What went wrong with GM’s Cruise

GM is winding down its robotaxi bet and folding Cruise into its self-driving development arm.

General Motors is giving up on developing its Cruise robotaxi, citing the resources needed and an “increasingly competitive” market.

Despite investing in the business for eight years, GM said on Tuesday that it would no longer fund Cruise’s robotaxi development work and would combine Cruise with its technical team to advance autonomous and assisted driving.

The US automaker acquired the self-driving startup in 2016 for $1 billion. It has poured billions in investments, including from industry heavyweights like SoftBank and Microsoft, into the company to develop a robotaxi business, where a driverless car picks up and drops off passengers, through an Uber-like app.

GM was aiming to compete with Amazon-backed Zoox, Alphabet’s Waymo, and Tesla, which introduced its own robotaxi — the Cybercab — in a highly-anticipated event in October.

GM’s CEO Mary Barra cited “the considerable time and expense required to scale a robotaxi business in an increasingly competitive market” on a Tuesday call with media and analysts.

“GM made this decision to refocus our strategy because we believe in the importance of driver assistance and autonomous driving technology in our vehicles,” she added.

GM agreed with other Cruise investors that it will raise its ownership from 90% to more than 97%, the company said on Tuesday. The restructuring is expected to lower GM’s annual spending by more than $1 billion after the plan is completed in the first half of next year.

String of troubles

The GM subsidiary got in hot water with regulators last year after several safety accidents.

In August 2023, an empty Cruise AV drove into wet concrete at a construction site and got stuck. Before that, a Cruise robotaxi blocked emergency vehicles on their way to respond to a mass shooting. The company also admitted to submitting a false report to the government during an investigation of a crash and paid $500,000 in a criminal fine.

The company lost its permit to operate in California after a pedestrian was dragged 20 feet beneath one of its driverless vehicles last October. After that incident, the company paused testing in other states and laid off 900 employees — about 24% of its workforce.

Cruise cofounder and former CEO Kyle Vogt, who resigned a month after the incident, criticized GM’s decision on Tuesday.

“In case it was unclear before, it is clear now: GM are a bunch of dummies,” Vogt wrote on X.

Vogt stepped down after GM and the board of Cruise increased scrutiny of his leadership, including appointing GM’s general counsel as Cruise’s chief administrative officer and hiring a third-party expert to assess safety.

‘Increasingly competitive’ market

Before Tesla’s highly-anticipated Cybercab event in October, Vogt weighed in to lay out the challenges that Tesla would face.

“It takes a non-trivial amount of work to go from making a car mostly drive without interventions to safe, robust, and legally compliant robotaxi network that meshes well with local communities,” he wrote in a post on X.

Waymo is much further ahead of its competitors in bringing robotaxis to the masses. It has opened its service to the public in San Francisco, Los Angeles, and Phoenix, providing over 100,000 paid rides a week as of October, the company said.