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GM He said Tuesday It will no longer fund development of its commercial taxi business, and will instead merge its self-driving car business Cruise and combine it with the automaker’s own efforts to develop driver-assistance features — and eventually fully self-driving personal vehicles.
The pivot is a big move for the automaker, which acquired self-driving startup Cruise in March 2016 for Cruise. 1 billion dollars. Since then, GM has poured billions into the company in an effort to commercialize self-driving vehicle technology through its robotaxi business.
GM said in a statement that “the significant time and resources needed to expand the business, coupled with an increasingly competitive robotics market” were the reasons for the change. General Motors said it expects the restructuring process to reduce spending by more than $1 billion annually after the completion of the proposed plan, which is expected in the first half of 2025.
GM owns about 90% of Cruze. The company said it had entered into agreements with other minority shareholders to buy back shares and raise its ownership to more than 97%. GM has previously brought in a number of outside investors including Microsoft, Walmart, Softbank, T.Rowe Price and Honda as the company sought to raise the billions in capital needed to bring taxis to the masses. In 2022, GM expanded its stake in Cruise and acquired shares of SoftBank Vision Fund 1 for $2.1 billion. At that time, GM also made an additional $1.35 billion investment in Cruise, replacing a previous commitment the fund made in 2018.
“I want to be clear that GM made this decision to refocus our strategy because we believe in the importance of driver assistance and self-driving technology in our vehicles,” Mary Barra, GM Chairman and CEO, said in a call with media and analysts on Tuesday. “This approach will allow us to leverage the strength of GM and Cruise while simplifying and accelerating the path forward, providing customers with meaningful benefits along the way.”
The dramatic shift in strategy comes just a year after Cruz was embroiled in scandal, following an October 2 incident that left a pedestrian stranded and then towed by one of his robotaxis. This incident, and Cruise’s actions in its immediate aftermath, led to investigations, fines, firings, and GM assuming more direct control of what was once a promising self-driving startup.
In the wake of the fallout, Cruise lost commercial operating permits from California regulators, paused other testing in other states, laid off 900 employees — about 24% of its workforce — and shut down plans to build a custom robotaxi called Origin. Kyle Vogt, co-founder and CEO of Cruise, resigned, and GM turned to outsiders to restructure the company and rebuild trust. In June, it appointed General Motors Mark Whitten — a video game veteran who was a founding engineer at Xbox and Xbox Live — as CEO of Cruise.
Vogt criticized the decision in a Share on X“If it wasn’t clear before, it’s clear now: GM is a bunch of puppets,” he said.
In November, Cruz I confess For making a false report with the intent to influence a federal investigation into a safety incident last year. The company agreed to pay a $500,000 criminal fine as part of a deferred prosecution agreement, according to the Justice Department.
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