General Motors (NYSE:GM) has been racing ahead with autonomous vehicles, and this week, the company's self-driving subsidiary said it would double its employee count over the next nine months.
Cruise Automation has about 1,000 employees on staff right now, so the hiring spree would bring the company's headcount closer to 2,000 by the end of the year, according to Reuters. Most of the new hires are expected to be for engineering positions.
This is GM's latest move to ramp up its efforts on autonomous vehicles (AVs), and it should help the company achieve its goal of launching a self-driving vehicle service later this year. Let's take a look at how increasing personnel fits into GM's overall AV picture.
Much more than a side project
It's easy to assume that the nation's largest automaker is merely dabbling in self-driving vehicles -- after all, there are hardly any self-driving vehicles on the road right now. But GM has made it very clear that Cruise Automation, and self-driving services in particular, are the company's inevitable future.
The most significant indication of this mind-set came just a few months ago when GM's then-president, Dan Ammann, left the company to take on the CEO role at Cruise Automation. That move was made around the same time that GM's CEO Mary Barra announced a restructuring and substantial job cuts at GM, in order to lower company costs and to focus the automaker's attention on new technology, including AVs.
One of the building blocks of GM's future is the company's autonomous ride-hailing service, expected to debut later this year in San Francisco. That service follows Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Waymo's commercial ride-hailing service, which launched in Arizona at the end of 2018.
GM's service will allow passengers to hail cars for rides around San Francisco, with the ultimate goal of bringing the service to passengers throughout the country. Cruise Automation is also forging partnerships to test new revenue opportunities, including recent experiments with food-delivery company DoorDash.
Check out the latest earnings call transcript for General Motors.
Pursuing a potentially huge market
IHS Markit estimates that more than 33 million autonomous vehicles will be sold worldwide in 2040. Additionally, research from Intel and Strategy Analytics estimates that the global market for consumer mobility-as-a-service (which includes autonomous ride-hailing) will be worth more than $3 trillion by 2050. If reality comes even close to those projections, GM has a massive chance to benefit.
In addition to its ride-hailing project, GM is pursuing self-driving by developing its own AV car -- without a steering wheel or pedals -- which is expected to debut later this year. And it's partnering with other companies.
Cruise Automation is working with Honda to jointly build a new autonomous vehicle, and will receive $2 billion from Honda over the next 12 years (along with an initial $750 million investment). It also received a $2.25 billion investment from Softbank last year, which put Cruise Automation's valuation at about $14.6 billion.
All of these moves, including Cruise Automation's hiring spree, add up to show just how large a bet GM is making on AV. Investors searching for direction on what GM's future looks like should note what Barra said in an interview back in 2015: "We're going to disrupt ourselves, and we are disrupting ourselves, so we're not trying to preserve a model of yesterday."
With the expansion of Cruise Automation, GM will move one step closer to disrupting the traditional automotive market. It's going to take years before the 111-year-old automaker fully transitions to a self-driving future, but investors need to know that it's already headed down that road. And if the estimates pan out, it could be a lucrative move over the long term.