Cruise and Motional backers slash robotaxi funding

Motional started testing its robotaxis at night in Las Vegas in Feb. 2023.

Two of the most prominent companies developing autonomous robotaxi services, Cruise and Motional, have been dealt major financial blows that could significantly impede their futures.

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Cruise’s parent General Motors announced this week that after losing over $8 billion on the robotaxi startup since 2017, it will slash another $1 billion in funding for 2024. This exceeds earlier plans from November 2022 to cut “hundreds of millions” as losses ballooned to $2.7 billion in 2023.

GM remains publicly committed to eventually relaunching Cruise after safety incidents in late 2022 forced it to halt rides and lay off 24% of staff. But president Mark Reuss estimated it may take 4-5 years to rebuild trust and resume meaningful operations.

Similarly, parts supplier Aptiv said it will cease further investment in Motional after jointly creating the $4 billion self-driving venture with Hyundai back in 2017. Aptiv cited unsustainable losses and hardware costs making profitability a distant prospect in robotaxi services.

While Motional stated it has adequate funding to continue technology development, the loss of a key backer raises uncertainty. Hyundai does remain on board as an ongoing partner and shareholder.

The pullback from two major players highlights lingering technical and economic challenges in commercializing safe, viable robotaxis. Despite billions invested and former promises of imminent launch from Cruise and Motional, clearly major automotive stakeholders have grown wary of overpromises from autonomous vehicle startups.

Both companies now face a precarious path forward likely marked by slowed growth, more guarded promises, and greater scrutiny. Their fortunes may rest on reigniting investor confidence while also delivering step-change improvements in self-driving capabilities, costs, and business models.

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