GM Halts Investment in Loss-Making Cruise Unit
General Motors (GM), the largest automaker in the United States, announced on Tuesday its decision to cease funding for the development of robotaxis through its majority-owned subsidiary, Cruise. This move marks a significant retreat from its ambitious plans in autonomous technology, a sector GM once prioritized as a cornerstone of its future.
Citing the extensive time and financial resources required to scale the robotaxi business, coupled with intensifying competition in the industry, GM decided to wind down operations at Cruise. The automaker has invested over $10 billion in the unit since 2016. Going forward, Cruise’s operations will be integrated with GM’s team working on driver assistance technologies rather than fully autonomous solutions.
The decision aligns with a broader strategic shift at GM. Recent moves include scaling back plans for electric vehicles (EVs), selling its stake in a joint venture battery plant, and restructuring its business in China. This reorientation reflects GM’s increased focus on its profitable gasoline-powered pickup trucks and SUVs. Following the announcement, GM’s shares climbed 3.2% in extended trading on Tuesday.
Competitive and Costly Robotaxi Market
The financial burden of developing and operating a robotaxi fleet, which GM CEO Mary Barra described as “fairly significant,” has proved to be a challenge not just for General Motors but for other major players in the industry. Barra acknowledged the high costs involved and emphasized that robotaxis were not part of GM’s core business strategy. She also revealed that the restructuring plan, expected to be completed by mid-2024, would reduce annual spending from $2 billion to $1 billion.
GM’s decision mirrors broader industry trends. Competitors such as Alphabet’s Waymo, Baidu, and Tesla continue to invest heavily in autonomous driving, but not all companies have sustained this path. Ford, for example, shut down its Argo AI division in 2022, citing the difficulty of developing fully autonomous technology. Tesla’s Elon Musk remains optimistic about the future of robotaxis, while Waymo has been expanding its ride-hailing services to cities like Miami and Los Angeles.
Cruise Faces Legal and Operational Setbacks
Cruise’s challenges have been compounded by legal and regulatory troubles. In October 2023, a Cruise robotaxi in San Francisco struck and seriously injured a pedestrian, leading to heightened scrutiny from federal regulators. The company admitted to submitting a false report during the investigation and agreed to pay a $500,000 criminal fine as part of a deferred prosecution agreement. GM also settled with the injured pedestrian.
These issues prompted General Motors to abandon plans for a steering wheel-less, fully autonomous robotaxi and led to significant cuts at Cruise, including layoffs of over a quarter of its workforce and the dismissal of top executives. Additionally, GM withdrew a petition filed with the National Highway Traffic Safety Administration (NHTSA) to deploy 2,500 self-driving Origin vehicles annually without human controls.
General Motors’s retreat from its robotaxi ambitions underscores the formidable challenges of autonomous driving technology, where high costs, technical hurdles, and regulatory scrutiny continue to pose significant barriers to success.
