Photo/GM website

General Motors (GM) said Tuesday it will retreat from the robotaxi business and stop funding its money-losing Cruise autonomous vehicle unit, after nearly a decade and over $10 billion invested in research and development.

Instead, the Detroit automaker will focus on development of partially automated driver-assist systems for personal vehicles like its Super Cruise, which allows drivers to take their hands off the steering wheel.

GM said it would get out of robotaxis "given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market."

In a surprise to many, including employees who were still working overtime to advance new projects.

An insider at Cruise, who has been with the company for several years, expressed shock to the National Business Daily (NBD), saying, "There were no major issues from our perspective. Suddenly, at noon today, we were all informed that GM would cancel funding and halt the Robotaxi business. We had been working on new projects and preparing for tests this week, but now it's shutting down abruptly. Most of us feel it's too sudden."

GM currently holds about 90% of Cruise and has agreements in place with other shareholders to increase its stake to over 97%. In June 2022, Cruise became the first autonomous vehicle company to offer paid rides in a major U.S. city. CFO Paul Jacobson indicated that GM expects to complete the acquisition of the remaining Cruise shares from external shareholders by early 2025, with the annual expenditure on Cruise expected to be reduced by more than half after restructuring.

Cruise attracted billions in external investment from major companies like SoftBank, Honda, and Microsoft. However, the high costs of operating an autonomous taxi fleet have been unsustainable, leading to the current decision.

Cruise's employees are expected to be integrated into GM's internal teams to collaborate on advanced driver-assistance systems like Super Cruise and personal autonomous vehicles. The above-mentioned insider at Cruise said th NBD, "Currently, General Motors has not made any layoffs at Cruise. We have absolutely no details."

As the autonomous driving industry potentially accelerates its shakeout, with players like Waymo and Tesla continuing their operations, the future of autonomous ride-hailing services remains uncertain, with safety and large-scale deployment being significant challenges.