Robo-taxies remain a pipe dream and greedy companies have only themselves to blame

By Therese Poletti

Setback at Cruise shows that, contrary to statements over the last year by Elon Musk and others, driverless cars are not around the corner

While Tesla Inc. Chief Executive Elon Musk and others working on autonomous vehicles have suggested that robo-taxis and driverless cars are around the corner, recent developments say otherwise.

In a big setback for the autonomous-vehicle industry, Cruise, the AV unit owned by General Motors Co. (GM), said late Thursday that it would suspend all of its driverless operations around the U.S., not just in California, where regulators this week suspended its recently launched robo-taxis in San Francisco.

It's a case of a technology company moving too fast, and breaking things, but this time to the detriment of the industry and consumers. Cruise miscalculated by trying to roll out its technology before it was ready for primetime -- especially in the highly regulated world of auto safety.

Cruise has big ambitions to eventually urn its driverless car fleet into a revenue-generating robo-taxi service across the U.S. and its parent GM has forecast that Cruise could reach $50 billion in revenue by 2030.

But earlier this week, the company got punished by the California Department of Motor Vehicles for failing to give complete video of an accident earlier this month involving both a human driver and a Cruise vehicle that sent a pedestrian to the hospital with life-threatening injuries after the Cruise car trapped her. A Cruise spokesperson said the company gave the DMV and other regulators the full video and reached out proactively to meet with regulators immediately after the incident.

While the DMV suspended Cruises's robo-taxis in San Francisco, the order did not affect Alphabet Inc.'s (GOOGL)Waymo, which also has approval for a driverless taxi service in the city. But in public filings this year, San Francisco city officials voiced concern about Waymo's safety record as well. Last year, Waymo filed a lawsuit against the California DMV, seeking to keep some of its crash data private, claiming the data is a trade secret. Waymo was also included in the city attorney's suits to block the approvals both Cruise and Waymo received for their robo-taxi services.

Seemingly overnight, San Franciscans over the last year began to see autonomous vehicles across city streets. Those vehicles originally featured a human safety drivers, but companies ditched that security to prove that their cars were safe without a human on board, and to move forward on its revenue generation plan.

"If a person had been in the car [as a test driver] they would have realized there was a person under the car," Carnegie Mellon associate professor Philip Koopman said of the Cruise incident in early October.

Having safety test drivers in AVs "is for the stuff [companies] didn't think of," when developing their software and training their systems, said Koopman, an associate professor in electrical and computer engineering who has researched AV safety for over 20 years.

"They weren't as ready as they wanted people to believe," he added. "They should operate only with safety drivers, and need to have a serious investigation with independent oversight." He said Cruise's next moves will be of vital importance in showing how the company deals with safety concerns.

Cruise's approach has been very similar to Uber Technologies Inc. (UBER) in its early days. That company was also often in the crosshairs of city governments with its unregulated ride-hailing services, but it perhaps learned from its mistakes and got out of the autonomous-driving business in 2020 after a vehicle driven by its self-driving-car unit was involved in a fatal accident.

In removing the safety drivers from their cars in San Francisco over the last year, both Cruise and Waymo raised the ire of public officials, especially first responders, who said stalled or rogue cars have impeded emergency response efforts.

Read also: Driverless cars are driving San Franciscans crazy

"We continue to say that AVs are not ready for prime time, and companies should not be deploying them on public roads to the detriment and danger of all road users," said Cathy Chase, president of Advocates for Highway and Auto Safety, a non-profit in Washington. "AVs are in urgent need of new safety regulations for the self-driving systems and related issues like cybersecurity. Industry transparency and accountability are essential."

Chase also pointed out that on a federal level, the National Highway Traffic Safety Administration needs to put a laser focus on the information provided by Cruise in its petition for exemptions from Federal Motor Vehicle Safety Standards. "Industry transparency and accountability are essential," she said in an email.

Cruise said in its social media post that the recent pause was "not related to any new on-road incidents" and that supervised AV operations will continue. "We think it's the right thing to do during a period when we need to be extra vigilant when it comes to risk, relentlessly focused on safety, & taking steps to rebuild public trust."

Rebuilding public trust is going to be key, and the only way the company will be able to do that is to improve its disclosures to public safety agencies. It should also take a slower approach to its rollout. But GM may feel pressure to move more quickly, with Wall Street counting on its previous forecasts.

"GM has been pushing them for results, one imagines," Koopman said. "They have been running themselves like a Silicon Valley VC company [and] if they want to change that dynamic, they are going to have to get their safety house in order."

He added that there has been a continual flow of consolidations, acquisitions and "acqui-hires" in the industry. "The question is does Cruise become the next one, or does GM say, let's re-assess, recalibrate, let's not be as aggressive. Can GM support that?"

The AV industry is facing a moment of truth with the current suspension of Cruise's driverless cars. Companies are clearly feeling the pressure to deliver returns, after after investing billions in developing autonomous vehicles that have yet to generate any revenue. But they also risk some severe reputational damage to their core businesses if they continue to promote unsafe technology before its time.

-Therese Poletti

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

10-28-23 1138ET

Copyright (c) 2023 Dow Jones & Company, Inc.