After spending more than $10 billion on its robotics unit, GM It abandons its driverless cruise service.
The Detroit automaker said Tuesday that it will no longer fund development of its cruise division's robotaxis and will instead fold the unit into its broader technology team. GM shares rose 2.3% in extended trading.
“Cruze was on its way to the robotaxi business — but when you look at the fact that you're deploying a fleet, there's a whole process to doing that,” GM CEO Mary Barra said in a phone call Tuesday. Barra said GM will instead focus on developing self-driving systems for use in personal vehicles.
GM cited an increasingly competitive robotics market and significant capital allocation priorities and significant time and resources needed to grow the business as reasons for its decision.
The company will merge majority-owned Cruise LLC with GM's technical teams. Barra, who also serves as chairman of Cruise, said the companies have not yet determined how many employees will move to GM. A GM spokesperson told CNBC that Cruise has approximately 2,300 employees.
General Motors acquired Cruze in 2016. GM said in a statement that the automaker currently owns about 90% of Cruze and has agreements with other shareholders that will raise its ownership to more than 97%. GM expects it will complete the acquisition of the remaining Cruise shares from outside shareholders by early 2025, Chief Financial Officer Paul Jacobson said Tuesday.
GM's current annual spending on Cruze is about $2 billion, and the restructuring will cut that amount by more than half, Jacobson said.
Honda, an outside investor in Cruze, told CNBC that it had planned to launch a driverless transportation service in Japan in early 2026, but would now reevaluate those plans and make adjustments if necessary.
“Honda remains committed to various research and development initiatives aimed at providing new mobility solutions to our customers in Japan,” a Honda spokesperson said on Tuesday. Honda said its total investment in Cruze amounted to $852 million.
“In case it wasn't clear before, it's clear now: GM is a bunch of puppets,” Cruise founder Kyle Vogt, who left the company in November 2023, posted on X after the announcement.
An early entrant into the U.S. robotaxi market, Cruise halted its driverless operations in October 2023, shortly before Vogt's departure. The National Highway Traffic Safety Administration fined Cruise $1.5 million after the company failed to disclose details of a serious accident that month involving a pedestrian.
A third-party investigation into the accident ordered by GM and Cruise found that culture issues, incompetence and poor leadership fueled the organizational oversight that led to the accident. The investigation also investigated allegations of a cover-up by Cruz's leadership, but found no evidence to support the allegations.
In July of this year, GM announced it would indefinitely postpone production of its Origin self-driving car as its self-driving Cruise unit attempted to relaunch operations. At that point, Cruise began focusing on using the next-generation Chevrolet Bolt to develop its own autonomous vehicles.
With Cruise's operations suspended, its robo-taxi competitors have made significant progress.
alphabetWaymo-owned company Waymo has begun operating commercial robotaxi services across several major metro areas in the United States, with the company last week announcing its plans to expand into Miami. Chinese self-driving car makers, including Pony.ai and WeRide, have rolled out in overseas markets as well.
TeslaMeanwhile, it showed off design concepts for a self-driving Cybercab at an event in October. Tesla still classifies the Autopilot and Fully Self-Driving software in its cars as “partially automated driving systems,” which require a human to be ready to steer or brake at all times. In an October earnings call, Tesla CEO Elon Musk said the company would launch a self-driving ride-hailing service in California and Texas as early as 2025.
SoftBank-funded Wayve is testing its self-driving vehicles in San Francisco, and Amazon-owned Zoox is also testing its self-driving vehicles, which do not have steering wheels, in several US cities including San Francisco.
SoftBank's Vision Fund was also an investor in Cruise, with a stake of about 20%, until GM bought back shares for $2.1 billion in 2022.
Watch: Uber and Lyft push back on news about Waymo expanding to Miami
