GM shut down Cruise after investing $10 billion in robotaxis

Since acquiring the self-driving startup Cruise in 2016, the automaker has invested over $10 billion.

General Motors’ decision to shut down Cruise highlights the challenges of building a robotaxi business—it’s costly, complex, and full of risks.

Since taking control of the self-driving startup in 2016, GM invested over $10 billion in Cruise. The company, alongside its Google-backed competitor Waymo, made significant strides in deploying driverless Chevrolet Bolt robotaxis. In August 2023, both companies received regulatory approval to operate ride-hailing robotaxis in San Francisco.

However, Cruise faced a major setback when one of its driverless cars caused a serious pedestrian injury, leading California regulators to revoke its operating permit. Cruise was forced to recall its entire fleet, and a subsequent investigation revealed the company had withheld critical details about the crash from regulators.

Struggling to recover as Waymo advanced, Cruise faced internal turmoil. CEO Kyle Vogt stepped down in November 2023, and the company laid off nearly a quarter of its workforce the following month.

Cruise resumed testing its self-driving technology earlier this year and announced a partnership with Uber in August to offer robotaxi rides through the Uber app. However, these efforts weren’t enough to prevent GM from shutting down the operation.

GM CEO Mary Barra explained the decision during a call with analysts, citing “the considerable time and expense required to scale a robotaxi business in an increasingly competitive market.”

John McDermid, a professor of software engineering at the University of York, remarked, “It’s a recognition of how challenging it is and how hard it is to make money in the robotaxi business. Even if you can solve the technical problems, it’s a tough place to be.”

Saber Fallah, a professor of safe AI and autonomy and director of the Connected Autonomous Vehicle Research Lab at Surrey University, told Business Insider that Cruise had moved too quickly in scaling its driverless robotaxis in San Francisco. He noted that the AI technology behind robotaxis like Cruise’s and the regulatory processes for certifying them were not yet advanced enough to handle the complexities of urban environments.

Competitors May Have an Edge

Analysts at Bank of America suggested in a recent note that GM’s withdrawal could indicate competitors such as Tesla and Waymo possess superior technology or that the market may not favor latecomers. Waymo, already offering a robotaxi service in multiple U.S. cities, logs 150,000 paid rides weekly and plans further expansion in 2024.

Even Waymo has faced regulatory challenges, including two recalls this year after incidents involving collisions with a towed truck and a telephone pole. Similarly, Amazon-backed Zoox is under investigation following crashes and questions about the compliance of its steering wheel-less robotaxis with federal safety rules.

Tesla’s Ambitious Robotaxi Vision

Tesla is pushing forward with bold plans. In October, Elon Musk unveiled the “Cybercab,” a $30,000 autonomous vehicle without a steering wheel or pedals, set for production in 2027. Tesla also intends to roll out fully autonomous Model 3 and Model Y vehicles in California and Texas by 2025, allowing owners to operate their own ride-hailing fleets.

However, experts remain skeptical. Tesla faces a federal investigation into its Full Self-Driving system after multiple crashes, and regulatory hurdles could delay its ambitions. Fallah suggested that Tesla and Waymo would likely encounter similar obstacles as Cruise. “The idea of robotaxis that can operate anywhere, anytime, without human involvement is more hype than reality,” he said, adding that significantly more advanced AI is needed to achieve this vision.

Shifting Priorities

In response to these challenges, GM announced it would pivot from robotaxis to developing advanced driver-assistance systems requiring human supervision.

When approached for comment, General Motors declined to respond.

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