General Motors is planning to close down Cruise, its autonomous vehicle technology development business, after the startup had racked up expenses of approximately $10 billion while generating revenues of only $500 million.
The way GM announced the closure on its website was that it plans to “realign its autonomous driving strategy and prioritize development of advanced driver assistance systems on a path to fully autonomous personal vehicles”.
GM will build on the progress of Super Cruise, the company’s hands-off, eyes-on driving feature, now offered on more than 20 GM vehicle models and currently logging over 10 million miles per month.
GM intends to combine the majority-owned Cruise LLC and GM technical teams into a single effort to advance autonomous and assisted driving.
Consistent with GM’s capital allocation priorities, GM will no longer fund Cruise’s robotaxi development work given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market.
Mary Barra, chair and CEO of GM, says: “GM is committed to delivering the best driving experiences to our customers in a disciplined and capital efficient manner.
“Cruise has been an early innovator in autonomy, and the deeper integration of our teams, paired with GM’s strong brands, scale, and manufacturing strength, will help advance our vision for the future of transportation.”
Dave Richardson, senior vice president of software and services engineering, says: “As the largest US automotive manufacturer, we’re fully committed to autonomous driving and excited to bring GM customers its benefits – things like enhanced safety, improved traffic flow, increased accessibility, and reduced driver stress.”
GM, which owns about 90 percent of Cruise, has agreements with other shareholders that will raise its ownership to more than 97 percent. The company will pursue the acquisition of the remaining shares.
Contingent upon the repurchase of these shares and Cruise board approval, GM will work with the Cruise leadership team to restructure and refocus Cruise’s operations.
GM expects the restructuring to lower spending by more than $1 billion annually after the proposed plan is completed, expected in the first half of 2025.
GM had made direct investments totalling $2.4 billion into Cruise, while Microsoft is reported to stand to lose $800 it had invested.
