway Traffic Safety Administration (NHTSA) for approval to deploy up to 2,500 autonomous cars without human controls each year. This request was submitted in the previous year.

GM cannot release the Origin onto public roads until it receives clearance from the government. The National Highway Traffic Safety Administration stated in July that it “will issue a decision in the coming weeks” before the accident that raised concerns about the vehicle’s level of safety.

Cruise also stated that it would pay employees for any potential tax burden resulting from the firm granting shares to employees. Two days after the decision to rescind an earlier offer, it was determined that it would issue a fresh tender offer to allow them to sell shares the following week.

The program’s suspension provoked a response from some employees, who claimed that they would be subject to significant financial obligations regarding the stocks vested on October 15 at a significantly higher price.

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