An autonomous cruise taxi in San Francisco, California, USA, on Thursday, August 10, 2023.
David Paul Morris | Bloomberg | Getty Images
DETROIT — For years General engines CEO and Chairman Mary Barra has promised a new future for the company, moving away from a stodgy, metal-bending automaker to a technology-driven, forward-thinking company primed for growth.
Part of the plan was for GM's innovation department to identify trillions – yes, trillions – of dollars in new market opportunities such as electric commercial vehicles, auto insurance, military defense, autonomous vehicles and eventually even the potential for “flying cars.” also called urban air mobility.
“We are creating world-class technology solutions and services that will transform the way people move, along with new fleet solutions and entirely new business models,” Barra said during a virtual CES keynote in January 2022.
While GM has declined to disclose how much revenue such businesses have generated, Barra, with the termination of its Cruise robotaxi business on Tuesday, made clear that the automaker's growth priorities have shifted amid a broader, industry-wide cutback for capital to keep. Companies, including GM, are now focusing on more “core” and adjacent business opportunities, including software, electric cars and “personal autonomous vehicles.”
“You really have to understand the costs of running a robotaxi fleet, which are quite significant and, again, not our core business,” Barra said on a call with Wall Street analysts on Tuesday.
The self-driving service should be the shining star of GM's growth opportunities, while just a few years ago executives touted it as an $8 trillion market opportunity that the automaker would lead. That included former executives posting $50 billion in revenue by the end of this decade, and Cruise being valued at more than $30 billion.
Instead, after spending more than $10 billion on Cruise since acquiring it in 2016, GM is ending its robotaxi business and adding Cruise's operations and an unspecified number of its nearly 2,300 employees to the automaker.
Save capital
As part of the phase-out, GM is expected to announce additional costs in the coming year from employee separation packages and buybacks of equity investments from outside investors, among other things.
GM cited the increasingly competitive robotaxi market, capital allocation priorities and the significant time and resources required to grow the business as reasons for its decision.
The car manufacturer's main competitor was Alphabet-backed Waymo, which is now the last entity with significant public operations. Others, especially Teslahave ambitions for robotaxi companies, but have so far failed to commercialize these activities.
To GM's credit, Wall Street, which previously pushed for such growth companies, applauded the decision to end Cruise's robotaxi ambitions. The company's shares were initially higher before ending the week high at the time the announcement was made.
GM stock as of December 9, 2024
GM, like other companies, has quickly shifted from trying to impress Wall Street with growth initiatives, including generating $280 billion in new business by 2030, to refocusing efforts on its core businesses to generate profits amid concerns about the economy and recession.
Analysts largely viewed GM's decision as positive, saving the automaker more than $1 billion in annual capital, which they expect could be used for additional share buybacks, including a target to reduce the number of shares outstanding to less than 1 billion .
“It has been clear for some time that most investors have dropped Cruise from their GM valuations, so today's news comes as less of a surprise,” Wells Fargo analyst Colin Langan wrote in an investor note on Tuesday.
Cruising is no longer possible
General Motors CEO Mary Barra speaks during a visit by the U.S. President to the General Motors Factory ZERO electric vehicle assembly plant in Detroit, Michigan on November 17, 2021.
Mandel Ngan | Episode | Getty Images
GM will combine Cruise LLC's majority stake with GM's engineering teams. Barra said repeatedly last week that the automaker is not giving up vehicle autonomy; it will focus on personal autonomous vehicles rather than robotaxis.
But it's hard to ignore that Cruise is GM's latest mobility venture or growth company to collapse or fall short of expectations.
GM's plans to diversify its business through faddish industries like ride-sharing and other “mobility” ventures — a trendy term previously used by the industry for growth initiatives — or startups have largely fallen flat since the automaker moved into such growth areas in 2016 started investing.
The automaker transferred its BrightDrop EV commercial vehicles to Chevrolet earlier this year amid lackluster sales. It has also failed to announce meaningful plans for fuel cells to connect boats, trains and planes, and has closed several previous “mobility” businesses.
Not all of GM's non-core businesses launched in recent years have failed. GM Energy and its commercial EV unit BrightDrop will continue to operate under the automaker's “Envolve” fleet operations.
GM's finance arm, meanwhile, continues to operate an insurance business that launched in late 2020 as part of its growth initiatives with its OnStar telematics and data unit. GM said Friday that operations are now in 12 states and “remain well positioned for long-term success.”
GM also continues to operate a military defense unit and fuel cell business, both of which recently announced new contracts or partnerships. That includes hundreds of millions of dollars in contracts for GM Defense.
Super cruise
Aside from saving capital, GM's silver lining for canceling the Cruise robotaxi business was that it sees more promise in further developing its Super Cruise hands-free advanced driver assistance system. That includes more semi-automated and ultimately autonomous capabilities.
GM was the first automaker to offer such a hands-free system in 2016. However, it's been a notoriously slow advance until recently, when the automaker started rolling it out across its lineup. That started in 2021 and has continued to expand to more than two dozen models, including high-volume vehicles like full-size pickups and SUVs.
Interior of the 2025 Cadillac Optiq with GM's Super Cruise hands-free driver assistance system.
GM
“The change in strategy shows that GM continues to believe in the potential of AV technology for personal vehicles. Going forward, GM will focus on improving SuperCruise's capabilities, which will be further enabled by continued technological advances, including in artificial intelligence (AI),” John Murphy of BofA Securities said in an investor note on Wednesday .
On the other side of the coin, Murphy also points out that the move could imply that other companies like Waymo and Tesla “have better technology and/or that the market may not be attractive to later entrants.”
First mover advantage lost
GM was not expected to be a “later entrant” into robotaxis. In fact, it was the first to offer such rides to the public, and many believed it was one of the leaders until last year, when the company ceased its driverless operations in October 2023 after an accident involving a pedestrian in San Francisco .
The National Highway Traffic Safety Administration has fined Cruise $1.5 million after the company failed to disclose details of the crash, in which a pedestrian was dragged twenty feet by a Cruise robotaxi after being struck by a separate vehicle .
A third-party investigation into the incident ordered by GM and Cruise found that culture issues, incompetence and poor leadership fueled regulatory concerns that led to the accident. The investigation also investigated allegations of a cover-up by Cruise's leadership, but found no evidence to support these claims.
The report outlines multiple instances in which then-CEO and co-founder Kyle Vogt, who resigned from the company in November 2023, made the final call to withhold information, particularly regarding the media.
Vogt was not enthusiastic about GM's decision to shut down robotaxi operations. He posted on X after the announcement: “In case it was unclear before, it's now clear: GM are a bunch of dummies.”
Vogt earlier this year pointed to GM's history of having a first-mover advantage in technology, as it did with Cruise and Super Cruise, and squandering it. GM followed a similar path with EV technology, such as the EV1 – a battery-electric vehicle produced in the 1990s – and the Chevrolet Volt plug-in hybrid-electric car in the 2010s, both of which were abandoned by the company.
GM is following several other companies in exiting robotaxis, including its biggest crosstown rival Ford enginewhich closed its autonomous vehicle unit Argo AI with Volkswagen in 2022.
The robotaxi leader in the US remains Waymo, which continues to expand operations for its publicly available fleet in Los Angeles, Phoenix and San Francisco and will soon debut in Miami, Atlanta and Austin, Texas.
“In many ways, this announcement highlights the economic challenges of scaling a robotaxi network and the role that ride-sharing platforms can play as AVs seek to commercialize (a bullish indicator), but we think the more tangible impact on this moment lies on the partnership ecosystem as Waymo is already scaling despite the costs and Tesla has ambitions to do so as well,” Bernstein analyst Daniel Roeska said in an investor note last week.