GM Abandons Cruise Robotaxi Program

TAKEAWAYS – KEY TAKEAWAYS

• General Motors announced that it would abandon its Cruise ride-hailing driverless service because of its high cost and its need for scale in a market with increasing competition.
• The company said that it will combine the Cruise team with the other technical groups and focus instead on developing advanced driver assist systems.
• GM claims that scrapping Cruise Robotaxi will help it save more than one billion dollars a year.

General Motors announced that it would abandon its driverless Cruise ride-hailing services due to the high cost and scale required in an ever more competitive market.

The biggest U.S. automobile manufacturer said it would combine the Cruise team with its other technical groups and instead concentrate on developing advanced driver assist systems that include features such as steering override.

"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," the company said.

GM is expecting to save $1B a yea by giving up cruises

GM said it "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."

UBS analyst called Cruise’s move to leave the ship “a mistake” in a memo published on Wednesday. “another example of GM’s refocus on capital efficiency.” They noted that GM had recently sold its stake in its Michigan electric vehicle (EV) battery plant to its South Korean partner, LG Energy Solution, and is also restructuring its operations in China, where business has been weak.

Analysts believe that GM’s plan to eliminate Cruise is a win for Tesla. “pursuing a capital intensive, end-to-end approach but is able to fund it.”

GM’s shares are currently up 1.5%, after gaining more than 45% in the past year. Tesla shares are now up another 1% in early trading on Wednesday. The stock is more than 60% above its 2024 price.

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