Transcript: GM’s Third Autonomy Act: Inside the New Push for Personally Owned Autonomous Vehicles

GM Re-Enters the Autonomy Race: Can Sterling Anderson Deliver a Personally Owned AV to Compete with Tesla?

Executive Summary

General Motors is making a significant new push into the autonomous vehicle space, focusing on developing a personally owned AV. Under the new leadership of Sterling Anderson, Chief Product Officer, GM aims to supercharge its autonomy efforts by hiring top talent, potentially even from the remnants of Cruise. This renewed effort faces significant hurdles, including rebuilding trust with the tech community after the Cruise flameout and deciding whether to evolve its Super Cruise system, build on Cruise’s old tech, or create an entirely new stack to compete with leaders like Tesla.

Key Topics & Timestamps

[00:00] GM’s surprise return to autonomy 

The discussion opens with the surprising news that GM is re-entering the autonomy space. While GM’s official position is that they “never left,” this new initiative, led by Sterling Anderson, is designed to “supercharge” development of a personally owned autonomous vehicle.

[04:00] Who is Sterling Anderson, and what is his new, expansive role at GM? 

Sterling Anderson is a “Silicon Valley kind of software guy” with an extensive background in autonomy from his time at Tesla and Aurora. Hired by Mary Barra, he is now GM’s head of all product development—overseeing EVs, internal combustion vehicles, and software, a move that appeared to leapfrog existing talent within the company.

[06:00] What will the technology stack look like? Building on Cruise vs. Super Cruise

GM’s strategy may involve a parallel approach. The initial step is to create a “hands and eyes free” system that would be an advancement of Super Cruise. For a true, fully autonomous system, the company could use the technology from Cruise, which is considered fundamentally sound and still viable.

[09:00] The subscription business model and revenue potential for personally owned AVs 

The revenue growth from Super Cruise projected to generate $400 million next year is a key factor driving this initiative. Automakers are eager to build subscription businesses, which are favored by investors, and the belief is that customers are willing to pay a recurring fee to not have to drive their cars.

[14:00] The challenge of rebuilding trust and hiring talent after the Cruise meltdown 

A major challenge for GM is attracting top talent, as Sterling Anderson is actively looking for more people. The company must overcome the “baggage” its name carries with West Coast tech talent, an issue made worse by the “high profile flame out” of Cruise, which may make new hires worry that the program could be shut down again.

[18:00] Could GM license technology from Waymo or another provider if its internal efforts falter? 

If GM’s in-house efforts fail, it is believed they would have to license a system from a provider like Waymo, Wayve, or May Mobility. While licensing from a direct rival like Waymo would be a “tough pill to swallow,” the biggest obstacle would be the fight over who controls the customer interface and vehicle data.

[25:00] Why Cadillac will likely be the first GM brand to feature the new autonomous technology 

The new AV technology will most likely debut on a Cadillac, as its customers can better afford the hardware and subscription costs. This aligns with GM’s traditional strategy of introducing new technologies on its luxury brand first, and the company has previously shown a Cadillac-branded AV concept car.

[28:00] The hidden costs for consumers: sensor repair and increased insurance rates

There are significant potential costs for consumers related to AV technology. Repairing and calibrating sensors after even a minor accident can cost thousands of dollars. This high repair cost, on top of EVs already being more expensive to insure, can cause insurance companies to “jack up the rates” for these vehicles.

[31:00] The dual motivation for GM: opportunity for subscription revenue and the threat of being left behind

GM’s motivation is driven by both opportunity and threat. The success of Super Cruise presents a clear opportunity to build a profitable software business. Simultaneously, there is a threat that if GM doesn’t develop a competitive system, its cars will become “less interesting” and it will lose customers to competitors like Tesla or a company using Waymo’s technology.

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Full Episode Transcript

Grayson Brulte: David, you broke the news last week. I literally fell out of my chair when I got the Bloomberg alert or the, the redhead. It said GM is going back into autonomy. What the heck is going on at gm? 

David Welch: You know, well, if you were to talk to them about it, they would say they never left because they, they said they were just working on personal avs, um, you know, beyond what they do with Super Cruise, where they were still going to work on essentially level four, technology. Now, by the way, one of the things that, uh, Sterling said in his internal meeting was, uh. They’re, they’re not even gonna use these SAE levels anymore. Uh, they’re, they’re, I kind of agree with ’em. I, I, I, I think that was useful for a while, but it can be a little bit misleading. But in any case, what he’s doing is he, he wants to basically supercharge what they’re doing and, and, and work harder to develop autonomy. He, he said in the meeting that it’s the future. They have to be there. They want to build a personally owned, uh, AV. And, you know, that, that he wanted to bring in more talent to do it. And even if that meant bringing, calling back some people from Cruise and they got rid of a lot of talent there, they, they laid off something like a thousand people, maybe more after that. That’s just kind of what got out in the news. Mo Elshenawy left. Uh, and a lot of the other, you know, top tech people were gone. So, um, they want to call some of them back or hire other people. , And, and, you know, maybe other companies, other code writers, et cetera, experts in robotics and AI to come and, and, and really build these trucks out. Now, the surprising, surprising part about it for me was, , I figured GM would still work on a personally owned av. And they said they were, Mary Barra talks about it in the earnings cost, but I kind of figured it would be, you know, many, many years, if ever before we actually saw this vehicle. They, they’ve already said, you know, they said by mid decade they would have a personally owned Navy out there, but they’ve, they, they’ve gotten rid of that goal that’s no longer valid. You know, they, they said that I think three years ago, uh, and I figured, okay, this will be worked on in some corner of GM r and d. You know, they’re sincere about it, but we just never see it. The co you know, the company doesn’t like the risk of it after what happened with Cruise. They have no interest in the robotaxis business. They, they might be right about that, but I, I, and I think investors too, people watch the company just figured, yeah, yeah, okay, you’ll work on it. But, you know, GM’s worked on fuel cells for years and we don’t really see those, you know, they, they have a hybrid system and you know, they, they’re only bringing that out because the market is forcing them to do so. And because EV take rate is sword and they thought it’s, you know, GM is a company that historically has had extremely intelligent engineers working there. They have been on the forefront of technology in terms of development, but they have often sat back and let somebody else take the win, get their first, take, the glory of the money. You know, OnStar one, they did commercialize it, but it never really took off. You know, they had the EV one, they killed it right around the time Tesla was founded. And, you know, Tesla is worth, you know, was worth a trillion dollars at one point less now, but still way more than gm. And they, they were the ev king, GM worked on autonomy, uh, with Larry Burns and, and, and, you know, the DARPA challenge, uh, about 20 years ago. And, you know, they, they, you know, when they got into financial trouble and headed into bankruptcy, fuel cells, EVs, autonomy, all this kind of stuff just went by the wayside. And Waymo developed it. So I kind of thought, you know, Mary Barra is much more serious about developing EVs, avs and, and, and software related businesses than past CEOs of gm. But the company is just cautious when it comes to that. Their shareholders don’t reward them for spending money on this stuff unless there’s a clear path to profitability. And I figured, yeah, this would be kicked into some corner, but Sterling Anderson wants to make it happen. I don’t know how many people they’re gonna hire, but he’s clearly out there looking for talent and, and he wants to push this thing. 

Grayson Brulte: Sterling’s new to gm. Can he make it happen? Does he have the support of Mary? Does he have the support of the board? Or we can. Is this gonna turn into a buyback dividend conversation? 

David Welch: I mean, look, he has to, right? They hired him and, and his, most of his background is autonomy related. Uh, he wrote, you know, his PhD paper, from 2012 or 13 was on. Basically more like driver assist if you go back and look at it. But it, it was autonomy related. He developed, or, you know, he, he worked on autopilot for Tesla, then he was at Aurora developing auto autonomous robotaxis. then autonomous trucks and he is a, you know, he, he is a, a Silicon Valley kind of software guy and you know, and that’s who Mary Barra has been bringing in. You look at, you know, a lot of the, was just Kirk Kelty and Battery came from Tesla. Uh, they have a lot of Apple people there in the software side of the business. And um, and now they’ve got Sterling Anderson. So I, yeah, I, I, I, I, I think she’s in on this and, and hired him to push it and look, he’s not just the head of their autonomous stuff. He’s head of all product development. He oversees development of EVs, internal combustion vehicles, software related, uh, services for customers. All of it, uh, which look, that was fascinating to me ’cause they’ve got some other young talent in product development that I thought they were really grooming to run that part of the business and then maybe get to the C-suite at some point. And Sterling Anderson, uh, kind of, to me it looked like he leapfrog some, some up and coming people at gm. Um, and you know, I, I think Mary Barra wants Silicon Valley smarts knowledge, know-how product development savvy in the company. You just, you’ve seen it, uh, with a lot of her hires. 

Grayson Brulte: As part of the talent hiring, Mr. Anderson is gonna go on. Do you think that they will hire a head of autonomy that reports directly to him? And most importantly, do you think this person will be based outta the Mountain View office? 

David Welch: That’s a good question. I mean, one, one thing they’ll hire. Uh, talent for autonomy anywhere. I know that, whether it’s, you know, Michigan or, or Mountain View or Austin, Texas people, they want people who can do the job. Uh, they had, I don’t know where, what the status is. They had a lot of people who could work on AI, robotics and autonomy kind of stuff in Toronto too. So, you know, maybe they’d find people there, but, you know, they, they’re on the hunt. As far as someone leading it, I don’t know. , I haven’t heard anyone say that, but it wouldn’t surprise 

Grayson Brulte: from a technical standpoint, is this gonna be a new stack? Is this gonna be built on the remnants of cruise? Is this gonna be built on Super Cruise? Any insights that you’ve learned about that? 

David Welch: One thing that I do know is that, so first thing they, they want to do what? They won’t call, but we would, you and I would probably call a level three system. So they want to, they, and, and, and that to me sounds like, kind of super advancing Super Cruise. So, you know, they, they want to get to, they already have a handsfree system. They want to get to a hand and hands eyes free system, but still have the driver in the vehicle. And then from there they want to go to a true, they won’t say, but you and I, well, level four system. Which is true autonomy. That would be the next step. So I think what’s going on is, you know, they continue to develop Super Cruise, but they also, you know, they do have a system from old Cruise and you know, the origin is still kicking around. I don’t think you’ll see that vehicle. , But who knows? They could. But they still have that technology and, um. I think they could use that for a, a fully self-driving vehicle. It’s not, it didn’t die. The system actually worked. It was a little cloogy the last time I rode in one, but it worked pretty well. There’s, you know, there’s nothing inherently wrong with their technology. The accident that they had was a pretty freak thing. So, , you know, they could, they, they could run and develop with both of those in a parallel way. 

Grayson Brulte: If they did in a parallel way, do you think that creates confusion in the markets that create internal rifts. 

David Welch: I don’t think it’s confusing in the market because you’ve got, I mean, people kind of know that Super Cruise, blue Cruise, uh, even what Tesla’s doing is not full autonomous driving. I mean, what Tesla’s doing now is getting there, but what, what Tesla’s typically are traditionally done here with autopilot and even, even I think FSD. That, that, that’s not really like a fully autonomous, you can fall asleep at the wheel kind of thing. What they’re working on now is, you know, what they’re piloting out there, uh, is supposed to be that, but you know, point is you can work on both, right? And, , you, Waymo doesn’t, Waymo is just making robotaxi fully self-driving vehicles. But. GM had, and, and Ford, when they owned Argo, they were, you know, they had Blue Cruise Handsfree system that they could sell today and they were working on a fully self-driving system. And I know at GM they are two different, two very different systems. You know, super Cruise and Blue Cruise are integrating a lot of advanced safety technologies and pushing them beyond. Which is very different than the whole stack and and system that Cruise had. 

Grayson Brulte: If you look at Super Cruise by the end of the year, it’s on track to generate 200 million projected to generate 400 million next year. Was that revenue growth, do you think one of the defining factors say, Hey, wait a second, there’s something here with personally owned avs, because look at the revenue growth that we’re seeing in Super Cruise. 

David Welch: Yeah, definitely. Um, I mean, look, car companies, for better and worse have just craved getting into some sort of subscription business. Because it’s, it’s, it’s money with less capital deployed and investors love it, right? If you have any kind of subscription service, think about Peloton, which failed, but it was a subscription service. Eventually, I think consumers get annoyed with some of these things. Um, like what did BMW try to do? Didn’t, was it heated seats? They try to make you pay for? , And consumers, you know, it’s a tough thing to get consumers that do is yes, you’ve acquired this hard asset with. A heater in the seat and a bunch of sensors on it, but you can only use it if you pay us more. It just irritates people. But, um, with autonomy, it, it, it, it might work and I think it does with Super Cruise because you, you can also shut that, subscription off if you’re not gonna be using it for a while. , And, and, and so that’s what they want. And I, I, I think it would work that way. People would pay. To not have to drive their car while they’re sitting in it. 

Grayson Brulte: I pay the $99 a month for FSD and I love it. It’s worth every penny. I, I couldn’t see myself buying the car un unless it had those features. So I’m locked into the, the Tesla ecosystem. So, Mr. Anderson comes to the tech Tesla ecosystem. It’s a vision only system. The Cruise stack is, as you know, is very sensor heavy. Do we potentially see a new sensor suite that’s highly scalable, not having all the redundancies that the cruise robotaxis had? 

David Welch: Yeah, it’s an interesting question. I mean, I, I think that kind of fundamentally gets to. Where is autonomy right now? Right. Can you know, I, I, I think Tesla’s out there as an outlier saying you can do it only with cameras because that’s the only way it’s scalable. I think Elon might be right, that that’s the only way it’s truly scalable ’cause of cost. But, you know, could Wayne well be right that you, you need lidar and other sensors to make this work safely? . I think, you know, watching Tesla, we’re we’re, we’re over time here. Gonna find out. , Now you’ve been in FSD, right? 

Grayson Brulte: I own FSD, and I’ve been in robotaxi and robotaxi performed flawlessly down in Austin. 

David Welch: explain it to everyone, the difference between what you experienced with FSD versus robotaxi. If robotaxi is a full self-driving vehicle. What can FSD not do? Is it just kinda, you know, driving on local streets? 

Grayson Brulte: The FSD that I have, 13.2 0.9 is phenomenal. Is it the fork that I was in with Robotaxis? No. Is it really, really good? Yes. Am I comfortable and safe with it? Yes. It’s made huge advancements. One of the biggest advancements that it’s made over the last six months, where if you’re going to school, because school time’s right around the corner and it would never stop when the flashing lights children, you go from 25 to 15 miles an hour. Now it doesn’t, to me that was the big, major breakthrough. It does not pull in my driveway yet, but it’ll pull out of my driveway. So I’m waiting to see that go, but. I would say less than 3%, 4% of the time when I’m actually in the Tesla vehicle, I actually drive it ’cause I’m that confident with it. And I’ve done long stretches, complicated stretches. I’ve done secret service interaction checkpoints ’cause you know where I live. And it, and it works falsely. And all these different edge cases that you really want to think about. 

David Welch: Hmm. So where, where does it not let you go? Hands for your ice free. 

Grayson Brulte: there are no limitations to the system. 

David Welch: Really. So FSD all about driver confidence, but you’re saying it doesn’t pull into your driveway. 

Grayson Brulte: No it pull, it pulls, right? So right in front of my driveway, say about, uh, 10 feet, six feet before it pulls right over. Closes the things like shuts the car off right there. It’s incredible. So I wanted to park on the street, no problem, but it actually won’t pull into the driveway, which is the weirdest little thing. 

David Welch: there are some things it won’t do if it requires a human to do these things. 

Grayson Brulte: It’s getting better be. 

David Welch: Yeah, that’s what I was saying. Okay. 

Grayson Brulte: It’s getting much better now. It, early on when I would go to the airport, I could take a fully autonomous to the airport. It didn’t know how to pull up to the curb. Now it does, you can’t say delta door, united door, but it knows how to pull up to the curb. So the, just the, the rate of improvement, the rate of acceleration, of how good the system’s getting is mind boggling to the point where I question how anybody can compete on a personally owned autonom vehicle standpoint. Just how fast the tech is iterating. Unless, if you look at GM standpoint, I’m the point now where I’m really thinking, does GM have to go out and license something to truly catch up to the advancements? Tesla’s making? 

David Welch: That’s interesting. I mean, look, I think that’s what Sterling Anderson wants to do is do it in-house, get some of their own people and, and be able to compete. 

Grayson Brulte: Do you think they have the talent and the wherewithal to do it in-house? ’cause what? You’re probably looking 4 billion, 5 billion, 6 billion. If they get this thing really ramped up. 

David Welch: I mean, isn’t that much, they’ve already got a lot of work done and they’re not, they’re not looking to build out a fleet of robotaxis the way Waymo does. They’re just working on some cars. , Look, I don’t know what it’ll cost. I think the answer to your question, do they have the talent based on the fact that Sterling Anderson is looking for talent? Probably not. Like they, they think they need more people, but I think he was pretty complimentary of the work Cruise has done in that same meeting. At least that’s what I was told. So I I, I think he feels they have a good foundation, uh, with both Super Cruise and Cruise and, and he wants to just bring in more people to, to, to do it better and faster. 

Grayson Brulte: I love the idea of bringing more people and adding a, a, a true competitor to the market. But did you learn anything about the trust factor? Says okay, I’m say I’m a world class engineer and Mr. Anderson calls and makes me an offer package. Okay, this is acceptable. I’ll go. But I’m thinking, okay, in three months, am I gonna get the phone call? The email ,slack hot program shut down. Here we go again. How is he gonna rebuild that trust? 

David Welch: Look, that’s, that’s big. And, and, uh, I, I, you know, another thing I know, and this, this does go back a few years. When, when Dan Amman was running cruise, remember when Cruise used to be called GM Cruise So I kept writing GM Cruise and stories and the, the people at Cruise would call me and complain bitterly and say, we’re called Cruise it. See now you’re not. It says GM Cruise on your website. GM Cruise, LLC if you want. I, I, I said I will never get that past a copy editor. At Bloomberg, they’ll go to the website and say, David, you’re gonna have to write a correction here because it says GM cruise, or it says Just cruise. It says gm. Just say fine. And they, and they hated it. Why did they hate it? Because when, and I pushed them hard on this, and they finally said, look, when we try to hire talent, the, the GM name carries some baggage with technology people on the West Coast. So, , that was the case back then. So they did finally, by the way, took it off their website. They may have even officially changed their name to just Cruise. So then I was able to do that in my stories and everybody was happy. But, that was a, that was an employer brand issue at the time. I gotta think, given the very high public meltdown of Cruises, layoffs of people. Buyouts of top talent, Kyle Vogt taking the occasional shot, uh, you know, cruise founder at at gm whenever they’ve shut things down, probably doesn’t help in that community. So yeah, you know, Sterling Anderson had, you know, knows a lot of people. There is a good reputation. Uh, so does some of the Apple people that are working in software at, at gm and they’re going to have to call friends. And I think, you know, the, the. They’re going to have to make a sales pitch to probably get some of these people. But yeah, I mean, this was a pretty high profile flame out of Cruise, and that carries some baggage. 

Grayson Brulte: It does carry baggage. The last time around, before it shut down, they call the cruise automation LLC. So to go to your point, the GM name was removed, which raises the point are they gonna have to just call it autonomy or come up with a different name that’s not associated with gm and basically make it the personally owned AV project. And then do a, a say an employee incentive product where you’re getting equity in a startup inside of. Gm very similar to what they originally had it with Cruise. 

David Welch: That’s a good question. I hadn’t thought about that. Um, you know, whether or not they, they need a new operation, I’m not sure what it, I mean, so the idea that that unit’s ever gonna go public though, and, and get the payout seems pretty remote. , Look, I think they’ll have to pay a lot of money. One thing that could help them, you and I have been on this podcast and, you know, talking for a few years now about. All of the autonomy companies that have died, uh, or cut back. Uh, so I think there are a lot of people out there who know how to do this, uh, or have experience doing it. So I, I, I think if somebody wants to, now those people can do other AI and other robotics jobs too, and develop other types of products and services. But there are people out there and, and so if someone really wants to develop self-driving cars. I, I think there’s talent to be had. They’re gonna have to pay up for it. ’cause those people are, are rare and they, they, they can do something. Most people can’t. 

Grayson Brulte: You’re right. It it when you said a graveyard reminded me of the Ben and Jerry’s flavor graveyard in Burlington, Vermont, all the flavors that went away, you could do the same thing for autonomy. A lot of these companies haven’t survived, and there’s companies today that will not survive. Let me ask you, the hell freezes over question. Let’s say Sterling has trouble attracting the talent. If the engineering talents there can’t get the systems to work, could GM do the unthinkable and call up Mountain View and say, Hey Waymo, we wanna do a licensing deal to build a personally owned av. Similar to, and we have very little details on this, the the Toyota MOU deal. Could we potentially see something like that if he cannot get the talent and the tech to work? 

David Welch: if this didn’t work for gm Yeah, I, I, I think they would, would have to do that if they want a personally owned av, they’d have to find a system that works. And. You know, could it all, could it also be Wayve or, or somebody else, uh, who develops it? , You know, Waymo, is Waymo’s the leader here in the us? Could they license a Chinese system? I mean, that, that’s a lot tougher because we’ve had some, we’ve had some regulations passed that, that keeps that from happening. But, , you know, you’ve got Wayves, a Wayve, you’ve got may mobility, you know, you’ve got other companies working on this. I would, I think it’d be a tough pill to swallow for GM to go to Waymo. But, , you know, let’s, let’s kind of forget about GM for a second and just any automaker that doesn’t have a system, if you wanna say GM could end up in that same group, fine. But, , you know, you really have one operating system we know works well. And then we’ve got Wayve and may mobility. Seem to have some pretty good technology out there. We’ve just seen less of it in fewer cities. So that by the time anyone has to make a decision on this a few years away, they, you could be choosing between two or three operating systems, but Waymo the leader right? 

Grayson Brulte: Waymo clearly, let’s not forget about Nuro, they got the lucid Uber deal, so there’s something going there. 

David Welch: That’s true too. Yeah. 

Grayson Brulte: I’ve been in that car. 

David Welch: Zoox’s still out there, , doing it as well. So, you know, you have a few different possibilities. If someone had to make a decision today, it’s Waymo, but if it’s a couple, three, five years from now, it could be any one of these companies we’re talking about. If they all still make It and, and, they’re still around. 

Grayson Brulte: It here would be an interesting thing and, and I’m saying this from purely from a coding standpoint, not a realistic standpoint because I dunno if it’s possible. Perhaps a, a Nuro a Wayve, a Waymo licenses gm, the tech, and then allows GM to fork it, essentially to put a GM layer on top of it and customize it for the GM needs. That gets an interesting opportunity, that creates a potential interesting business revenue model for all these licensers. 

David Welch: Yeah, sure. I mean, l look at, you know, some of the, the AV trucking companies. Some are want, some want to, you know, integrate it themselves into the truck and others kind of sell the system or license the system. To, uh, like Plus AI, they license the system. They do help with integration, but their, their customers really do the, in a lot of the integration work, kind of in concert with them. But they’re just licensing a system out you know, Waymo could do that, uh, the others could as well. And, you know, I, I, I think, look, one of the things GM, I think wanted to do in addition to running a robotaxi business was maybe license IT systems. And, and maybe they still do, It’s just, I think it’s always a, you know, there’s always a question of, you know, who do you allow to have an interface, interface with your car buyer and, and you know, that was the issue with it, is the issue with CarPlay 2.0. CarPlay 1.0 is a projection system. Okay? So I can play my music and text messages and make phone calls through my iPhone, project it onto my screen, and it works well in some cars and little bit buggy in others, but, okay, fine. CarPlay 2.0 starts, I think, what doesn’t it? Control side mirrors and some other stuff. I mean, it’s gonna be, starts to dig into the vehicle, which is why Tesla and Rivian won’t do it. GM won’t do it, and Mercedes has opted out. They don’t want, uh, apple digging into the car. So if you license Waymo’s system, it’s running on Waymo’s network and that system interfaces with the customers collecting that data of where they go and where they shop and where they eat. You know, it starts to get hairy. And so let’s say GM succeeded with this effort. They could license theirs out. \ You know, who, who does another car company trust? GM or Waymo? Or Zoox. You know, it, it gets, you know, that, that, that, that battle over who’s got the dashboard and the customer interface has been something we’ve been, uh, been writing about it for a while. There’s a lot of data in cars. I mean, think about it. You’re driving your car. If there is a person in the passenger seat and they’re not buckled up, you, you get a warning, right? That means your car knows if you have a passenger, a lot of information, all kinds of stuff, how fast you drive, you name it. Like all that stuff can be found and where you’re going. Um, consumers, you know, there’ve been fights, lawsuits over consumer data on this kind of stuff. And the companies fight over it. So, you know, that’s just something to think about. When we, we look at future licensing deals for autonomous and semi-autonomous systems. I mean, look, it is notable that everybody who has a sort of hands-free driving system, right? Audi, Mercedes, BMW, gm, Ford, it’s all their own, right? Unless I’m mistaken, I, I think they’re all doing their own system. 

Grayson Brulte: They’re all doing their own system outside of Audi and China. They’re running in the vw. They’re running a Horizon robotics stack in China, but for the rest of the world, they’re all building their own. Because you’re right, that data’s valuable. It’s highly targetable. It’s it’s highly localized, and let’s be very blunt. It’s, it, it’s very personalized. So, okay. So I’m convinced now that GM has to, to build it on their own. They do build on their own. When do we see the first car? 28. 29. Am I getting a little too aggressive there? 

David Welch: no idea. I mean, it, it is just, you know, it’s so hard to predict. , I think they want sooner rather than later, obviously, but, uh, you know, how soon they can depend, you know, like the, the, the cruise system works, um, and they do have cars out there with humans driving them. Um, and I think it’s using cruise’s software, but it, it, it’s just to gather data using the sensor suite to, to, you know, mapping data and so forth. So they’re, they’re, they’re, they’re doing stuff out there. How many of those cars are actually out there doing it? I don’t know. But, there’s, there’s a lot of work being done and, um, I don’t think they’re in a hurry. Uh, they know it, you know, the last time they did that, what it cost them. Um, and you know, you look at the trucking companies, they’re not in a hurry either. You know, they’re all, you know, they’ve been working on this for a number of years and you’re looking at what, 26, 27, 28, when most of those companies are going driver out, on highways, on public roads. So it’s, it’s a tough one. I, you know, I, I, I think you and I are gonna be talking about future plans for future years. 

Grayson Brulte: it’s probably pretty much every time you can mom me talking about future plans. ’cause it just, as you know, it keeps kicking the can down the road. But if you look at data today, the Super cruise, 70% of all Cadillacs have Super Cruise enabled on them. Out of the four core GM brands, do you think Cadillac is going to be the first one to have this personally owned technology? 

David Welch: Yeah, I do because those customers can afford the, the monthly payment on the service and the extra, whatever the extra charge is for the hardware. And I think, you know, GM showed like a two person concept car a few years ago. Um, might have been at CES, and it was a Cadillac, it it, if it didn’t have a badge on it, it sure looked like a Cadillac and it may have had a Cadillac badge on it. So, and, and that’s been. Usually the way GM rolls things out. Although with the Chevy Bolt, EV and with the Volt, , the strong plugin hybrid, you know, those were both Chevys first ’cause they wanted to try to get scale, but a lot of people look back at that and said it should have been, both of them should have been Cadillac models first. But traditionally, you know, things like air conditioning going back many, many years, high compression engines, Cadillac was first on a lot of that stuff. Blood it down through the, the other brands as it got, as they got scale on, on, on manufacturing it. In this case, it’s just, it’s a matter of, you know, if you’re charging what you, you said Tesla’s charging you 99 bucks a month. You know, for, for someone who buys a $35,000 Chevy Equinox, ev, you know, if, if they’re paying three 50 a month on that 400 a month. If adding another hundred, you know, there’s a reason they didn’t buy, uh, the Blazer ev or a Cadillac, ’cause they couldn’t get to 500 a month. So it’s tougher. 

Grayson Brulte: That’s a good point. Do you think so the Tesla model, the way it’s set today for. 50, it’s $8,000 one-time payment, or it’s $99 a month. Does GM have to follow that pricing or do you think they try and undercut it, or where do you see them going in the, in the pricing perspective? 

David Welch: Ah, geez. , Tough to say. I mean, by the time they have it out there, you know, what’s the cost of the hardware? What’s the cost of the maintenance of the system? Can they undercut it? Do they start it off cheaply to get people in and then they, they, they, they raise rates. , I mean, that’s, that’s a tough one. I mean, look, that Tesla system right now, $8,000 worth of hardware, that’s expensive. That’s an expensive option. 

Grayson Brulte: It. It is, but you could, you don’t have to pay for it. The hardware’s still there in the car, so technically if you were to buy the model three, the Model Y, the hardware’s still there. You just have to pay to activate it. So it’s built into the car. We don’t know what the cost of that hardware four is. We know there’s a hardware five coming. If you look at a gm, if they’re gonna build a sensor heavy, it’s gonna be more, I’ll go out on a limb based on, uh, the specs of a Super cruise system. And if you combine it with, with a Cruise system, I’ll give you a ballpark of $3,500 probably for that hardware onto that vehicle. So then what’s gm gonna have to mark it up to 5,000, do you think, on the Cadillac brand, and then charge your subscription on top of that. 

David Welch: Yeah, look, I mean, these things tend to be very profitable. Um, so, you know, yeah, they’re gonna be looking to mark it up for sure. And if they could mark it up and still on aircraft Tesla, I think they’d be very happy. There is another thing about this, though. Remember the, the story that, uh, my colleague Eric Shaka and I did on Hertz and, and the cost issues they had with repairing Teslas. One of the problems was even if a Tesla gotten a little fender bender, you have sensors for autopilot and it could be hundreds or even over a thousand bucks just to replace that sensor. Now the body shop could replace that sensor ’cause it would out, it would come in one big assembly and they, I, I think they would just, you know, fix the bumper and put that piece in there, but they couldn’t calibrate it, so they had to send it to get another shop just to calibrate it. That was like another thousand, 1500 bucks in some cases. That’s what the people at Hertz were telling me. So you could end up, you know, spending a few thousand bucks just on the sensor portion of the repairs. And I don’t know about you, but I, you can’t get out of a body shop for under 500. Well, it’s 500 bucks every time you walk in the door. And usually at least a thousand for even what looks like minor work. Then you add a few thousand dollars worth of sensor repairs. Are a lot of consumers gonna want that, want that risk. 

Grayson Brulte: No, 

David Welch: people are gonna buy, look, people love these systems, but that’s why this is something for luxury buyers right now. 

Grayson Brulte: And then you also have to, the other thing you have to factor in on this insurance costs. When you have these systems, your insurance costs go up. Give you an example. If you were to try in the state of the state of Florida to go insure a, a model three or model Y, it’s gonna be double or triplet, some insurers versus other insurers. There’s these big gaps involved there. 

David Welch: Someone just sent me a study that Teslas were the most expensive cars to insure right now. Uh, and I don’t have the details on it, but I, I, someone just sent me that study last week and I don’t know what jurisdiction it was in, but EVs generally are more expensive to insure, and then you add in a bunch of sensors and technology. It’s, you know, like. I, I know with insurance companies, they’re not interested in making less money, so, , they, they tend to jack up the rates. If you’ve got technology on the car, that could be expensive to fix. 

Grayson Brulte: Then that raises the question just, uh, how does GM deal with the warranties, the repair, and the maintenance? Do they have to, to train new individuals on how to take care of this technology or build a build a program? How are they gonna maintain these? 

David Welch: Yeah, I mean, that, that one’s easier. I mean, it’s just the, you know, you, you go into a Cadillac dealership now, uh, and, and I was just in one, uh, my wife’s got a lyric and um, you know, I saw a couple lyrics up on lifts, get having some work done. So. You know, they’ve, they’ve got, they’ve got the machinery, uh, and, and skilled workers who can do whatever work is being done, whether it’s with just light service maintenance or, or repairs, uh, or some software upgrades or whatever it was. They’ve got people who can do it and they’ve got the machinery to handle it. So, uh, and that was a big thing when GM was really pushing. Cadillac dealers to go ev. Some of them just sold their franchises or closed ’em down. They didn’t wanna spend the extra money because it, it was a decent, it was a decent chunk of change in order to get the equipment to repair EVs. 

Grayson Brulte: It was a big trick. Chase. Obviously GM seems well prepared for the think over time where you and I know their shareholders want the free cash flow to increase. They want the buybacks to go, they want the dividend to increase, and if they sell subscriptions, there’s clearly a path there. Outside of the financial incentives, do you think this push to person owners being driven by the. Uh, the growing interest in FSD from consumers, now we’re starting to consumers starting to talk about it. 

David Welch: Yeah. Uh, GMs I think has had a pretty good experience in terms of making money and customer satisfaction with Super Cruise. So they, they, they see a fully autonomous vehicle, and Ford has too, so the others right. Uh, they’ve all had a pretty good experience with this. It’s been a pretty good business. GM talks about it a lot in terms of making money from software related services in their cars. So, you know, they, they, they’ve had a pretty good experience with that and, and I think the customer satisfaction with it has been pretty good. So they want to expand it and, uh, you know, autonomy’s kind of like the holy grail of that. And then there’s the threat part of it, right? So, you know, those are the opportunities, but the threat is if, uh. You don’t have it, and two, three of your competitors do, suddenly your cars are less interesting, particularly on the high end, uh, you know, Cadillac’s finally getting some traction here, and they’re, they’re growing in markets where they haven’t been before, like on the coast because they’ve got some pretty, you know, pretty strong selling EVs out there. And then, you know, to blow it because you’re behind in the, uh, you know, driver assist and, and autonomy gain. They, they, they’re, they’re, I think. There’s gotta be something they’re looking at here is they don’t want Tesla and anyone who would license Waymo technology to to steal their buyers. 

Grayson Brulte: GM’s ramping up. They got a clear strategy. Where does Ford fit into this? Where are they going? ’cause it seems that they’re gonna be left behind as GM Really ramps up here. 

David Welch: I think everybody might have some. Work going in the background on this, but, uh, others may be, this gets back to the licensing model, right? Does, do they license from Waymo Wayve Zoo and, and look, you think about where our Rob, the robotaxi, let’s call it personally, you know, you know commuter transportation, avs are right now. So you got Waymo in what, six cities? Is that where we are at the moment? 

Grayson Brulte: Just about, just about. 

David Welch: and, and you know, pretty limited geography within those six cities. And Waymo’s doing very well. No one else is where they are. So if you’re, if you’re Jim Farley. I’m sure he is watching this. I’m sure there are conversations about internally and externally about what they could do to license or get a system in their cars. But if, if the creme deal of creme of autonomy, Waymo is in six cities in limited geography, you don’t have to make that decision today. Un unless you’re developing it internally. But you, you can kind of hang, watch, keep conversations going. If, you know, there’s either a breakthrough or Waymo just gets to the point where they’re in the 20 largest cities, then um, you, you know, then, then you, you can maybe cut a deal with ‘ 

Grayson Brulte: David, this is all really interesting and I’m looking forward to seeing you covering GM and and where they ultimately go. But I’m asking a forward thinking thing as we look to wrap up here. Where do you, at the end of the day, ultimately think GM is going, and what impact do you see this having on the market? 

David Welch: I think they’re gonna push hard to develop this, and as long as they are, they, they are able to keep the talent. They, they keep Sterling Anderson, they keep the Apple software guys and. some of the others I think they’re gonna push pretty hard how soon they get a system out there. Like I, I think even if the technology is good, they’re going to be very cautious with deployment. So you’re, you know, this to me looks like of the decade before we see something customer driven and, and, and that’s a darn throw on my, board. 

Grayson Brulte: it’s gonna be interesting to watch. But what we do know, we’re gonna always have you back. The future is bright. The future autonomous, the future is personally owned. Avs. David, as always, thank you so much for coming on the road to Autonomy today. 

David Welch: Great to be here. Thanks, man. 

Key The Road to Autonomy Episode Questions Answered