GM dumps Cruise robotaxi plans; shifts autonomy work to personal cars
General Motors is pivoting from self-driving robotaxies to focus on developing autonomous driving technology for personal vehicles in the future.
The company made the announcement late Tuesday afternoon, with GM spokesman Kevin Kelly telling the Detroit Free Press that GM sees a better business opportunity with personal vehicle autonomy rather than building a robotaxi fleet with its San Francisco-based self-driving subsidiary Cruise.
The automaker said it will combine Cruise, of which GM is majority owner, and GM technical teams into a single effort to advance autonomous and assisted driving in personal cars. As a result, GM said it will no longer fund Cruise’s robotaxi development, given the considerable time and resources needed to scale the business, along with an increasingly competitive robotaxi market.
“GM is committed to delivering the best driving experiences to our customers in a disciplined and capital-efficient manner,” CEO Mary Barra said in a media statement. “Cruise has been an early innovator in autonomy, and the deeper integration of our teams, paired with GM’s strong brands, scale and manufacturing strength, will help advance our vision for the future of transportation.”
Considerable cost savings
The news comes after GM spent much of the earlier part of this year telling Wall Street that Cruise was inching closer to restarting its driverless robotaxi business. Cruise had halted all services and recalled its vehicles in 2023 after an incident in October of that year in San Francisco. A vehicle hit a pedestrian, pushing her into an oncoming Cruise self-driving car, which then dragged her several feet, leaving the woman critically injured.
But in May of this year GM said Cruise resumed supervised autonomous driving in Phoenix. As of June, Cruise was operating fleets in Dallas and Houston as well.
But GM had been spending about $2 billion a year supporting Cruise and has never had a return on its investment since buying Cruise in 2016. GM expects this restructuring to lower its spending by more than $1 billion annually after the proposed plan is completed, which is expected in the first half of 2025.
During an investor call Tuesday, CFO Paul Jacobson said GM, which owns about 90% of Cruise, has agreements with other minor stakeholders to sell their shares and raise GM’s ownership to more than 97%. The company is in negotiations and will purchase the remaining shares next year, he said.
More details to be worked out
GM will work with Cruise CEO Marc Whitten, Chief Technology Officer Mo Elshenawy and President Craig Glidden to restructure Cruise’s operations, Barra said, noting the move is contingent upon the repurchase of the shares and Cruise board approval. Asked how many Cruise employees will come over to GM, Barra said those details still need to be worked out, but Jacobson indicated this pivot has been long considered.
“Over the past year we’ve been assessing our self-driving strategy,” Jacobson said during the investor call. He said the company realized that to continue down the path of deploying, maintaining and operating a robotaxi fleet would require a heavy capital investment on top of “the $10 billion we’ve already invested in it.”
“The better use is to pursue improvements to L3 and ultimately in L4 in a personal model because that’s more aligned with the capital and working needs of the business going forward,” Jacobson said.
GM will build on the technology currently offered in its hands-free driving system called Super Cruise, which is available on 20 of its models. Super Cruise is Level 2 (or L2) autonomous technology, which means the driver can be hands-free, but is still responsible for the vehicle while the system is active. Level 3 means the car can handle some driving on its own, but a driver must be ready to take control at any time. Level 4 is when the car can do most of the driving on its own.
“You have to understand the cost of running a robotaxi fleet, which is fairly significant, and it’s not our core business,” Barra said. “The technology has developed such that … we’ve seen an opportunity where we think we can work more quickly with focusing on personal autonomous vehicles and bringing the teams together.”
The competition in the robotaxi market was heating up. Google’s Waymo unit, which is partnered with Uber, was running ride-hailing and taxi services that use human drivers. Also, Tesla announced plans earlier this fall for new driverless vehicles that would not contain steering wheels, brakes or accelerators. Tesla also had plans to offer a robotaxi service where Tesla owners could rent out their cars to it when they are not driving the vehicles.
Other GM moves to gain efficiency
The change follows GM’s other shifts in strategy announced recently. Earlier this month, GM said it will sell back its investment in a battery cell plant being built in Lansing to its Ultium Cells joint venture partner LG Energy Solution. The move is in line with Barra’s comments to investors earlier this fall that the company is becoming increasingly prudent in its capital allocation to align production capacity with demand. That sale is expected to return about $1 billion to the automaker.
Following that news, GM said it will record a total of nearly $5 billion in charges against its fourth-quarter adjusted pretax earnings because of its struggling operations in China. GM is in the midst of a massive restructuring of its operations in China to reduce costs, operate more efficiently and better match its vehicle portfolio to consumer demand there. GM has a 50-50 joint venture in China with SAIC Motor Corp. The joint venture is called Shanghai General Motors or SGM. SGM makes and sells Chevrolet, Buick, and Cadillac vehicles in the Chinese market.
China is GM’s second most important market, behind the United States, and is the world’s largest auto market. GM’s business has been under pressure there for several years now due to a rapid rise in electric vehicles, increased regulations and new domestic competitors entering the market.
In November, GM cut a total of about 1,000 salaried and hourly employees as part of the new salaried employee ranking system as well as the “normal course of business” to achieve better operating efficiency. At that time, GM said it will also stop using its Yuma Desert Proving Grounds in Arizona for hot-weather vehicle testing, ending 33 jobs. Additionally, GM is permanently closing its Durability, Corrosion and Teardown departments at its Milford Proving Grounds in Michigan. The latter resulted in 44 UAW-represented hourly employees and 16 salaried employees being permanently laid off.
Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber. Staff reporter J.C. Reindl contributed to this article.