DETROIT — General Motors announced on Tuesday that it will withdraw from the robotaxi market and cease funding its Cruise autonomous vehicle division, which has been operating at a loss. Instead, the automaker plans to concentrate on enhancing partially automated driver-assist technologies for its personal vehicles, such as the Super Cruise system that permits hands-free driving.
GM’s decision to exit the robotaxi space comes in light of the significant time and resources required to scale this business, compounded by an increasingly competitive market for robotaxis. The company revealed that it would integrate Cruise’s engineering team with its own to focus on the advancement of systems designed to assist drivers.
The automaker initially acquired a controlling stake in San Francisco’s Cruise automation in 2016, fueled by aspirations to create a profitable fleet of robotaxis. However, over the years, GM poured billions of dollars into this venture and ultimately claimed a 90% ownership stake from previous investors, accumulating extensive losses in the process.
The pivot away from Cruise marks a stark turnaround from GM’s prior strong endorsement, which led to notable financial losses. The company invested around $2.4 billion in Cruise without seeing substantial returns, with the robotaxi service racking up over $10 billion in operating deficits against revenues of less than $500 million, as reported in shareholder communications submitted to the Securities and Exchange Commission.
Earlier ambitions included plans for Cruise to achieve $1 billion in yearly revenue by 2025, but the automaker decreased its funding for the unit after a concerning incident in 2023, in which one of its autonomous Chevrolet Bolts was involved in an accident involving a pedestrian in San Francisco.
This mishap led to allegations by the California Public Utilities Commission that Cruise attempted to obscure details surrounding the crash for more than two weeks. Consequently, regulatory authorities suspended the robotaxi service’s operating license in California, which prompted leadership changes within Cruise and resulted in workforce reductions, cutting approximately 25% of its employees.
In a recent analyst call, GM CEO Mary Barra emphasized that the newly structured unit would pivot its focus towards personal vehicles, developing systems capable of driving autonomously in specified situations. GM also holds agreements to acquire an additional 7% stake in Cruise and plans to secure full ownership of the subsidiary.
This shift is not isolated, as other automakers have similarly scaled back their autonomous vehicle ambitions, with Ford previously disbanding its Argo AI unit due to profitability concerns. Nevertheless, several companies continue to progress with their plans for deploying autonomous vehicles. For instance, Alphabet Inc.’s Waymo is set to expand its robotaxi service to additional locations, including Miami, with plans to begin charging for rides by 2026.
Recently, Waymo extended its service in an 80-square-mile area of Los Angeles to all users seeking rides. Alongside this, the company has intentions to launch new fleets in Atlanta and Austin next year in collaboration with leading ride-hailing platform Uber. Additionally, Aurora Innovation intends to start autonomous freight transport on Texas highways.
Tesla CEO Elon Musk has expressed that his company aims to operate fully autonomous Model Y and 3 vehicles without human supervision by next year, with robotaxis utilizing Tesla’s “Full Self-Driving” system anticipated to launch in 2026 in California and Texas. However, an investigation by the National Highway Traffic Safety Administration into the system’s performance in low visibility conditions has raised doubts regarding the safety of such deployments without human drivers.
As GM looks to collaborate with Cruise leadership on restructuring the company, the focus shifts toward driver-assist systems, with expectations that these changes will cut expenditures by more than $1 billion annually. Currently, Cruise employs about 2,300 individuals and will maintain operations in San Francisco, though precise employment figures will be clarified once the restructuring process concludes next year.
Dave Richardson, senior vice president of software and services engineering, indicated that Cruise would contribute its software and AI innovations to enhance GM’s driver-assist technologies. Barra affirmed the company’s intention to capitalize on existing advancements as they move forward, expressing confidence in their collaborative efforts.
Following the announcement, GM’s stock experienced a roughly 3% rise in after-hours trading, contributing to an overall increase of about 47% for the year.
