While General Motors owns 80% of Cruise since buying out SoftBank's stake in the startup in 2022, it's safe to say that GM owns the company. While GM is in the business of producing and selling vehicles, why would GM want to be in the robotaxi business? Mobileye, an autonomous driving tech company, does not want to be in the robotaxi business because its more complicated than providing hardware to robotaxi operators. Also, GM would make more money in the long run by selling better vehicles to consumers every year than to push a world where everyone relied on robotaxis to go from Point A to Point B.

As I researched more about Cruise, I learned that Cruise is GM's autonomous driving project. As Cruise vehicles are better able to navigate the hectic streets of San Francisco, GM is able to transfer that technology to their GMC, Chevy, Buick, and Cadillac vehicles and provide more advanced driver assistance capabilities. Chevy and other GM brands do not need to do their own research and development of autonomous driving capabilities when they have Cruise doing all the hard work for them. In her 2022 CES keynote presentation, GM CEO Mary Barra said that she is aiming to sell personal autonomous vehicles to consumers by the middle of this decade. A reason for why an automaker like GM would want to focus more on selling personal autonomous vehicles and distance themselves from turning into a major robotaxi operator is simple: the profits are juicer when you're selling a vehicle than when you're building vehicles to operate as a robotaxi.

Image Credits: Screenshot/GM

While the costs of building a robotaxi remain high, rest assured that through economies of scale and vertical integration, those costs will go down significantly. Cruise has embarked on an ambitious cost cutting program where it aimed to cut costs by 90% over the long run. Most of the cost reductions comes from developing more of their hardware in-house. One of the biggest things Cruise has developed in-house is the chips that they use in their hardware. Their chips, called Dune, can be seen as parallel to what Dojo is to $TSLA. Another big thing that Cruise has developed in-house is their own computing board. The latest computing board that they've developed, the C7, will have the Dune chip. Cruise has found that by developing their own chips and computing boards, they can reduce costs by 90%, see a reduction in mass by 70%, and see its vehicles reduce energy consumption by 60%.

We've seen $AAPL products increase immensely in performance when it designed its own chips for its iPhones, Airpods, and Macbooks. $AMZN designed the Graviton2 chip for its AWS data centers and they provided 40% better performance than $INTC x86-based chips. It's smart for Cruise to choose to make its chips in-house. The success of Cruise's in-house chip efforts is what might've inspired Adam Jonas of Morgan Stanley to make Tesla's Dojo supercomputer chip to be his new bull thesis.

Image Credits: Roberto Baldwin

GM is smart for pushing Cruise to offer fared rides to people. GM is also smart for using its majority ownership in Cruise to transfer IP from that subsidiary into its other subsidiaries and making GM's vehicles competitive to what Tesla and other automakers are offering when it comes to driver assistance technology. As more people are being pushed to come to the office, people will demand a vehicle with near-autonomous capabilities to make the commute more bearable. Without Cruise, GM will have a harder time developing its autonomous driving tech in-house and will have to rely on inefficient startups to develop the technology themselves or license it from a competitor like Tesla.

As car ownership becomes more expensive, the younger generations are starting to lose hope on owning a car. We've seen this with homeownership and how more members of the millennial and Gen Z generations are pessimistic on the opportunity to own a home in the future. If ever car ownership remains unaffordable, at least GM has Cruise to offer those people a robotaxi network that they can rely on to go from Point A to Point B 24/7, but that will be available in the future. And if ever people do prefer to own their own vehicle but want autonomous features, GM will be ready to provide them with their own personal robotaxi.