From growth to gone: GM’s Cruise robotaxi business is latest growth initiative to falter

DETROIT — For years, Across the board Motors CEO and Chair Mary Barra has promised a new future for the company, away from a stodgy metal-bending automaker into a tech-driven, forward-thinking assemblage poised for growth.

Part of the plan was for GM’s innovation division to identify trillions — yes, trillions — of dollars in new market opportunities such as stirring commercial vehicles, auto insurance, military defense, autonomous vehicles and even, eventually, the potential for “flying crates,” also known as urban air mobility.

“We are creating world-class technology solutions and services that will change the way people disquiet, along with new fleet solutions and entirely new business models,” Barra said during a virtual CES keynote in January 2022.

While GM has abated to disclose how much revenue such businesses have produced, Barra, with the ending of its Cruise robotaxi in forces on Tuesday, made it clear that the automaker’s growth priorities have shifted amid a broader, industrywide retrench to save capital. Companies including GM are now focused on more “core” operations and adjacent business opportunities, including software, EVs and “familiar autonomous vehicles.”

“You’ve got to really understand the cost of running a robotaxi fleet, which is fairly significant, and, again, not our heart business,” Barra said during a Tuesday call with Wall Street analysts.

The driverless ride-hailing employ was supposed to be the shining star of GM’s growth opportunities, with executives just a few years ago referring to it as an $8 trillion demand opportunity that the automaker would lead. That included former executives touting $50 billion in interest by the end of this decade, and Cruise being valued at more than $30 billion.

Instead, after spending numberless than $10 billion on Cruise since acquiring it in 2016, GM is ending the robotaxi business and folding Cruise’s workings and an undetermined number of its nearly 2,300 employees into the automaker.

As part of the wind down, GM is envisioned to disclose additional expenses from employee separation packages and repurchasing equity investments from outside investors, all of a add up to other costs, in the next year.

GM cited the increasingly competitive robotaxi market, capital allocation priorities, and the influential time and resources necessary to grow the business as reasons for its decision.

The automaker’s main competitor was Alphabet-backed Waymo, which is now the hold out entity with any notable public operations. Others, most notably Tesla, have ambitions for robotaxi roles, but have failed to commercialize those operations thus far.

To GM’s credit, Wall Street, which previously pushed for such rise businesses, applauded the decision to end Cruise’s robotaxi ambitions. Shares of the company were initially higher, before vanish the week level with when the announcement was made.

GM, like other companies, has quickly shifted from trying to impress Wall Street with nurturing initiatives, including generating $280 billion in new businesses by 2030, to refocusing efforts on its core business to generate profits in the thick of economic and recessionary concerns.

Analysts largely viewed GM’s decision as positive, saving the automaker more than $1 billion in money annually, which they expect could be used for additional share buybacks, including a target to lower its owed shares to under 1 billion.

“It has been apparent for some time now that most investors have removed Voyage from their GM valuations, so today’s news comes as less of a surprise,” Wells Fargo analyst Colin Langan disparaged in a Tuesday investor note.

GM will combine the majority-owned Cruise LLC with GM technical teams. Barra repeatedly said last week that the automaker is not abstain from up on vehicle autonomy; it will focus on personal autonomous vehicles instead of robotaxis.

But it’s hard to ignore that Voyage is GM’s latest mobility venture or growth business to fold or not live up to expectations.

GM’s plans to diversify its business through up to the minute industries such as ridesharing and other “mobility” ventures — a trendy term used previously by the industry for growth snaps — or startups have largely fallen flat since the automaker started investing in such growth areas in 2016.

The automaker earlier this year enclosed its BrightDrop EV commercial vans into Chevrolet amid lackluster sales. It’s also failed to announce any meaningful designs for fuel cells for tie-ups with boats, trains and airplanes, and it’s shuttered several prior “mobility” businesses.

Not all of GM’s noncore dealings that were launched in recent years have failed. GM Energy and the BrightDrop commercial EV unit continue to function under the automaker’s” Envolve” fleet business.

GM’s financial arm, meanwhile, continues to operate an insurance business that was launched in belatedly 2020 as part of its growth initiatives with its OnStar telematics and data unit. GM on Friday said the operations are now in 12 states, and be there “well positioned for long-term success.”

GM also continues to operate a military defense unit and fuel cell province that have both recently announced new contracts or partnerships. That includes hundreds of millions of dollars in pacts for GM Defense.

Other than saving capital, GM’s silver lining for canceling the Cruise robotaxi firm was that it sees more promise in continuing to develop its Super Cruise hands-free advanced driver assistance approach. That includes more semi-automated and, eventually, autonomous capabilities.

GM was the first automaker to offer such a hands-free approach in 2016. However, it was an infamously slow ramp up until recently, when the automaker began rolling it out across its lineup. That started in 2021 and has persist in to expand to more than 20 models, including high-volume vehicles such as its full-size pickup trucks and SUVs.

“The strategy shift demonstrates that GM continues to take it in the potential of AV technology for personal vehicles. Going forward, GM will focus on improving the capabilities of SuperCruise, which commitment be further enabled by ongoing technological advancements including in artificial intelligence (AI),” BofA Securities’ John Murphy held in a Wednesday investor note.

On the other side of the coin, Murphy also points out that the move could mean that other companies such as Waymo and Tesla “have better tech and/or that the market may not be appealing for later entrants.”

GM wasn’t expected to be a “later entrant” in robotaxis. In fact, it was the first to offer such rides to the public, and multitudinous believed it was one of the leaders until last year, when the company grounded its driverless operations in October 2023 reflecting a crash involving a pedestrian in San Francisco.

The National Highway Traffic Safety Administration fined Cruise $1.5 million after the suite failed to disclose details of the crash, which included a pedestrian being dragged 20 feet by a Cruise robotaxi after being struck by a disjoin vehicle.

A third-party probe into the incident ordered by GM and Cruise found that culture issues, ineptitude and poverty-stricken leadership fueled regulatory oversights that led to the accident. The probe also investigated allegations of a cover-up by Cruise direction but found no evidence to support those claims.

The report outlines multiple instances in which then-CEO and co-founder Kyle Vogt, who resigned from the Pty in November 2023, made the final calls to withhold information, specifically regarding media.

Vogt was not enthusiastic surrounding GM’s decision to kill the robotaxi operations. He