GM Exits Cruise Robotaxi Business, Plans Full Acquisition in Early 2026
General Motors (GM) has exited Cruise ride-hailing business after investing over $10 billion. Reuters reported that the move to discontinue funding for the GM Cruise robotaxi business is a blow to the giant vehicle manufacturer, which had prioritized advanced technology. GM shares increased by 2.3% following the announcement.
GM Self-Driving Car Losses
GM said that Cruise will be folded into the company’s unit that has been working on driver assistance technology. The company said it quit the self-driving industry due to rising competition in the robotaxi market and the growing capital allocation requirements. GM also cited the amount of resources and time needed to grow the unit as a reason for the Cruise business exit in 2024.
“Cruise was well on its way to a robotaxi business, but when you look at the fact you’re deploying a fleet, there’s a whole operations piece of doing that,” GM CEO Mary Barra said
GM has been scaling down its electric vehicle plans for sometime now. The company also sold its stake in a battery plant joint venture and restructured its business in China. This move allows it to focus on production of gasoline pickup trucks and other big vehicles. GM also plans to merge Cruise LLC with its technical teams. The two entities are yet to decide how many of the 2300 Cruise employees will be moving to GM.
Majority Stake in Cruise
GM holds a 90% stake in Cruise having acquired it back in 2016. The company also signed agreements with other shareholders to raise its ownership to over 97%. As part of the GM Cruise exit strategy, the company plans to finalize purchase of shares owned by external shareholders of the ride-hailing startup next month.
Through full acquisition, GM expects to achieve a 50% reduction of its annual spending on Cruise. Currently, this expenditure stands at about $2 billion according to GM CFO Paul Jacobson.
One of the external investors in Cruise is Honda. The Japanese motor vehicle manufacturer invested a total of $852 million in Cruise. Honda had plans to introduce driverless ride-hailing services in Japan at the beginning of 2026. However, it will be reassessing this decision and adjust them where necessary.
“Honda remains committed to various research and development initiatives aimed at providing new mobility solutions to our customers in Japan,” a Honda spokesperson said.
Internal Dynamics
Cruise was among the first entrants into the US driverless ride-hailing market having established its operations in October 2023. However, the startup has been struggling with a range of internal problems. Its founder, Kyle Vogt left the startup a month after its establishment. In a post shared on X, Vogt said, “in case it was unclear before, it is clear now: GM are a bunch of dummies.” His post points to a strained relationship with GM.
Cruise faced a myriad of challenges that affected its financial performance and contributed to GM self-driving car losses. The ride-hailing startup was slapped with a $1.5 million fine by the National Highway Traffic Safety Administration for failing to disclose details of a crash that involved a pedestrian in November 2023. Investigations into the crash revealed that poor leadership, ineptitude, and culture issues in the startup contributed to the accident.
Earlier this year, GM said that it was delaying manufacturing of Origin autonomous vehicles indefinitely. GM’s announcement came at a time when Cruise was trying to relaunch operations. This forced the ride-hailing startup to use next-generation Chevrolet Bolt for its autonomous vehicle business.
Stiff Competition
While Cruise operations stalled, its rivals gained a lot of ground in the robotaxi industry. Waymo, for instance, launched commercial driverless ride-hailing services in major US cities. Last month, Waymo dropped its waitlist feature and is currently planning to introduce its services to Miami.
Chinese driverless robotaxi WeRide launched ride hailing services in the UAE while Ponyai raised $260 million through an initial public offering in the US, pushing its valuation to about $4.55 billion. Wayve is already testing driverless vehicles in San Francisco while Tesla launched its self-driving Cybercab in October 2024.
