GM's Cruise Plans to Charge for Autonomous Taxis in 2019 - TheStreet

Self-driving taxis are coming to a city near you, whether you're ready for them or not.

That's according to Daniel Kan, co-founder of GM's Cruise. Speaking at a conference in San Francisco on Thursday, he said that in 2019, anyone will be able to hail for a self-driving taxi in the city. And yes, he said, they'll be charged money. 

How Cruise will make that happen is still a huge question mark.

"We'll do whatever is best for ourselves and to maintain optionality," said Kan, who also heads up operations at Cruise. 

Cruise certainly has options. In 2016, it rocketed from scrappy startup to self-driving powerhouse when (GM) - Get Report bought the company for north of $1 billion. Since then, it has incorporated its testing units into Chevy Bolt vehicles for testing in San Francisco, Arizona and the Detroit area. And it has managed to avoid the high-profile crashes fatalities that have marred both Uber and Tesla's efforts in autonomous driving. The automotive research firm Navigant named GM and Cruise as the most likely to bring autonomous cars to market first.

The picture got a bit more complicated when Softbank, the Japanese conglomerate, bought up a $2.25 billion stake in Cruise, giving that company a 20% ownership position.

"GM is obviously a really big player in the space, and almost certainly we could have [accomplished our goals] with them, but linking up with the biggest investor in the world, we get heavy hitters in our corner and the ability to accelerate our timeline around the world," Kan said.

In addition to Cruise, Softbank has snapped up significant stakes in a number of companies working on autonomous tech, including Nvidia  (NVDA) - Get Report  and chipmaker ARM Holdings. It's bought shares in multiple ride-hailing networks worldwide, including a 15% stake in Uber. With its vast reach across the industry, Softbank is expected to build alliances among companies in its portfolio.

Kan insisted that Cruise is still open to anything in launching a commercial fleet: More cash, more partnerships, or even building their own ride-hailing network. "Whether we launch with one partner, two partners or zero partners is still up in the air. It could be us, it could be Lyft, it could be any ridesharing company, including Uber."

GM also owns about 9% of Lyft, but the relationship has grown more distant in the increasingly messy self-driving landscape. (GM President Dan Ammann left the board last week; Lyft also cozied up with Ford (F) - Get Report  in 2017 on development.

That could work in Uber's favor. "At this stage it looks unlikely that they will work with Lyft, but an Uber partnership is not out of the question," said Sam Abuelsamid, senior research analyst on transportation for Navigant.

The technology also still has a big stigma to overcome. Deaths resulting from collisions involving Uber's autonomous testing and, more recently, Tesla's Autopilot system, have sparked worries that the autonomous taxis aren't ready for prime time. Cruise is still grappling with regulators in cities like New York, where it has long wanted to place more testing units.

"I think it is reasonable for Cruise to start offering a commercial service in 2019, within certain constraints," added Abuelsamid. "I think they will probably start operating only in selected areas of the city where they are confident the system will work reliably and may limit it to certain weather conditions."

Cruise already maintains a small, internal ride-hailing service for its few hundred employees in San Francisco, and "they could easily deploy that commercially," he said.

But don't be surprised if they wind up switching gears entirely.

"Along with every company in the automated driving space, GM is doing all kinds of experiments to try to understand which business and operational models will lead to long-term profitable businesses," he added. "Deployment of cars on the Uber platform can leverage Uber's brand recognition while they build up whatever internal brand they select -- which could be Cruise, Maven (GM's car-sharing division) or something else entirely."

Jim Cramer and the AAP team hold a position in Nvidia and Ford for their Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells Nvidia? Learn more now.