Why GM scrapped its $50 billion robotaxi dream
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Illustration: Sarah Grillo/Axios
GM just walked away from its robotaxi dream, bailing on its Cruise business as the price tag became too much to stomach.
Between the lines: GM can't afford — the cost or the distraction — to work on a moonshot when its core business needs fixing.
The big picture: The automaker's decision Tuesday to abandon Cruise also reflects the reality that risky long-term bets can face when economic conditions shift.
Catch up quick: After sinking nearly 10 years and about $10 billion into developing a driverless taxi business, GM decided to refocus Cruise's technology toward building autonomous tech into GM's personal car business.
- What a sharp change in tone from a year ago, when GM CEO Mary Barra said the Cruise unit could bring in $50 billion in annual revenue by the end of this decade.
- Barra Wednesday said GM is still committed to autonomous vehicles but isn't interested in entering the robotaxi business anymore. "We're taking a different path," she told Axios' Joann Muller in an interview at an Automotive Press Association event in Detroit. "I hope you see we're being proactive in making decisions."
So what happened? For one, GM and other legacy automakers placed big bets on their future during an era of profligacy thanks to ZIRP, or zero interest rate policy. But growth-at-any-cost storylines have become less palatable as interest rates have risen.
- Expensive experiments, such as deploying fleets of robo-taxis, have likely become even less appealing as GM faces tougher conditions in selling its cars — particularly in China — while also trying to build a profitable EV business.
What they're saying: "When we looked at the amount of money to deploy a robotaxi business and then to maintain that business and grow it — it's quite a bit of capital. And as you know, a robotaxi business is not General Motors' core business," Barra told analysts Tuesday.
By the numbers: The restructuring of Cruise could reduce spending by more than $1 billion annually, GM says.
- In other efforts to reign in costs, the Detroit automaker just laid off about 1,000 people to aim for $2 billion in savings this year.
What we're watching: GM's retreat may clear a bigger path for Waymo and Tesla to succeed with their robotaxi businesses.
- With fewer competitors in the market, there's less competition for talent and customers. And from a regulatory perspective, it may be simpler to track fewer tech stacks.
- Still, it's wildly unclear when any fully self-driving car platform will reach the point of unquestionable success (a large scale profitable operation with wide public trust and solid safety record).
The bottom line: GM has some tough homework to finish in its core business before it can go outside to play.
