General Motors announced on Tuesday that it will no longer fund the development of its autonomous taxi business. Instead, it has decided to absorb its wholly-owned subsidiary Cruise and integrate it with the company's own research and development of driver assistance technology, focusing on the development of fully autonomous private vehicles. This decision marks a significant strategic shift for General Motors in the field of autonomous driving, reflecting the company's new positioning in future automotive technology.
General Motors acquired the autonomous driving startup Cruise in March 2016 for $1 billion, and since then, the company has continuously invested in Cruise with the aim of commercializing autonomous driving technology through its taxi business. However, General Motors stated in its announcement that "scaling up the business requires a substantial amount of time and resources, and the competition in the autonomous taxi market is becoming increasingly fierce," leading to the strategic adjustment. The company expects to save over $1 billion annually after the restructuring plan is completed, which is anticipated to be finished in the first half of 2025.
Currently, General Motors holds about 90% of Cruise's shares and plans to buy back shares from other minority shareholders to increase its ownership to over 97%. Cruise has received funding support from external investors such as Microsoft, Walmart, and SoftBank to promote its autonomous taxi project. In 2022, General Motors further increased its stake in Cruise and acquired shares from the SoftBank Vision Fund for $2.1 billion, while also investing an additional $1.35 billion to replace previous investment commitments.
Mary Barra, Chairman and CEO of General Motors, emphasized during a conference call with media and analysts that, "We made this decision to realign our strategy and ensure that driver assistance and autonomous driving technologies can be better integrated into our vehicle products." She stated that this transformation will help integrate the strengths of General Motors and Cruise, accelerate the company's technological innovation, and provide tangible benefits to customers.
However, this strategic shift is also closely related to a series of scandals involving Cruise. On October 2, 2023, Cruise's autonomous taxi was involved in a serious accident, with a pedestrian trapped under the vehicle and dragged along. Following the incident, Cruise's mishandling of the emergency response triggered investigations and penalties from regulatory authorities, leading to the company losing its commercial operating license in California. Additionally, Cruise suspended testing in other states and laid off about 900 employees, accounting for 24% of its workforce. This accident and its aftermath directly led to General Motors taking more direct control over Cruise and ultimately deciding to integrate Cruise into its internal R&D system.
Furthermore, Cruise was also fined $500,000 for submitting false reports that affected safety investigation, as part of a deferred prosecution agreement. This series of events has left Cruise's future uncertain and accelerated General Motors' strategic adjustments.
Regarding this significant strategic shift, Kyle Vogt, co-founder and CEO of Cruise, criticized General Motors' decision on social media platform X, bluntly stating, "General Motors is a bunch of fools." Nevertheless, General Motors insists that this change will enable the company to better cope with increasing market competition and closely integrate autonomous driving technology with the development of private vehicles to achieve the transformation of future transportation.
Currently, General Motors is re-planning its autonomous driving strategy, aiming to accelerate the research and market promotion of private autonomous vehicle technology while reducing expenditures.