General Motors made waves in the auto industry earlier this week when it announced that it would be shutting down its Cruise robotaxi project, citing intense competition and heavy costs associated with self-driving.
In the eight years since the automaker acquired its self-driving subsidiary, Cruise proved to be an expensive investment: General Motors lost $3.5 billion on Cruise in 2023 alone, and it lost $435 million in Q3 2024, though that was an improvement year-over-year from its $791 million burn in Q3 2023. In total, General Motors had invested more than $10 billion in the self-driving startup since 2016 before deciding to pull the plug, a hefty price tag for a company worth around $57 billion.
Since 2013, Cruise had been in a competitive arms race with other self-driving players like Tesla and Google’s Waymo, but it suffered a major setback in October 2023 that may have been the nail in its coffin. A San Francisco pedestrian was struck by another vehicle in an adjacent lane, knocking her in front of a Cruise AV, and the Cruise car, failing to detect the woman, dragged her 20 feet before stopping. At the time, Cruise had about 400 vehicles operating across San Francisco, Austin, Houston, and Phoenix, but in the aftermath of the incident, California suspended Cruise’s robotaxi permit, setting the company back as its competitors continued to make strides.
Cruise was supposed to be General Motors’ crown jewel that would give it an edge in the automotive industry. Early on, it was poised to succeed. In 2020, Cruise received approval to test fully driverless cars, known as Level 4 autonomous driving. Additionally, in 2023, GM CEO Mary Barra said that Cruise could generate $50 billion in annual revenue by 2030. The margins on self-driving car subscriptions would have presumably been much higher than manufacturing, given the capex requirements of the latter, and winning self-driving could have propelled General Motors ahead of its competition.
But instead, Cruise faltered. Meanwhile, competitors like Waymo continued to execute, with the Google subsidiary noting earlier this month that it was now providing more than 150K robotaxi trips per week across Phoenix, Los Angeles, San Francisco, and Austin. It also reported that it was about to expand its operations to Miami.
Investors have taken notice of Waymo’s progress, and Alphabet’s autonomous driving division was valued at $45 billion in a November fundraise, putting it in the same ballpark as General Motors’ entire business. With Waymo’s market share in Los Angeles now equal to Lyft and gaining on Uber, Google is beginning to look like a not-so-darkhorse candidate to win the autonomous race.
