Legacy automaker General Motors Corp. GM is preparing to invest oodles of money into its loss-making Cruise self-driving unit. Tesla, Inc. TSLA CEO Elon Musk thinks it’s a really bad idea.
What Happened: GM’s CFO Paul Jacobson on Tuesday said at Deutsche Bank’s Global Auto Industry Conference in New York City that the company plans to invest $850 million to cover operating costs at its Cruise unit, media reports said. The company is also reportedly scouting for external financing from investors to beef up the unit’s financial position.
Reports said Cruise has posted a loss of $8.2 billion since 2017, including the $3.48 billion loss it incurred in 2023 alone.
Musk reacted to a post by a Tesla influencer about the news. “They are not making the right moves to succeed,” he said.
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Why It’s Important: Cruise, which was tested in select markets in the U.S., stopped operations following an accident involving a woman in October that resulted in a lawsuit. The company has since then settled the lawsuit by agreeing to pay the woman $8 million in damages.
The accident claimed the scalp of top executives at Cruise, including co-founders Kyle Vogt and Dan Kan, and several employees were laid off. As salvaging measures, the company launched a comprehensive safety review and also recalled all 950 Cruise vehicles last year to update the software and prevent similar incidents in the future.
GM along with other legacy automakers are going through a tough transition to EVs as they equip themselves to compete with pureplay EV makers, including nimble upstarts.
Tesla’s own self-driving technology, aka full self-driving software, has been in development for years and is yet to see large adoption, with skepticism regarding safety and regulator’s apprehensions serving as pushbacks. Once the company is able to overcome these hurdles, the FSD will likely emerge as a big revenue driver. The technology is core to Tesla’s own robotaxi service, which it expects to unveil on Aug. 8.
In premarket trading on Wednesday, GM rose 0.37% to $48.39, according to Benzinga Pro data. Tesla fell 0.39% to $169.99.
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Read Next: General Motors Adjusts EV Production Target, Resumes Cruise Operations In Houston
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