General Motors’ self-driving robotaxi company, Cruise, has been suspended from operating in San Francisco following an accident. The California Department of Motor Vehicles (DMV) made the announcement on Tuesday, expressing concerns about the vehicles’ performance, potential data misrepresentation, and choices that may compromise public safety.
While Cruise vehicles can still operate with a safety driver onboard, GM has decided to pause operations of its autonomous vehicles in San Francisco.
The suspension is primarily due to public safety concerns arising from an accident. In a statement, GM explained that a human hit-and-run driver struck a pedestrian who was then propelled into the path of the autonomous vehicle (AV). The AV applied aggressive braking before impact and attempted to pull over to prevent further safety issues. However, during the maneuver, the AV continued for a brief moment before coming to a final stop, causing the pedestrian to be pulled forward. GM expressed condolences to the victim and emphasized their proactive cooperation with the DMV in sharing information about the incident.
The DMV confirmed that the suspension was directly related to the accident. Some video footage from the incident was not promptly shared and was only provided upon request, leading to a citation of the information-sharing regulation by the DMV.
GM Stock Drops Amidst Cruise Business Concerns
GM stock took a hit with a 1.9% decline in midday trading, while the S&P 500 and Dow Jones Industrial Average experienced modest gains of 0.4% and 0.5% respectively.
Since GM acquired a portion of Cruise in 2016, the company has been offering autonomous taxi rides. With plans to expand the Cruise business nationwide, GM is optimistic about the potential to generate billions of dollars in annual sales by the end of the decade.
However, there has been limited impact on GM stock from Cruise thus far. Currently, GM shares are trading for less than 5 times the estimated 2024 earnings, whereas Ford Motor (F) stock trades for less than 7 times.
Investors have expressed concerns about various factors including the state of the economy, rising interest rates, and the ongoing United Auto Workers strike.
In addition to these concerns, GM recently reported better-than-expected third-quarter results, with an operating profit of $3.6 billion compared to Wall Street’s expectation of $3.3 billion. Although these results are lower year over year, the positive surprise initially boosted the stock. However, the UAW strike at GM’s Arlington assembly plant in Texas, which produces popular vehicles like the Chevy Tahoe and Cadillac Escalade, complicated the situation.
Since September 15, the United Auto Workers have slowly expanded their strike to GM, Ford, and Stellantis (STLA).