GM gives Cruise an $850 million lifeline as it revives robotaxis in Houston

General Motors is investing $850 million in Cruise as the autonomous vehicle subsidiary slowly returns to testing in Phoenix, Dallas and, as of Tuesday, Houston.

GM Chief Financial Officer Paul Jacobson announced the capital infusion on stage at Deutsche Bank’s Global Auto Industry Conference on Tuesday.

“This will help bridge Cruise’s funding until we can find the right long-term capital efficiency strategy, including potential new partnerships and external financing,” said Tiffany Testo, a spokeswoman for the company, at TechCrunch. She declined to provide further details on the types of new partnerships or how much money Cruise hopes to raise.

The new investment comes less than a year after GM told investors it would cut spending on Cruise in 2024 by “hundreds of millions” of dollars, following a series of safety incidents that resulted in to Cruise’s grounding of its entire fleet in November 2023. Patrick Morrissey, GM’s vice president of corporate communications, told TechCrunch that the spending reduction is still in effect, despite the injection of capital today.

“The total spending reduction announced earlier is based on Cruise’s total operating costs being lower in 2024 compared to 2023 (operations halted for several months, smaller fleet, fewer cities, etc… ” Morrissey said via email, noting that Cruise still needs the money to advance its technology. But not as much.

In total, Cruise has already raised more than $15 billion, according to Crunchbase data. GM has spent and lost more than $8 billion since acquiring Cruise in 2016, including $3.48 billion lost in 2023 alone. The new funds suggest GM is not yet ready to give up its investment.

Cruise has struggled since marketing its fully autonomous, driverless robotaxi service in San Francisco and Austin. Shortly after removing the driver, incidents of vehicles blocking traffic, public transportation and first responders began to surface on social media. In October, a Cruise robo-taxi ran over and dragged a pedestrian 20 feet in San Francisco. The pedestrian was initially struck by a car driven by a human and landed in the path of a Cruise robotaxi. Cruise employees were accused by the federal and state government of providing incomplete information in their reporting, showing only video of the vehicle braking suddenly and not dragging the pedestrian as the car attempted a pull-over maneuver. over.

When this additional information came to light, the California Department of Motor Vehicles immediately suspended the company’s permits to operate autonomous vehicles on public roads, and these have still not been reinstated.

The DMV confirmed to TechCrunch that Cruise is in talks to reinstate his licenses in the state. In other states where AV companies don’t need to acquire permits, Cruise is already making a comeback.

Cruise has launched small fleets in Phoenix, Dallas and now Houston that will operate with a human safety driver behind the wheel. The company aims to validate its technology and move slowly in order to regain public trust.