The Cruise Origin was supposed to be the future—or so it seemed four years ago.
That’s when Cruise cofounder Kyle Vogt introduced the futuristic-looking vehicle: No steering wheels. No pedals. Wireless internet. “Campfire” seating for six passengers. Sliding doors.
“Well that’s really something isn’t it?” Vogt said as he slid out of the Origin on stage.
But all of that changed yesterday morning when GM announced it was delaying production of the Cruise Origin indefinitely and instead using the familiar Chevy Bolt as the main platform for its self-driving efforts.
While the Origin’s radically different design from traditional automobiles may have always made it a long shot, GM had appeared committed to the vision. Prior to last October, Cruise Origins were being tested at GM’s headquarters in Detroit, in Austin, and at one of Cruise’s test tracks outside San Francisco. A handful of them had just been delivered to Phoenix.
So what happened?
To hear GM CEO and Cruise Chair Mary Barra, the demise of the Origin comes down to costs and regulation. GM’s “per unit-costs will be much lower” by focusing on Bolts instead of Origin vehicles, Barra wrote in a quarterly letter to shareholders Tuesday. Barra discussed the regulatory challenges during the quarterly earnings call, explaining the company’s view that deploying the Origin was going to require “legislative change.”
“As we looked at this, we thought it was better to get rid of that risk,” Barra said.
All robo-taxi companies have been waiting on the green light from regulators for the approvals needed to add these futuristic pedal-less cars into their commercial fleets. While the National Highway Traffic Safety Administration adjusted its rules so that carmakers could manufacture and deploy cars without pedals or steering, state DMVs still have many restrictions set in place when it comes to people riding in them. GM isn’t completely swearing off the concept of steering-wheel free cars — Barra noted that there could be an opportunity for a “vehicle like the Origin in the future.”
The other big change for GM, of course, is the October accident involving one of Cruise’s self-driving Chevy Bolts in San Francisco (in which a woman was dragged underneath the car), and the company’s handling of the incident. Regulators revoked Cruise’s permit in the state of California, and Cruise temporarily grounded its fleet nationwide. GM also replaced Cruise’s senior management and took control of day-to-day operations, with Vogt leaving the company around the same time.
Dumping the Origin seems like a safe bet for a company eager to regain confidence with the public and regulators. After all, many people are still uncomfortable with the idea of autonomous cars (sometimes even attacking them on the streets)—not to mention autonomous cars that don’t really look like cars at all. And a dysfunctional car stuck in traffic with no steering wheel or pedals is harder to move than something people already know how to use, adding one more potential element of risk.
That said, Cruise competitors aren’t slowing down when it comes to these futuristic robo-taxi vehicles. Waymo is running its own manual tests with Chinese automaker Zeekr in San Francisco (Waymo uses traditional vehicles for its current operations). And just last week, Aicha Evans, CEO of Amazon-owned Zoox, laid out her company’s plans to jump into commercial service out-of-the-gate with its own zero-steering-wheel vehicle when it launches commercial service. Zoox, which started offering rides to friends and family last year, has no traditional cars in its fleet.
“The way we look at that, is if you have to have manual interaction—this is not a robo-taxi,” Evans said on stage at Fortune’s Brainstorm Tech conference last week.
Cruise cofounder Vogt appears to agree that cars without steering wheels are the future. As he wrote on X yesterday, in reference to GM and its Origin move: “It’s like someone keeps letting them look into a crystal ball and then they just go, ‘Nah, we’re good.’”
Barra has many other considerations to take into account than simply having a cool-looking vehicle on the street. Her decision to back away from the Origin is certainly a big change to its self-driving strategy—but whether it signals a retreat from the race or simply a bet on a different horse, remains to be seen.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
- Vanta, a San Francisco-based security and compliance platform, raised $150 million in Series C funding. Sequoia Capital led the round and was joined by Goldman Sachs Ventures, J.P. Morgan, and existing investors including Atlassian Ventures, Craft Ventures, CrowdStrike Ventures, HubSpot Ventures, Workday Ventures, and Y Combinator.
- Exoticca, a Barcelona, Spain-based travel booking platform for multi-day trips, raised €60 million ($65.1 million) in Series D funding. Quadrille Capital led the round and was joined by All Iron, ICF, and existing investors 14W, Mangrove, Bonsai, Sabadell, and Aldea.
- QA Wolf, a Seattle, Wash.-based quality assurance testing platform, raised $36 million in Series B funding. Scale Venture Partners led the round and was joined by Threshold Ventures, Ventureforgood, and existing investors Inspired Capital and Notation Capital.
- Code Metal, a Boston, Mass.-based developer of AI-powered development workflows, raised $13 million in seed funding led by Shield Capital and $3.5 million in pre-seed funding led by J2 Ventures. Other investors include Fulcrum Venture Group, Underdog Labs, and others.
- Caldera, a San Francisco-based rollup ecosystem, raised $15 million in Series A funding. Founders Fund led the round and was joined by Dragonfly, Sequoia Capital, Arkstream Capital, Lattice, and others.
- Splight, a San Francisco-based developer of AI-powered electricity grid operations technology, raised $12 million in seed funding. noa led the round and was joined by Elewit, EDP Ventures, Draper Cygnus, Draper B1, Ascent Energy Ventures, Fen Ventures, Reaction Global, and others.
- Igloo, the Miami, Fla.-based parent company of crypto-native products and platforms including Pudgy Penguins, raised $11 million in funding. Founders Fund led the round and was joined by Fenbushi Capital, 1kx, Everest Ventures Group, and Selini Capital.
- Sojo Industries, a Bristol, Pa.-based manufacturer of robots designed for food and beverage assembly, raised $10 million in Series A funding from Schreiber Ventures, Tech Council Ventures, and others.
- SoundHealth, a Los Altos, Calif.-based developer of respiratory health technology, raised $7 million in seed funding. Moai Capital and J4 Ventures led the round and were joined by TeleSoft Partners, Tau Ventures, TechU Ventures, and Rhythm Venture Capital.
- Vijil, a Menlo Park, Calif.-based platform designed for organizations to build autonomous AI agents, raised $6 million in funding from AIStart and Gradient Ventures.
- Promptfoo, a San Mateo, Calif.-based large language model testing platform, raised $5 million in seed funding. Andreessen Horowitz led the round and was joined by others.
- ZEST Security, a New York City and Tel Aviv, Israel-based cloud security platform, raised $5 million in seed funding from Hanaco Ventures, Silvertech Ventures, and angel investors.
- Noded AI, a San Francisco-based AI-powered productivity platform designed for knowledge workers, raised $4 million in funding. Boldstart Ventures led the round and was joined by Bessemer Venture Partners, 20VC, First Hand Ventures, and others.
- Cuttable, a Victoria, Australia-based automated content agency, raised A$5.5 million ($3.64 million) in seed funding. Square Peg led the round and were joined by Rampersand and angel investors.
- AppMagic, a Paphos, Cyprus-based market analytics platform, raised $3 million in funding from GEM Capital.
- Farmblox, a Boston, Mass.-based agriculture technology company, raised $2.5 million in seed funding. Hyperplane led the round and was joined by Slow Ventures, MHS Capital, and Service Provider Capital.
PRIVATE EQUITY
- Advantive, backed by Ottawa Avenue Private Capital, ST6 Partners, and TA Associates Management, acquired Pepperi, a New York City-based commerce platform for B2B companies. Financial terms were not disclosed.
- Genstar Capital acquired a majority stake in Docuspace, a Holmdel, N.J.-based developer of operations software for wealth management and financial advisors. Financial terms were not disclosed.
- H.I.G. Capital acquired a majority stake in Naturalia Tantum, a Milan, Italy-based beauty and personal care company. Financial terms were not disclosed.
- Infogain, a portfolio company of Apax Partners, acquired Impaqtive, a Bridgewater, N.J.-based consulting services firm for Salesforce. Financial terms were not disclosed.
- PestCo, a portfolio company of Thompson Street Capital Partners, acquired Secure Pest Services, a Linden, N.K.-based provider of commercial and residential pest control services. Financial terms were not disclosed.
- Riveron, backed by Kohlberg & Company, acquired Yantra, a Santa Clara, Calif.-based provider of tech and advisory services. Financial terms were not disclosed.
- Tropolis, a portfolio company of Unity Partners, acquired 360 Risk Management, a Northville, Mich.-based property and casualty insurance company, Modi Benefits, a Northville, Mich.-based benefits and risk management firm, and Fishman Agency, a Deerfield, Ill.-based PR firm. Financial terms were not disclosed.
EXITS
- Platinum Equity agreed to acquire GSM Outdoors, an Irving, Texas-based outdoor and consumer sporting goods company, from Gridiron Capital. Financial terms were not disclosed.
OTHER
- Terex Corporation (NYSE: TEX) agreed to acquire Environmental Solutions Group, a Chattanooga, Tenn.-based designer and manufacturer of refuse collection vehicles, waste compaction equipment, and more, for $2 billion in cash.
- IDEX Corporation (NYSE: IEX) agreed to acquire Mott Corporation, a Farmington, Conn.-based manufacturer of filtration and flow control solutions, for $1 billion.
- Stagwell (NASDAQ: STGW) agreed to acquire LEADERS, a Tel Aviv, Israel-based influencer marketing agency. Financial terms were not disclosed.
PEOPLE
- Dell Technologies Capital, the Palo, Alto, Calif.-based corporate venture capital arm of Dell Technologies, hired Barrel Kfir as an investing partner. Formerly, he was with Vintage.
- Techstars, a New York City-based pre-seed investor, promoted Jonathan Geehan to chief financial officer.