General Motors To Stop Robotaxi Service
General Motors (GM) has made the tough call to end its Cruise Robotaxi services owing to mounting financial pressures and increased competition, which make the venture unfeasible for the company’s business interests. GM CEO Mary Barra explained that the financial commitment towards developing a robotaxi fleet was too huge, especially when it is not the company’s core focus business.
Having invested more than $10 billion in Cruise since 2016, GM is now making this decision as it scales back its production of electric vehicles (EVs) and sells its stake in the joint battery venture in Michigan. Although Barra said in 2023 that Cruise could generate a revenue of over $50 billion by 2030, the venture has since been dubbed as expendable.
Cruise lost nearly $3.48 billion in the last year, and the company now views the robotaxi service as a burden rather than the future of mobility. The largest US automaker which prioritises advanced technologies would rather shift its focus to its primary business which includes manufacturing fuel-powered vehicles, improving driver assistance, and semi-autonomous driving technologies.
GM shares increased by 3.2% on Tuesday following this news. The company estimates that this large-scale restructuring will decrease spending by $1 billion, once the plan is completed by June 2025. Barra has declined to reveal how many Cruise development employees could be moved into GM. The company has, however, indicated that they are working on integrating these employees back into GM so that they can work on personal vehicle tech operations rather than public taxi services.
GM has had a tumultuous year, especially coming under scrutiny when a pedestrian was injured, raising questions regarding its safety regulations. This October 2023 crash which occurred in San Francisco has cost the company dearly, especially after it admitted to submitting false reports to sway a federal investigation. The US Justice Department said that they had levied a criminal fine of $500,000 as part of a deferred prosecution agreement after it was discovered that GM had failed to divulge key information pertaining to this case.
It was also announced in July that GM would be halting the development of a robotaxi which would not have a steering wheel and other human-controlled panels. This announcement came after the 2023 crash resulted in many top-level executives and nearly one-fourth of its employees were laid off.
Although GM is abandoning its Cruise enterprise, it does not signify an industry-wide slowdown for robotaxis. Companies like Waymo, Tesla, and Baidu remain optimistic, with Waymo even receiving an investment of $5.6 million from Alphabet to further developments in this field. Ford, on the other hand, is facing the same pressures as GM, as it recently closed its Argo AI division.
Automakers are faced with financial and technological challenges while developing robotaxis, but the industry does seem confident that such ventures will steer the future of public transport services in the right direction.