Cruise Automation Purchase Shows GM ‘Way Behind’ on Self-Driving Cars

Analyst Brad Templeton explores the role Uber played in GM's $1 billion purchase of Cruise Automation Inc., which is a desperate attempt for the world's second-largest car company to make headway in the self-driving car race.

Photo Caption: From left to right, Cruise Automation’s Daniel Kan and Kyle Vogt pose with GM President Dan Ammann.

General Motors has purchased Cruise Automation Inc., a small self-driving startup in San Francisco. Rumors suggest the price was over $1 billion. In addition, other rumors have come to me suggesting that at least one other startup has been seeking a new round of funding at that valuation, but did not succeed due to the market downturn.

I gave Cruise some small assistance when they were getting started, and wrote about them when they showed off their first prototype. Since then, Cruise, as expected, moved away from highway autopilot retrofit into making a proper robocar, and their test Leaf has been running around SF with 4 velodyne LIDARs and other sensors for a while.

Even in my wildest dreams, I did not imagine startup valuations this high, this soon. (Time to get my own startup going.) Let’s consider why:

First, GM, as the world’s 2nd largest car company, is way behind on robocars. They were one of the first companies to announce a highway autopilot (called, ironically, “Super Cruise”) for the 2014 Cadillac. However, they quickly pulled back on that announced, and for the last few years have continued to delay it, recently announcing it would not even appear in the 2017 car, even though Mercedes, Tesla and several other companies had products like that.

GM’s main academic partner was CMU. They sponsored Boss, the CMU team that won the DARPA Urban Challenge, headed by Chris Urmson (who now leads the Google car project.) Recently, Uber moved into Pittsburgh in a big way and poached many of the top people from CMU for their project. This left GM with very little, a poor position for the world’s 2nd largest car company.

Next, we have Kyle Vogt, founder of Cruise. Kyle was on the founding team for justin.tv, and also for Twitch, which had a billion dollar acquisition - in other words, Kyle is not precisely hurting for money. He has not confirmed this to me, but I suspect when GM showed up at his door, he was not interested in joining a big car company, and his resources meant he was not in any hurry. I then presume GM took that as negotiation and bumped the price to where you would have to be crazy to say no.

GM will let cruise be independent, at least for now. That’s the only sane path. We’ll see where this goes.

This article was republished with permission from Brad Templeton’s Robocars Blog.




About the Author

Brad Templeton · Brad Templeton is a developer of and commentator on self-driving cars. He writes and researches the future of automated transportation at Robocars.com.
Contact Brad Templeton: 4brad@templetons.com  ·  View More by Brad Templeton.
Follow Brad on Twitter.



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