Facepalm: Building a robotaxi business isn't easy, even for one of the nation's biggest automobile manufacturers. General Motors has concluded that problems with regulation and operation, coupled with ever-increasing costs of scale and stiff competition, make further development of the Cruise taxi service not worth the capital expenditure.
General Motors is calling it quits on its goal of operating a robotaxi service. On Tuesday, GM announced it would combine its teams working on the Cruise autonomous taxi with teams in charge of its Super Cruise advanced driving features in passenger cars. The focus shift comes after GM put Cruise Origin development on indefinite hold in July.
After evaluating the project over the last several months, GM has determined that the robotaxi business is not profitable enough to warrant further development. It cited expanding investments to scale and increasing competition in the robotaxi market as reasons for pulling out.
"[General Motors] intends to combine the majority-owned Cruise LLC and GM technical teams into a single effort to advance autonomous and assisted driving," the automaker said. "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."
Since purchasing a majority share of Cruise LLC, GM has poured over $10 billion into the startup, with $2 billion in just 2024. However, raw capital is only the least of the now-defunct project's problems.
Going back as far as 2022 and earlier, Cruise has had trouble operating on the streets of San Francisco. Initially, the robotaxis were causing traffic flow issues because they would stop in the middle of the street for no reason. When this happened, remote techs had to boot into the cars to get them moving again. This issue spawned many complaints from civilians and emergency workers, such as fire and EMS personnel, who could not escape the traffic jams.
In an incident in October 2023, a motorist hit a pedestrian and knocked the woman into the next lane, where a Cruise taxi ran over and stopped on top of her. Firefighters had to use the Jaws of Life to remove the car from the pedestrian's pinned leg.
Three weeks later, San Francisco officials suspended GM's permit to operate Cruise. Two days after the suspension, the automaker halted Cruise operations nationwide, which included pilot programs in Austin, Houston, Phoenix, and Miami. The entire debacle cost Cruise CEO Kyle Vogt and about a quarter of Cruise's workforce their jobs.
General Motors did not say whether its restructuring would impact employees through layoffs, although that is highly likely. It is merging at least some of the Cruise workforce into its driver assistance division, but it's unclear if the Super Cruise team can accommodate all of them.
In the meantime, GM has offered up a restructuring plan to shareholders, including purchasing at least 97 percent of Cruise – it currently owns 90 percent. If the board approves the plan (and can acquire the proposed shares), the company will "work with the Cruise leadership team to restructure and refocus Cruise's operations." So, a Cruise robotaxi is still possible, but under entirely different conditions.
If everything goes as planned, GM will execute its Cruise restructuring in the first half of 2025 and expects to save over $1 billion annually.