GM to ditch unprofitable Cruise robotaxis

General Motors said on Tuesday it will end robotaxi development at its majority-owned, money-losing Cruise business, a blow to the ambitions of the largest US carmaker, which had made the advanced technology unit a top priority.

The Detroit-based car company said it would no longer fund work on self-driving robotaxis, “given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market”.

The carmaker has invested more than $10bn in Cruise since 2016. Cruise will be folded into its group working on driver assistance technology.

The move comes on the heels of GM scaling back plans for electric vehicles (EVs), selling its stake in one of its joint venture battery plants and restructuring its China business, leaving the company more focused on its profitable business of making pletrol-powered pickup trucks and other large vehicles.

GM shares rose 3.2% in extended trading on Tuesday.

In 2023, GM CEO Mary Barra said the Cruise business could generate $50bn in annual revenue by 2030 but on Tuesday said the business was expendable.

“You’ve got to really understand the cost of running a robotaxi fleet, which is fairly significant, and again, not our core business,” Barra said on an analyst call.

GM expects the restructuring will cut spending from about $2bn to $1bn after the plan is completed by the end of June.

Barra declined to say how many Cruise employees could be moved over to GM.

Costly business

Rivals still in the emerging robotaxi industry include deep-pocketed developers such as Alphabet’s Waymo, Baidu and Tesla.

But some of GM’s competitors have already stopped funding autonomous driving businesses, citing the costs and difficulties involved in developing such sophisticated technology.

In October 2022, Ford Motor began winding down its Argo AI operation that was part-funded by Volkswagen. Ford is still working on advanced driver assistance systems in-house different from the fully autonomous ones previously being developed at Argo AI.

Still, Tesla CEO Elon Musk — a close adviser to president-elect Donald Trump — is bullish on the future of robotaxis, and Trump is expected to make it easier to deploy self-driving vehicles nationally.

Waymo last week said it would expand its autonomous ride-hailing services to Miami. Last month, the company opened its ride-hailing services to everyone in Los Angeles, and in October it closed a $5.6bn funding round led by Alphabet.

Last month, Cruise admitted to submitting a false report to influence an investigation and agreed to pay a $500,000 criminal fine as part of a deferred prosecution agreement.

The justice department said Cruise failed to disclose key details of an October 2023 crash to federal regulators in which one of its robotaxis in San Francisco struck and seriously injured a pedestrian. GM paid a substantial settlement to the woman who was injured and it faces continuing scrutiny from US auto safety regulators.

GM in July said it would halt development of a planned robotaxi that would not have a steering wheel or other human controls after it made a series of dramatic cuts after the 2023 crash, including firing many top executives and laying off more than a quarter of its employees.

In 2022, GM filed a petition with the National Highway Traffic Safety Administration seeking permission to deploy up to 2,500 self-driving Origin vehicles a year without human controls such as brake pedals or mirrors. GM in recent months withdrew the petition, a person briefed on the matter said.

Reuters