Auto File: GM and Cruise in Robo-taxi Hell

Foxtron Vehicle Technologies

20/11/2023 16:00

Joe White
Global Autos Correspondent
    
    Greetings from the Motor City!  

    It was quite a weekend in the world of artificial
intelligence!
    Kyle Vogt, the CEO of General Motors Cruise robo-taxi
business – which is an AI venture at heart - resigned late
Sunday as investigations widened into the safety of Cruise’s
technology.
    There was some other drama involving an AI entrepreneur
named Sam Altman. But that doesn’t concern us here in the World
of Cars. Yet. Altman is going to work at Microsoft, and
Microsoft is an investor in Cruise. That’s the thing about AI.
It has no limits. 
    It's going to be a short work week as those of us here in
the United States celebrate Thanksgiving on Thursday, and then
hit the holiday Black Friday sales. It’s also a great time for
automakers to announce setbacks and strategy reversals. Let’s
get started! 
    
    Today – 
    *         Kyle Vogt is out at Cruise. Now what? 
    * Foxconn’s EV unit IPO takes a dive 
    *         Hyundai-Kia say EV demand is just fine 

    
    * GM takes the wheel at Cruise 
    Kyle Vogt stepped down Sunday as CEO of Cruise, the
self-driving car company he co-founded in 2013. Vogt will land
on his feet. The future for Cruise is uncertain. 
    Cruise will now have two Presidents: General Motors’ chief
counsel, Craig Glidden, who will take control of the efforts to
navigate Cruise out of robo-taxi regulation hell. Mo Elshenawy,
formerly Cruise’s head of engineering, will become President and
Chief Technology Officer.  
    Since a Cruise car dragged a pedestrian down a San Francisco
street, the company has suspended operations in the United
States – though not in Japan or Dubai. California regulators
have pulled the company’s license to operate driverless cabs and
federal safety regulators are investigating various incidents
involving Cruise driverless cars.  
    Federal regulators have yet to approve deployment of the
Cruise Origin purpose-built driverless shuttle – which company
officials have said is key to turning a profit.
    U.S. Transportation Secretary Pete Buttigieg said Monday his
agencies will do “everything we can” to assure robo-taxis are
safe. 
    Cruise’s board, controlled by GM, has hired outside lawyers
and technology experts to evaluate the unit’s technology as part
of an effort, in Cruise’s words, to “strengthen public trust.”
Those efforts will face vigorous opposition from automated
vehicle skeptics, including labor unions.  
    Uber’s struggle to put its driverless car effort back on
track after a fatal accident illustrates how challenging it
could be to rebuild trust. Uber eventually sold its AV
operations. Ford and Volkswagen also abandoned their shared
self-driving car effort, seeing no end to losses. 
    California regulators have accused Cruise of misrepresenting
critical information in connection with the Oct. 2 incident.
Cruise has said it shared information fully. The controversy has
derailed Vogt’s drive to scale up Cruise’s operations to meet
GM’s goal of generating $50 billion in revenue by 2030.  
    GM has already warned that it could have to slash the value
of Cruise.  
    In 2021, Microsoft, GM, Honda and other investors put $2
billion into Cruise valuing the operation at $30 billion,
Reuters reported at the time. GM has not released a current
valuation for Cruise.  
    One day before he stepped aside, Vogt apologized to Cruise
employees for the situation the company is in and said employees
would be allowed to sell their non-public shares back to GM –
reversing a decision last Thursday to cancel the share
buyback.  
    Cruise has less than nine months of cash left. GM CEO Mary
Barra told Cruise employees in an email Sunday that GM is
“intensely focused on setting Cruise up for long-term success,”
according to Reuters colleague Greg Bensinger.
    An all-hands meeting at Cruise is scheduled for Monday at 1
p.m. Pacific time. How many hands will be pecking out messages
to potential new employers is just one challenge Cruise’s new
leaders will face. 
    
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    *         New climate warnings as automakers retreat from
EVs 

    
    * Foxconn’s EV unit IPO falls flat 
Shares in Apple gadget assembler Foxconn’s new electric vehicle
unit, Foxtron Vehicle Technologies stumbled out of the gate as
they started trading Monday. Investors valued the operation at
$2.7 billion. 
    Foxtron’s inauspicious debut underscores the new sobriety
among investors in electric vehicle startups, compared with the
heady days of 2020 and 2021.  
    "The EV market has been flooded by a red sea of price cuts
by major players such as Tesla," said an analyst at Mega
International Securities, as reported by Reuters colleagues Ben
Blanchard and Faith Hung. 
    Foxtron currently has just one client. Another problem for
Foxconn: Founder Terry Gou is in hot water with the Chinese
government over his ambition to become Taiwan’s President. 
    
    * Stellantis turns its deal-making strategy to Italy 
    Stellantis will intensify talks next month with the Italian
government toward a deal that could secure regulatory relief and
subsidies from Rome in return for Stellantis committing to build
more vehicles in Italy. 
    Stellantis said it wants postponement or cancellation of
tougher emissions rules under the proposed Euro 7 standard,
sales subsidies for EVs and help with EV charging networks and
energy costs. 
    CEO Carlos Tavares’ deal-making with the Italian government
comes on the heels of bargaining with the United Auto Workers in
the United States, where Stellantis appears to have played a
deft hand of poker.  
    Ahead of the UAW bargaining, Stellantis closed a factory in
Belvidere, Ill. That prompted state and federal officials to
offer subsidies to save Belvidere’s jobs. Those subsidies will
now help Stellantis build a mid-size pickup it has been planning
for years, as well as a battery plant. 
    Stellantis also lined up several parts warehouse operations
for shutdown by declining to renew leases for the buildings, the
UAW’s top bargainer at Stellantis told members in a video.  
    That confronted the union with a choice of accepting the
company’s plan to consolidate warehouse operations or lose more
jobs, Boyer said. “Mopar was going to die on the vine, slowly
but surely,” he said.  
    In the end, Stellantis got new, modern parts warehouses. The
UAW got a commitment that all current Mopar employees could keep
their jobs – or take a buyout. Win-win. 
    
    * Hyundai and Kia don’t see an EV slowdown 
    Senior executives of Hyundai and Kia said they do not see
the EV sales slowdown that rivals are blaming for decisions to
pull back on capacity and new EV launches. 
    “If I had more capacity today, I could sell more cars,"
Hyundai COO Jose Munoz told a conference ahead of the Los
Angeles Auto Show. 
    This talk will not help the Detroit Three make the case to
the Biden administration that slowing EV demand requires the
government to back away from rules aimed at shifting the U.S.
new vehicle market to two-thirds EVs by 2032. 
    Separately, U.S. regulators said they are investigating
Hyundai and Kia’s recalls covering 6.4 million vehicles that
could be at risk of fires caused by brake fluid leaks. 
    
    * Fast Laps 
        - It’s official! The UAW has secured ratification of new
contracts at GM, Ford and Stellantis North America that promise
25% base wage increases over 4 ½ years, and even more
substantial raises for workers who had been stuck in lower-wage
scale parts and warehouse jobs. The union put out official
confirmation of the ratification wins Monday. UAW online vote
trackers had flagged the votes last week.  
        
    - 
    Chargepoint shares slumped by 38% Friday after the company
slashed its revenue forecast. Chief Executive Pasquale Romano is
out, replaced by COO Rick Wilmer. Pressure from Tesla and
slower-than-expected uptake of non-Tesla EVs are likely
culprits. 
        
    - 
    Subaru will raise pay for its U.S. production workers,
looking to get ahead of the United Auto Workers’ efforts to sign
them up as members. 
        
    - 
    Tesla defeated a lawsuit accusing the company of
monopolizing parts and repair service for its vehicles. The
judge ruled that the plaintiffs did not show that Tesla owners
were “unaware of the supposedly supracompetitive prices and
exorbitant wait times” for service. 
        
    - 
    Redwood Materials will supply Toyota with recycled EV
battery materials under a new long-term deal.

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 (Editing by Andrew Heavens)