General Motors announced this Tuesday (10) that it will end the development of robotic taxis carried out by the loss-making Cruise division – a partnership with Honda -, reversing a strategy for the technology that was previously considered the group’s top priority. After GM “takes its foot off the accelerator”, this Wednesday (11), Honda also announced that it will stop financing the project that was being run together.
The U.S. automaker said it will no longer fund Cruise’s work “due to the considerable time and resources that would be required to expand the business, along with an increasingly competitive robot market.”
The automaker has invested more than US$10 billion in Cruise since 2016. From now on, the division will be incorporated into the group that works with driver assistance technology.
The move comes in the wake of GM scaling back plans for electric vehicles, which include selling a stake in a battery factory and restructuring its business in China. GM shares rose 3.2% in trading after markets closed on Tuesday.
In 2023, GM Chief Executive Mary Barra said the Cruise business could generate $50 billion in annual revenue by 2030, but on Tuesday said the deal was expendable.
“You really need to understand the cost of running a fleet of robotaxis, which is quite significant and, again, not our core business,” Barra said in a conference with analysts.
READ MORE: German Chancellor asks Volkswagen not to close factories
GM expects the restructuring to reduce spending from about $2 billion to $1 billion after the plan is completed by the end of June.
Barra declined to say how many Cruise employees could be transferred to GM.
A Honda spokesperson stated that the Japanese automaker “will continue to develop new products and services for the Japanese market”.
Expensive business
Rivals still in the emerging robotaxi sector include deep-pocketed developers such as Alphabet’s Waymo; Baidu and Tesla.
But some of GM’s competitors have already stopped financing autonomous driving deals, citing the costs and difficulties involved in developing such sophisticated technology.
In October 2022, Ford began shutting down AI operation Argo, which was partially funded by Volkswagen. Ford is still working on advanced driver assistance systems internally, different from the fully autonomous systems that were previously being developed at Argo AI.
Still, Tesla Chief Executive Elon Musk – a close advisor to US President-elect Donald Trump – is optimistic about the future of the technology. Musk’s expectation is that Trump will facilitate the deployment of autonomous vehicles in the USA.
Last week, Waymo said it will expand service to Miami. In October, the company obtained a US$5.6 billion financing round led by Alphabet.
READ MORE: Stellantis will once again be part of the European automakers association ACEA
Last month, Cruise admitted to submitting a false report to influence a federal investigation and agreed to pay a $500,000 criminal fine as part of a settlement.
The U.S. Department of Justice said Cruise failed to disclose key details of an October 2023 crash to federal regulators in which one of its cars in San Francisco struck and seriously injured a pedestrian. GM paid a substantial settlement to the woman who was injured and faces intense scrutiny from U.S. auto safety regulators.
In July, GM announced the end of development of a car without a steering wheel or other human controls. After the 2023 collision, the company fired many top executives and laid off more than a quarter of Cruise’s employees.
GM had plans to deploy up to 2,500 autonomous Origin vehicles annually without human controls such as brake pedals or mirrors.
*With information from Reuters and Bloomberg
