GM's autonomous taxis are struggling. Why are investors backing out?
The Cruise project, developed by General Motors, is feeling the heat. As the U.S. ramps up safety inspections of self-driving cars, investors – notably the leading partner, Honda – are beginning to express doubts.
Cruise could arguably be the most successful project related to autonomous vehicles, having caused considerable excitement in the industry. The robotaxis, primarily operating in San Francisco, has proven successful and the growth opportunities seemed substantial. Concerns about the future of Cruise, however, are now mounting.
A series of incidents, some more serious than others, involving autonomous taxis have prompted regulatory bodies – the same ones that initially provided approval for the robotaxis to use public roads – to initially restrict the number of Cruise vehicles on the streets, before putting a complete halt to permits.
General Motors CEO Mary Barra staunchly maintains that autonomous taxis represent a significant advance in road safety and lifesaving potential. However, these federal interventions are fostering serious doubts among the companies involved in the project.
As reported by Reuters, Cruise's plan is to generate $50 billion in revenue by 2030. However, since 2017, reported losses amount to $8 billion, with an alarming $728 million occurring in the third quarter of 2023 alone. Currently holding $1.7 billion, the company could operate normally for a mere nine months.
Another quandary is Honda – the same Honda that announced plans in October to launch autonomous taxis in Tokyo with Cruise. According to Reuters, the Japanese carmaker is set to cease its funding process for Cruise, after previously investing significant capital. Given the present circumstances, reports indicate that layoffs are imminent.
Cruise is in a precarious situation, with its shares hitting their lowest point since August 2020. For General Motors, the issues with the robotaxi project are another concern, following a costly agreement to end a strike with UAW and a revised plan to ramp up production of electric cars. These are certainly not the best times for the American automotive giant.
