The automotive industry is arguably poised to evolve more over the next decade or two than it has over the past century. There is a massive opportunity for automakers with the transition to electric vehicles (EVs), the potential for software revenue and subscription-as-a-service, and robotaxis, just to name a few things.
For all of the exciting potential upside, all that General Motors' (NYSE: GM) majority-owned Cruise business has seemingly done so far is provide headaches. But finally, there's a bit of good news for investors hoping Cruise's robotaxis are driving forward again.
What's going on?
Cruise was rocked with controversy in large part due to a collision with a pedestrian and questionable decision-making from prior management. The company turned over a chunk of upper management, laid off employees, and temporarily halted rides. Cruise now aims to return to providing fully autonomous rides later this year and potentially charging fares by early 2025, per a Bloomberg report.
The first bit of good news -- probably the less exciting of two developments, but also perhaps the more important -- is that the National Highway Traffic Safety Administration is closing a probe into nearly 1,200 Cruise robotaxis after the company's recall resolved issues of hard braking and immobilization.
What's next?
The previous development is good news for the company's current standing, but the next development is with an eye on what investors hope is a lucrative future partnership. In addition to Cruise possibly starting to charge fares with its robotaxis early next year, Uber Technologies (NYSE: UBER) will start offering Cruise robotaxis to customers on its ride-hailing platform in 2025.
It's a unique situation, considering Uber sold its autonomous driving division in 2020 as the company faced serious cash burn and opted to focus on its core business of ride-hailing and food delivery. That said, the number of autonomous trips taken on Uber's platform rose six-fold during the second quarter, compared to the prior year.
Will this move the needle?
To put it bluntly, no. This absolutely will not move the needle for General Motors currently, and likely not even for Cruise itself. This will ultimately start at a very small scale, and Cruise will share Uber's platform with other self-driving competitors. However, this could be an important partnership for Cruise and Uber in the future, especially since the deal was inked only a couple of months before Tesla's delayed robotaxi product was unveiled.
The truth is that scaling autonomous vehicles is going to be extremely challenging. It will take innovative technology with immense capital requirements, and that's to say nothing about regulatory scrutiny.
GM's Cruise is a long-term play that has immense potential when the industry eventually figures out how to scale, commercialize, and monetize this business. In a way, the best part about these developments is simply that they aren't bad news for Cruise. That alone is a positive development for GM investors hoping its troubles are in the rearview mirror and that the automaker hits a multi-billion-dollar homerun with Cruise down the road.
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Daniel Miller has positions in General Motors. The Motley Fool has positions in and recommends Tesla and Uber Technologies. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
