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GM’s decision to shut down its Cruise robotaxi program continues to impact the market, and extends to minority investors in the self-driving car company.
Microsoft, which in 2021 invested in Cruise, will take an $800 million impairment charge as a result of GM’s actions. According to the regulatory filing. Microsoft said the charge will be recorded in other income and expenses and was not included in the second-quarter guidance provided on October 30, 2024. It is estimated to have a negative impact of about $0.09 on second-quarter diluted earnings per share, according to the filing.
GM owns about 90% of Cruze. GM 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.
Cruz raised $2 billion in January 2021 in a round that included Microsoft as well as General Motors and its partner Honda. This increase raised Cruise’s value to $30 billion. The two companies also entered into a long-term strategic partnership that included plans for Cruise to use Azure, Microsoft’s cloud and edge computing platform, in its self-driving ride-hailing service.
General Motors announced Tuesday that it will no longer fund robotaxi development, and instead will absorb its self-driving car subsidiary Cruise and combine it with the automaker’s own efforts to develop driver-assistance features — and eventually fully self-driving personal vehicles. General Motors acquired self-driving startup Cruise in March 2016 for GM 1 billion dollars. Since then, GM has spent more than $10 billion on the company in an attempt to commercialize self-driving vehicle technology through its robotaxi business.
Minority investor Honda said Wednesday it will stop financing a joint venture with General Motors and Cruise to launch a robotaxi service in Japan.
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