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The challenges of developing an autonomous fleet have pushed another corporate casualty into the barriers and out of the race.
GM’s (GM) Cruise robotaxi business has ended.
A recognition that billions of dollars and years of toil are not enough to sustain a still-commercial fantasy. But where an old-fashioned car company has failed, a sprawling tech giant (Alphabet) and an EV company with increasing political support (Tesla) are going all in.
In racing terms, the stage race is underway and we have completed the first stage. We’re starting to see some winners like Waymo and some losers like Cruise.
Cruise isn’t even the first major player to withdraw from the race to develop a robotaxi company. Ford (F) ended its self-driving venture Argo AI two years ago. And Apple (AAPL), torn between building an autonomous fleet or just a new electric car, scrapped its decade-long car project altogether earlier this year.
At first glance, Cruise’s demise seems like a boon for its robotaxi rival Waymo, Google’s (GOOG, GOOGL) sister company. And great news for Elon Musk’s Tesla (TSLA), which plans to release its own robotaxi in 2027. But there is a double dynamic at play.
On the one hand, there is now one competitor less. On the other hand, Cruise’s ending is also proof that even established players can’t hack it.
GM’s market capitalization is very different from Alphabet and Tesla. Maybe their trillion-dollar valuations give them the resources and time to tinker that GM decided it didn’t have. But it is not an encouraging sign.
It may seem that Cruise’s demise was linked to the specific tragedy of last year’s high-profile pedestrian accident, which caused the company to temporarily suspend its services, from which it never really recovered. While that is strictly true, the specifics of the incident can be generalized and applied to any autonomous candidate: there are enormous investment costs and enormous risks associated with pushing the technological frontier.
If it’s still unclear whether this is the kind of market where many players can thrive – perhaps targeting different segments of a large country with many different cars – the end of Cruise, as well as Uber’s reliance on fickle partnerships, hints at something . closer to one or two players winning and taking it all.
