General Motors pulls plug on loss-making Cruise robotaxi service
General Motors (GM) has announced that it will no longer fund its subsidiary Cruise, a robotaxi service. The move comes as part of GM's strategy to focus its resources on building autonomous vehicles for personal ownership. The decision comes after GM realized that keeping the project afloat was financially unsustainable considering the huge expenses and lack of profitability.
Cruise's financial struggles and GM's strategic shift
Cruise was facing major financial issues, having lost $3.48 billion in 2023. The subsidiary was seen as a financial liability for GM, considering its high costs of operation and no clear path to profitability. "Given the considerable time and expense required to scale a robotaxi business in an increasingly competitive market, combining forces would be more efficient," said Mary Barra, CEO of General Motors.
GM's decision could lead to layoffs and service suspension
The withdrawal of funding by GM could lead to layoffs at Cruise, although no official announcement has been made yet. Cruise's autonomous vehicle testing in Arizona and Texas will also be temporarily halted as the company reassesses its strategy. The future of the robotaxi service remains uncertain as GM plans to buy back its remaining shares in Cruise, currently owning 90% of the company.
Cruise's commercial operations and GM's investment
Cruise's commercial operations have been halted since October 2023, after one of its driverless cars met with an accident in San Francisco. Despite the setbacks, Barra stayed committed to the project and launched a restructuring process at Cruise earlier this year. Since acquiring Cruise in 2016, GM has invested nearly $10 billion into the subsidiary. The automaker is repurchasing equity in Cruise and, through agreements with other shareholders, will increase its stake from 90% to over 97%.
GM's cost savings and market reaction
GM is pulling back on its robotaxi ambitions just as Alphabet-backed Waymo expands into more cities and Tesla plans to start its robotaxi business in 2026. The decision to stop robotaxi development is also expected to cut GM's annual costs by more than $1 billion. Following the announcement of this strategic shift, shares of General Motors rose 2.7% after regular trading hours in New York.
