GM Exits Cruise Robotaxi Business

By Abhirup Roy

SAN FRANCISCO (Reuters) – General Motors (NYSE:GM) has decided to end its Cruise robotaxi business, exposing the significant challenges that autonomous vehicle (AV) developers face. Perfecting AV technology requires a long-term commitment and substantial financial backing.

AV developers are hoping for more favorable regulations under President-elect Donald Trump to facilitate getting self-driving cars on the road. However, GM's departure indicates that even with billions in funding, success is not guaranteed in this evolving sector filled with setbacks and skepticism from drivers.

Bernstein analysts addressed this uncertainty, questioning whether AV economics can actually work. They noted that while it is possible, achieving a successful proprietary network will demand capable technology and a readiness to invest heavily, akin to the early rideshare days.

Cruise had nearly $10 billion from GM and commenced commercial operations last year, once positioned as an industry leader with revenue potential of $50 billion annually, but the venture remained unprofitable.

The turning point came after a 2023 accident where a Cruise self-driving car severely injured a pedestrian, leading to halted operations, public backlash, and numerous investigations. Following the incident, Cruise cautiously resumed supervised autonomous driving in Phoenix.

The surprising decision stunned Cruise employees, with one source expressing shock and confusion over the sudden change.

Despite GM's setbacks, other competitors are advancing in the AV race. Companies like Alphabet's Waymo, Tesla, and Amazon's Zoox are making strides towards competing in the robotaxi market. In contrast, Musk announced plans for a robotaxi called Cybercab, set for production in 2026, while Waymo secured additional funding.

Jason Petitte, a senior analyst at Kovitz, noted that while Cruise struggled, competitors continued to progress. Consequently, GM decided to shift its focus from Cruise to its Super Cruise driver assistance system, available in over 20 models.

This pivot allows GM to leverage its vehicle production expertise and generate quicker cash flow through subscription services. University of South Carolina law professor Bryant Walker Smith emphasized the benefits of consistent income over long-term loans.

For other robotaxi developers, GM's exit serves as a cautionary tale. Carnegie Mellon professor Philip Koopman highlighted that a major safety incident could jeopardize an entire company, urging others to prioritize safety amidst investor pressures for rapid advancement.