General Motors has decided to shut down its Cruise robotaxi business as it changes the growth strategy of the automaker which is after years of vast investment and ambitious projections into self-driving ride-hailing services. According to Mary Barra, the Chief Executive of GM, the firm now refocuses its operations on core business with side opportunities as a way of holding onto capital in an economically unfriendly environment. This is the latest in GM’s broader retrenchment, which has led to the company scaling down or shutting down several ventures that were ambitious in nature over the past few years.
The Cruise initiative for autonomous vehicles, a venture GM acquired in 2016 for over $1 billion, was once positioned to revolutionize the transportation sector, one that at its high point was projected to hold a $8 trillion in-market opportunity and could bring to GM $50 billion annually by the end of this decade. However, after spending more than $10 billion in the firm, the company is ceasing the robotaxi business. The bulk of Cruise’s activities will be integrated into GM, though an untold number of its 2,300 workers probably face job cuts.
The auto giant reflects the broader trends in the industry companies are moving from an aggressive growth strategy to a more conservative approach focused on profitability. According to Barra, operational costs of running a robotaxi fleet are very high and not aligned with the core business of GM. Wall Street analysts supported the change, viewing it as the means through which GM could reduce more than $1 billion of its expenses every year and subsequently reinvest it in either share buybacks or other core businesses.
Cruise’s failure adds to growing list of missteps for non-core business ventures at General Motors. The company had previous missteps with ventures as well, including its EV commercial vans under the BrightDrop brand, which were collapsed back into Chevrolet due to lackluster sales as well as other mobility initiatives that flamed out. Still, GM’s energy and defense operations are proving to be bright spots elsewhere, with growth in EV solutions and defense contracts.
GM will place greater emphasis on its Super Cruise hands-free driving technology, which has demonstrated stronger performance in consumer vehicles. The company is now pivoting from robotaxis to personal autonomous vehicles and looks forward to leveraging advancements in artificial intelligence and driver-assistance systems to cement a place in the changing automotive landscape. The decision to go back on Cruise is somewhat reflective of the technical hardships of autonomous taxis and increased competition from other players Waymo and Tesla among others who are yet to stop pushing forward with the robotaxi ambitions.
