GM exits Cruise robotaxi business amid mounting losses and challenges
GM exits Cruise robotaxi business amid mounting losses and challenges
General Motors will stop developing robotaxis through Cruise, the majority owned autonomous driving unit, marking a major pullback from its once lofty aspirations of pure self driving technology.
Substantial investments of more than USD 10 billion since GM acquired Cruise in 2016 led to the decision. The company pointed to the large amount of time, resources and competition in the robotaxi market when explaining the change. In his quest to steer GM toward more practical and profitable ventures, Cruise's operations will be folded into GM's division for driver assistance technologies.
Mary Barra, GM CEO, told an analyst call that “operating a robotaxi fleet isn’t something we believe aligns with our core business, given the costs and challenges involved.” Cruise program expendable, but Barra previously wanted to make USD 50 billion by 2030.
GM has focused on its profitable gasoline-fueled trucks and SUVs while scaling back high-cost, experimental projects. In addition, the company has stopped its electric vehicle expansion, exited a battery joint venture and restructured its China business. By mid-2024, Cruise's restructuring plan is expected to cut GM's annual spending from USD 2 billion to USD 1 billion.
The retreat mirrors wider industry problems. High costs and slow progress in achieving full autonomy have led other automakers, such as Ford, to scale back or even halt their autonomous vehicle initiatives. In 2022, Ford closed its Argo AI unit and pivoted to built-in advanced driver-assistance systems.
But Cruise has also endured steep regulatory and operational challenges, including a USD 500,000 fine for failing to disclose details about a San Francisco crash that year involving one of its robotaxis. It was that incident, where a pedestrian was struck and injured, that federal scrutiny, lots of layoffs and withdrawal of a petition to deploy steering wheel free vehicles resulted.
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Meanwhile, competitors like Alphabet’s Waymo and Tesla continue to invest in autonomous technology, with Waymo expanding services to Miami and Los Angeles. However, GM's move underscores the daunting path to profitability in the nascent robotaxi sector.
GM shares rose 3.2% in after-hours trading following the announcement, reflecting investor approval of its cost-cutting measures.
