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General Motors is “indefinitely suspending” work on Origin, the autonomous vehicle produced by the US carmaker’s self-driving subsidiary.
Mary Barra, chief executive, said in a letter to shareholders that the move would lower the costs per unit, as well as address “regulatory uncertainty” from the product’s “unique design”. Origin, designed for ride-sharing, has no pedals or steering wheel.
Staff at GM-owned Cruise will instead focus their efforts on the next generation of the battery-run Chevrolet Bolt. The decision to “pause” production of the Origin triggered a $605mn charge in the second quarter, chief financial officer Paul Jacobson said.
Cruise has been under scrutiny since an October crash involving a pedestrian on the streets of San Francisco. A pedestrian was hit by another vehicle and then thrown into the path of Cruise’s autonomous robotaxi, which dragged her another 20 feet.
The California Department of Motor Vehicles withdrew permission for Cruise driverless vehicles to operate on city streets. The agency said the company misrepresented details of the crash.
A report that GM and Cruise commissioned from an outside law firm found that Cruise did not fully explain the driverless vehicle’s role in the crash, once executives became aware of it. The report said the company’s response was marked by “poor leadership, mistakes in judgment, lack of co-ordination, an ‘us versus them’ mentality with regulators”, and an overall lack of transparency and accountability, the report said.
Ultimately, Cruise chief executive Kevin Vogt resigned.
Cruise halted operations in Houston and Austin in Texas, and Phoenix in Arizona. But Barra said in the letter that operations have resumed in Houston and Phoenix, and started in Dallas. Last month, the company hired Marc Whitten, a veteran of the video game industry, to head the unit.
Jacobson said the company “might” return to the Origin in the future, but for now “our efforts are really going to be focused on the Bolt”.
GM announced the suspension of Origin as it beat Wall Street’s expectations for the second quarter. The carmaker raised its guidance for the second time this year, citing strong sales and pricing, particularly for trucks and sport utility vehicles.
The company reported operating earnings of $4.4bn in the second quarter, an increase of 37 per cent compared to same period a year earlier. It earned an adjusted $3.06 per share, compared to the $2.71 anticipated by analysts polled by FactSet.
The company said it expected adjusted operating earnings this year to fall between $13bn and $15bn, up from the $12bn to $14bn range it gave in January.
GM, which closed at $49.56, was up almost 5 per cent in pre-market trading.