Robotaxi Leader Cruise Cruising No More As GM Pulls Its Funding Amid Strategic Pivot

General Motors seemed to have made a major stride in the autonomous mobility space with Cruise, its self-driving car subsidiary. However, problems seem to me mounting for the robotaxi service provider.

In our previous coverage, we discussed how GM's Cruise had partnered with ride-hailing service Uber while its rival Waymo announced its new driverless vehicle, the 6th-generation Waymo Driver. We also highlighted at the start of the year how General Motors planned to reduce expenses incurred by Cruise by $1 billion

At one point, the American carmaker decided to halt Cruise's robotaxi production amid various challenges that the company was facing in the autonomous vehicle market. Despite this, things are getting worse for Cruise, with General Motors (GM) making a strategic pivot that will significantly impact Cruise’s robotaxi services.

So, what did General Motors announce about the future of Cruise? Let’s explore!
 

What Did General Motors Say?

General Motors has opted to discontinue funding for the Cruise robotaxi service, deciding to focus its efforts on autonomous vehicle development, particularly for personal automobiles. Employees from Cruise will join GM's internal teams developing Super Cruise, its advanced driver assist systems (ADAS) and other cutting-edge driver assistance technologies.

Additionally, the goal will shift towards creating self-driving cars for consumers, rather than robotaxis. GM hopes this shift in focus can help it make headway into the autonomous driving market for individually owned vehicles.

This comes on the back of Cruise’s robotaxi venture reporting a staggering $3.48 billion loss in 2023. With GM’s total investment in Cruise, since acquiring it in 2016, exceeding $10 billion, the robotaxi division has become a financial burden with rivals like Waymo, Tesla and Amazon’s Zoox.

Although layoffs at Cruise are likely, nothing had been announced as of now, with Cruise’s board set to determine the next steps, including restructuring, mergers and shutting down divisions.

Yet, according to GM CEO Mary Barra, “Given the considerable time and expense required to scale a robotaxi business in an increasingly competitive market, combining forces would be more efficient.”
What does this mean for the future of Cruise?
 

What Will Happen To Cruise Now?

Post the announcement, Cruise’s testing in Arizona and Texas have been paused as GM works on integrating Cruise’s employees into its internal team. GM will also need to repurchase its remaining shares of Cruise, as the automaker owns 90 percent of the autonomous mobility company.

Estimates suggest that GM will save more than $1 billion a year by getting out of the robotaxi business, allowing it to redirect resources into projects with better chances of monetization. In fact, GM shares rose by 3.2% following the announcement, showcasing investors’ approval of the strategic shift.

This is not the first setback that GM faced with Cruise’s commercial operations, including the suspension of its driverless testing permit in California in 2023 after a robotaxi struck and dragged a pedestrian. This comes as a final straw for the embattled subsidiary as GM has decided to pull its funding.
 

Conclusion

Other players in the industry have made similar moves, with Ford and Volkswagen shutting down Argo AI, their autonomous vehicle joint venture, due to high costs and operational challenges. As GM steps out of the autonomous arena, leaders like Alphabet’s Waymo and Tesla will continue to pursue robotaxi development. In fact, Tesla recently announced plans to launch its Cybercab service in 2025 to become a force in autonomous robotaxi game.

While GM had big plans for Cruise, it just goes to show how challenging and expensive it is to make self-driving technology. With GM still focusing on self-driving cars for people, incorporating Cruise's resources and expertise, it might be a name to look out for leader in the self-driving market.

Do you think GM’s decision to pivot away from Cruise robotaxis will pay off? Will its rivals step ahead in the autonomous driving arena?

Share your thoughts in the comments below!