General Motors (GM) announced it will discontinue its investment in the development of self-driving robotaxis at its Cruise unit, citing the high costs and competitive challenges of scaling the business. This decision marks a strategic pivot away from autonomous vehicles after years of significant investment, amounting to over $10 billion since acquiring a majority stake in Cruise in 2016. The company stated that Cruise will now be integrated into its broader operations focusing on driver assistance technologies.
The move aligns with GM’s broader restructuring efforts, which have included scaling back plans for electric vehicles, selling its stake in a battery joint venture, and reorganizing its operations in China. These changes are part of GM’s strategy to prioritize its core business of producing gasoline-powered vehicles, such as pickup trucks, which remain highly profitable. As a result of this shift, GM expects to halve its spending on Cruise from $2 billion to $1 billion by June 2024.
CEO Mary Barra underscored the financial impracticality of maintaining a robotaxi fleet, describing it as “not our core business” during an analyst call. This marks a significant reversal from her earlier projections in 2023, where she estimated the potential for Cruise to generate $50 billion in annual revenue by 2030.
The decision comes amid heightened scrutiny of Cruise following a 2023 crash in San Francisco that seriously injured a pedestrian. The company admitted to submitting false information during a federal investigation into the incident and agreed to pay a $500,000 fine as part of a deferred prosecution agreement. GM has since withdrawn a petition to deploy 2,500 fully autonomous Origin vehicles annually and ceased development of steering wheel-free robotaxis.
GM’s retreat mirrors similar moves by competitors in the autonomous vehicle sector. In 2022, Ford Motor shut down its Argo AI venture due to cost concerns. However, competitors like Alphabet’s Waymo continue to push forward, recently expanding ride-hailing services to new cities and securing substantial funding. Despite these advancements, the autonomous vehicle industry remains marked by high development costs and technical hurdles, prompting reassessments by many players. GM shares rose 3.2% following the announcement.
