General Motors calls it quits on $50 billion robotaxi dream

General Motors Co. Chief Executive Officer Mary Barra, clad in her signature leather jacket and masked up pandemic style, climbed into a Cruise robotaxi named Tostada for her first autonomous ride almost three years ago.

“Oh my God," she exclaimed in a moment GM promoted with a video. “This is incredible."

Now she is shutting down the business, citing the high costs to develop the technology and build out a fleet of cars in multiple cities, retreating from a once-promising market that proved full of reputational pitfalls for the automaker.

Instead, Barra will merge Cruise into GM’s operations with more humble goals such as developing advanced safety systems for the vehicles it sells and, one day, offering autonomous driving as a feature on future models.

With the decision to downgrade Cruise, GM is giving up on hopes of transforming itself into a multi-platform technology company that targeted bringing in $50 billion in revenue from robotaxi fares and subscriptions by 2030. The carmaker had aspired to double its revenue by 2030 on the twin pillars of autonomy and electric vehicles. That goal also now looks remote without Cruise as a new business and after GM scaled back its lofty EV sales ambitions.

“We looked at the amount of money to deploy a robotaxi business and to maintain that business and grow it, it’s quite a bit of capital," Barra told analysts on a call Tuesday. “A robotaxi business is not GM’s core business."

While GM will develop autonomous technology, it’s a big retrench for the company. The Detroit carmaker set out to recast itself a decade ago as more than a mere metal bender in an ambitious drive to stay competitive with Silicon Valley’s software giants in the race for robotaxis. The move was unexpected after Cruise had managed to survive a shakeout among autonomous-driving companies and a robotaxi crisis of its own making.

Robotaxi rivalry

All told, GM invested more than $9 billion in Cruise and at one point rivaled Google parent Alphabet Inc.’s Waymo for robotaxi supremacy in San Francisco and other cities. The about-face comes just as Cruise had resumed testing and operations after an incident last year in which one of its cars dragged and injured a pedestrian.

Before that misstep, GM had also been running robotaxis in Phoenix, Houston and Austin, Texas, and laying the groundwork in other cities.

GM is pulling back just as Waymo expands into more cities and Tesla Inc. plans to start its robotaxi business in 2026. Tesla CEO Elon Musk is now one of the most influential voices in President-elect Donald Trump’s circles and has pressed for a federal framework for self-driving cars.

Both Alphabet and Tesla have trillion-dollar market capitalizations that dwarf GM’s $58 billion valuation.

Rather than compete in that arms race, Barra plans to combine the work GM has done developing its SuperCruise assisted driving system with the driverless expertise at Cruise. The idea is to further enhance SuperCruise, providing a glide path to eventually debut a fully driverless system for vehicles sold to retail car buyers.

Dropping robotaxi development will save GM more than $1 billion in annual costs, the company said. It’s buying back equity in Cruise and, through agreements with other shareholders, will boost its stake from 90% to more than 97%.

Investors signalled relief at GM’s move to cut its losses. Shares of the carmaker rose 2.7% as of 4:26 p.m. in New York after the close of regular trading.

Tumultuous stretch

As GM nurtured Cruise, it attracted billions in additional investment from Softbank Vision Fund, Honda Motor Co., Microsoft Corp., Walmart Inc. and T. Rowe Price.

GM had hoped to push robotaxis into dozens of cities — including overseas locations such as Tokyo — and with Honda’s help was developing the Origin, a fully autonomous shuttle that could seat as many as six people. GM ended work on the Origin earlier this year, citing development costs and a long process to get the vehicle exempted from Federal regulations that require a steering wheel and brake pedals.

A Japanese newspaper reported Honda now plans to sell back its stake to GM and end its self-driving partnership with the automaker.

The retreat caps a tumultuous stretch for Cruise. The pedestrian accident led to a sharp crackdown by regulators, with California pulling Cruise’s license to ferry passengers and charge fares. The company temporarily grounded its fleet nationwide.

Not long after the incident, Cruise founder Kyle Vogt resigned and the company later fired nine top executives and laid off 25% of the workforce.

Vogt criticized GM’s move to chloroform Cruise in a post-Tuesday on the X social media platform, calling his former employer “a bunch of dummies."

Ending the robotaxi push brings GM right back to where it started in 1908 as a maker and seller of cars, scrapping its 21st-century dreams of tapping into new revenue streams by offering mobility as a service.

If Waymo and Tesla are able to stand up profitable robotaxi businesses, GM could end up looking back on Cruise as a missed opportunity the same way it now views the EV1 electric car. The Detroit automaker pulled the plug on that revolutionary attempt at a commercially viable electric vehicle in 2003 — the same year Tesla was founded.

“At some point in the past 10 years they had a leadership position in autonomy that they lost," Reilly Brennan, co-founder and partner at Trucks Venture Capital, which invests in autonomy, said in an interview. “If they could have waited until Waymo did its IPO, it would have been a great strategy and could have unlocked billions in value."

Cash drain

Funding was becoming an issue for Cruise. GM said in June it was giving the company $850 million in cash, which was enough to keep it going into the first quarter. Cruise had resumed running cars with safety drivers in Dallas and Houston and planned to test vehicles in California.

GM has said it had conversations with potential investors but even with some interest, decided that the future cost of developing a robotaxi business was more than management wanted to spend.

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