Autonomous driving is considered one of the biggest challenges in mobility. This can be seen, among other things, at Tesla, where a large part of the valuation is based on the robotaxi hope. General Motors (GM) also operated its Cruise subsidiary for this purpose. Until now – because the project and billion-dollar grave is now being stamped.
This emerged from a company announcement from GM on Tuesday evening. The car manufacturer listed several reasons for the end of the Robotaxi subsidiary: The market is now very competitive and building such a fleet takes a lot of time and resources.
Accident with serious consequences
In addition, a serious accident in San Francisco led to regulatory problems. In October 2023, a driverless Cruise car hit an already injured pedestrian and dragged her several meters. As a result, Cruise took all of the vehicles off the road. This was followed by license revocations, internal investigations and the termination of executives – including founder and boss Kyle Vogt. Cruise only resumed operating its vehicles in April.
Billionaire grave Cruise – that's how much money the daughter swallowed
Since purchasing Cruise in 2016, GM has invested more than $10 billion in the project – most recently around $2 billion per year. Nevertheless, the subsidiary was far from becoming profitable. With the realignment, the car manufacturer now plans to reduce spending on Cruise by more than half – i.e. to save over a billion dollars.
What's next?
Cruise will now be integrated into General Motors' engineering departments. The development of driving assistance systems is continued internally. But the focus is now private. Vehicles GM plant to buy out the remaining Cruise shares from external investors such as Honda by 2025.
If it was unclear before, it's clear now: GMs are a bunch of fools.
— Kyle Vogt (@kvogt) December 10, 2024
This means the end of cruise for GM
While investors appear to be reacting to the news – GM shares rose by around two percent premarket on Wednesday – Kyle Vogt sharply criticized the move. In a post on Twitter, he called GM “a bunch of fools.” For General Motors, the main focus is likely to be that the decision will save billions annually. This step is understandable, especially in the car market that is currently driven by price wars.
General Motors
(WKN: A1C9CM)
On Wall Street, investors are honoring GM's decision. In the short term, GM should benefit from lower spending. In the long term, however, the group risks falling behind in a forward-looking division.
