GM to quit robotaxi business and stop funding its Cruise autonomous vehicle unit

The car manufacturer will instead concentrate on developing partially automated driver-assist systems for personal vehicles

General Motors announced this week that it will withdraw from the robotaxi business and cease funding for its loss-making Cruise autonomous vehicle unit.

The Detroit-based car manufacturer will instead concentrate on developing partially automated driver-assist systems for personal vehicles, such as its Super Cruise, which allows drivers to remove their hands from the steering wheel. GM stated that it would exit the robotaxi sector "given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market."

The company plans to merge Cruise's technical team with its own to work on advanced driver-assist systems. GM took control of San Francisco-based Cruise automation in 2016, hoping to create a profitable fleet of robotaxis.

Over the years, GM invested billions into the subsidiary, eventually acquiring 90% of the company from investors, all while accumulating millions in losses. GM’s decision to abandon Cruise represents a significant reversal from years of unwavering support that left a substantial financial impact on the automaker.

The company invested $2.4bn in Cruise only to endure years of continuous losses, with little return. Since GM purchased a controlling stake in Cruise for $581m in 2016, the robotaxi service accumulated more than $10bn in operating losses while generating less than $500m in revenue, according to GM shareholder reports filed with the Securities and Exchange Commission.

The car manufacturer has revealed plans for Cruise to generate $1bn in annual revenue by 2025, but it reduced investment in the company after one of its self-driving Chevrolet Bolts was involved in a collision with a pedestrian in San Francisco in 2023. The California Public Utilities Commission accused Cruise of concealing details of the accident for over two weeks.

This unfortunate incident led to Cruise's license to operate its driverless fleet in California being suspended by regulators and resulted in a leadership shake-up and layoffs that saw about a quarter of its workforce let go. GM CEO Mary Barra announced on a conference call on Tuesday that the new unit will focus on personal vehicles and developing systems that can drive autonomously under certain conditions.

The company has agreements to purchase another 7% of Cruise and plans to buy the remaining shares to own the entire company. This move marks another step away from autonomous vehicles, which have proven more challenging to develop than initially expected.

Two years ago, Ford Motor Co. , a rival company, disbanded its Argo AI autonomous vehicle venture in Pittsburgh, which it co-owned with Volkswagen, stating at the time that it didn't see a path to profitability for several years.

However, other companies are continuing to push forward with plans to deploy autonomous vehicles and expand their services.

Alphabet Inc.'s self-driving unit, Waymo, is ramping up its efforts to expand its robotaxi service, with plans to test its autonomous Jaguars in Miami next year and start charging for rides by 2026.

This development follows on the heels of Waymo opening its robotaxi service to the public in a significant portion of Los Angeles. Additionally, Waymo is eyeing Atlanta and Austin for new fleets in collaboration with Uber.

Meanwhile, Aurora Innovation is gearing up to deploy driverless semis for freight transport in Texas come April. Tesla's Elon Musk has also announced ambitions for autonomous Model Y and 3 vehicles to operate without human drivers as early as next year, with robotaxis lacking steering wheels expected to hit the roads in California and Texas by 2026.

However, an ongoing investigation by the National Highway Traffic Safety Administration into Tesla's "Full Self-Driving" system's performance in low visibility conditions has raised questions about the readiness of Teslas for driverless deployment. The probe was initiated after reports of crashes involving the system under challenging visual conditions, including one incident that resulted in a pedestrian fatality in Arizona.

GM has announced plans to collaborate with Cruise to reorganize the company and shift its focus towards developing advanced driver assistance systems. This strategic move is set to slash spending by a whopping $1bn each year.

Cruise, which currently employs around 2,300 staff, will maintain its San Francisco base, GM confirmed. However, future employment figures remain uncertain until the restructuring's completion next year, according to a company spokesperson.

Senior vice president of software and services engineering, Dave Richardson, revealed that Cruise's expertise in software, AI, and sensor tech would join forces with GM to enhance the automaker's driver-assist technologies. "We want to leverage what already has been done as we go forward, and we think we can do that very effectively," said Barra.

Post-announcement, GM's stock experienced a roughly 3% increase in after-hours trading and has seen a significant 47% rise over the year.