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General Motors has called time on its $10 billion Cruise robotaxi project, marking a major shift in its autonomous driving ambitions. The automaker’s decision comes amid fierce competition, regulatory hurdles, and efforts to streamline spending by $1 billion annually.
GM Halts Funding for Cruise Robotaxi Development
A devastating blow to the carmaker that had prioritized the advanced technology branch, General Motors announced on Tuesday that it will halt funding and leave robotaxi research at its majority-owned Cruise subsidiary, Reuters reports.
The automaker announced that it will no longer be providing funding for robotaxi research "given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market." More than $10 billion has been invested on Cruise by the manufacturer.
During Tuesday's extended session, GM shares increased by 3.2%.
GM's Cruise Robotaxi Ambitions and $50B Revenue Goal
Mary Barra, CEO of General Motors, said in 2023 that the Cruise division might bring in $50 billion a year by 2030.
"This is the latest in the series of decisions that GM has announced which underscore our focus on having the right technology for the future of our company and the industry and reflects our commitment to execute with speed and efficiency," she said in an interview.
The number of Cruise workers who might be transferred to GM was not disclosed by Barra.
The expenses and challenges of building such complex technology have caused some of GM's rivals to cease investing in autonomous driving companies.
Autonomous Driving Rivals Pivot Strategies
Per Investing.com, after receiving funding from both Volkswagen and other sources, Ford Motor Company redirected resources from its Argo AI business in October 2022, thereby halting the project. While Argo AI develops completely autonomous systems, Ford continues to focus on improved driver assistance systems internally.
In a deferred prosecution agreement, Cruise acknowledged last month to filing a false report in an effort to influence a federal probe and agreed to pay a $500,000 felony fine. According to the Justice Department, Cruise withheld important information from federal regulators following a collision in October 2023 in San Francisco, in which one of its robotaxis severely hurt a pedestrian.
Financial and Regulatory Pressures Reshape GM's Plans
After the plan is finished by the end of June, GM expects spending to drop by more than $1 billion yearly due to the restructuring.
With the help of other shareholders, General Motors will increase its stake in Cruise from 90% to over 97% and then seek to acquire the remaining shares.
The development of a robotaxi without a steering wheel or other human controls was halted in July by GM.
General Motors petitioned the National Highway Traffic Safety Administration in 2022 to allow the deployment of up to 2,500 autonomous Origin vehicles each year, which function without the need for human controls like brake pedals or mirrors. General Motors justified its move by pointing to regulatory risk, and the government has yet to decide on the request.
