Self-Driving Disaster: GM Exits Robotaxi Market, Folds Cruise into Tech Team

General Motors has announced that it will no longer fund the development of its Cruise division’s robotaxi service, citing increasing competition, capital allocation priorities, and the significant time and resources required to grow the business.

CNBC reports that in a major strategic shift, GM has decided to abandon its Cruise driverless ride-hailing service and fold the division into its broader tech team. The announcement, made on Tuesday, comes after the Detroit automaker invested more than $10 billion in the robotaxi unit. GM shares rose 2.3% in extended trading following the news, but are down 1.9 percent in morning trading on Wednesday.

GM CEO Mary Barra explained the decision, stating, “Cruise was well on its way to a robotaxi business — but when you look at the fact you’re deploying a fleet, there’s a whole operations piece of doing that.” Instead, the company will focus on developing autonomous systems for use in personal vehicles, a move that Barra believes aligns better with GM’s priorities and resources.

The increasingly competitive robotaxi market, capital allocation priorities, and the considerable time and resources necessary to grow the business were cited as the main reasons behind GM’s decision. The majority-owned Cruise LLC will be combined with GM’s technical teams, though the exact number of employees transitioning to GM has yet to be determined. Cruise currently employs nearly 2,300 people.

GM’s acquisition of Cruise began in 2016, and the automaker currently owns about 90 percent of the company. Agreements with other shareholders are expected to raise GM’s ownership to more than 97 percent, with the company anticipating the completion of the acquisition of remaining Cruise shares from outside shareholders by early 2025. CFO Paul Jacobson noted that the restructuring would cut GM’s current annual expenditure on Cruise, which amounted to about $2 billion, by more than half.

The decision to exit the robotaxi market comes as Cruise’s operations have faced challenges in recent years. In October 2023, the company grounded its driverless operations shortly before founder Kyle Vogt’s departure. The National Highway Traffic Safety Administration (NHTSA) also fined Cruise $1.5 million for failing to disclose details of a serious crash involving a pedestrian that same month.

A third-party probe into the incident, ordered by GM and Cruise, found that culture issues, ineptitude, and poor leadership fueled regulatory oversights that led to the accident. While the probe also investigated allegations of a cover-up by Cruise leadership, no evidence was found to support those claims.

As Cruise’s operations remained on hold, its robotaxi rivals, such as Alphabet-owned Waymo, Chinese autonomous vehicle makers Pony.ai and WeRide, and Amazon-owned Zoox, have continued to expand and gain ground in the market. Tesla has also shown off design concepts for a self-driving Cybercab and plans to launch a self-driving ride-hailing service in California and Texas as early as 2025.