KEY TAKEAWAYS
- General Motors said it was abandoning its Cruise driverless ride-hailing service due to its high costs and the scale needed in an increasingly competitive market.
- The automaker said the Cruise team will be combined with its other technical teams and the company will instead focus on developing advanced driver assistance systems.
- Scrapping the Cruise robotaxi project will save it more than $1 billion a year, GM said.
General Motors (GM) said it was abandoning its Cruise driverless ride-hailing service due to its high costs and the scale needed in an increasingly competitive market.
The largest U.S. automaker said the Cruise team will be combined with its other technical teams, and the company will instead focus on developing advanced driver assistance systems, which include functions such as taking over steering.
"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," the company said.
GM Expects To Save More Than $1B a Year From Abandoning Cruise
GM said it "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."
In a note out Wednesday, UBS analysts called the move to abandon Cruise "another example of GM's refocus on capital efficiency." They noted that GM had recently sold its stake in its Michigan electric vehicle (EV) battery plant to its South Korean partner, LG Energy Solution, and is also restructuring its operations in China, where business has been weak.
The analysts said the GM plan to scrap Cruise could be a positive for Tesla (TSLA), which is "pursuing a capital intensive, end-to-end approach but is able to fund it."
GM shares, which have gained more than 45% this year through Tuesday, are up about 1.5% in premarket trading. Tesla shares, which are more than 60% higher in 2024, are up a further 1% early Wednesday.