• by Tanya Gazdik , December 11, 2024

General Motors is pulling the plug on its funding of Cruise electric robotaxis, instead focusing fully on prioritizing development of advanced driver assistance systems on a path to fully autonomous personal vehicles. 

The automaker will combine the majority-owned Cruise LLC and GM technical teams into a single effort to advance autonomous and assisted driving. 

Consistent with GM’s capital allocation priorities, GM will no longer fund Cruise’s robotaxi development work given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market, which includes Tesla, Amazon and Waymo.

“The decision removes GM from a business that some in the industry believe could someday be worth hundreds of billions of dollars, if researchers can solve formidable technological hurdles,” according to The New York Times. “Elon Musk, the chief executive of Tesla, and other Silicon Valley executives have sketched a future where thousands of driverless cars ferry passengers to destinations.”

Instead, GM will build on the progress of Super Cruise, the company’s hands-off, eyes-on driving feature, now offered on more than 20 GM vehicle models and currently logging over 10 million miles per month.

“GM's brushoff of Cruise represents a dramatic about-face from years of full-blown support that left a huge financial dent in the automaker,” according to NPR. "The company invested $2.4 billion in Cruise only to sustain years of uninterrupted losses, with little in return. Since GM bought a controlling stake in Cruise for $581 million in 2016, the robotaxi service piled up more than $10 billion in operating losses while bringing in less than $500 million in revenue, according to GM shareholder reports filed with the Securities and Exchange Commission.”

GM, which owns about 90% of Cruise, has agreements with other shareholders that will raise its ownership to more than 97%. The company will pursue the acquisition of the remaining shares. 

Contingent upon the repurchase of these shares and Cruise board approval, GM will work with the Cruise leadership team to restructure and refocus Cruise’s operations. GM expects the restructuring to lower spending by more than $1 billion annually after the proposed plan is completed, expected in the first half of 2025. 

Cruise employees were “blindsided” by GM’s plan, finding out about it on Slack. Of course, this is the same company that lays off longtime employees via email. 

“Cruise CEO Marc Whitten, who took the top post in June, posted a message Tuesday afternoon in the company’s announcements channel,” according to TechCrunch. “Minutes later, during an all-hands meeting, Cruise employees learned a few more details. The self-driving car company would be absorbed into parent company GM and combined with the automaker’s own efforts to develop driver assistance features — and eventually fully autonomous personal vehicles. Whether their jobs would be safe or cut was, and still is, unclear. That meeting was short and unsatisfactory, according to one source, who noted that the senior leadership team was also surprised by this turn of events.”

Cruise founder Kyle Vogt criticized GM's decision to pull robotaxi funding.

“Vogt, who resigned from the company in 2023, posted on the social-media platform X following GM's announcement that it would stop funding Cruise and fold it into the company's other driver-assistance efforts: ‘In case it was unclear before, it is clear now: GM are a bunch of dummies,’” according to Business Insider. “Vogt's departure last year came just weeks after the company suspended all autonomous operations. The company has since resumed autonomous-vehicle testing with safety drivers in Arizona and Texas.”