General Motors has made the dramatic decision to end funding for Cruise’s robotaxi operations, marking a significant retreat from autonomous vehicle ambitions that has drawn sharp criticism from the company’s founder. Kyle Vogt, who resigned from Cruise in 2023, didn’t mince words following GM’s announcement, posting on X (formerly Twitter): “In case it was unclear before, it is clear now: GM are a bunch of dummies.”
The decision comes after GM invested more than $10 billion in Cruise since acquiring control of the startup in 2016. GM CEO Mary Barra explained on a conference call that while “Cruise was well on its way to a robotaxi business,” the operational costs of deploying and maintaining an autonomous fleet proved too burdensome. The automaker plans to fold Cruise into its existing driver-assistance programs, expecting to save approximately $2 billion annually from this strategic pivot.
The timing reflects broader challenges facing the autonomous vehicle industry and GM’s financial pressures. The company has been aggressively cutting costs throughout the year as electric vehicle demand slows and profitability timelines extend. Cruise’s commercial robotaxi operations have been suspended since October 2023, when one of its autonomous vehicles injured a pedestrian in a high-profile incident that triggered regulatory scrutiny and public concern.
Vogt’s departure in late 2023 came just weeks after Cruise suspended all autonomous operations following the accident. Since then, the company has only resumed limited autonomous vehicle testing with safety drivers present in Arizona and Texas, a significant step back from its previous fully driverless operations.
GM joins other legacy automakers retreating from autonomous ambitions. Ford previously pulled out of its joint venture with Argo AI in 2022, signaling that traditional car manufacturers are finding the path to profitable robotaxis more challenging than anticipated. In contrast, Tesla under Elon Musk remains committed to robotaxi development, while Alphabet’s Waymo continues expanding its driverless ride services to consumers across multiple cities, demonstrating the diverging strategies between tech companies and traditional automakers.
Investor reaction was initially positive, with GM’s stock rising over 3% in after-hours trading Tuesday on news of the $2 billion in annual savings, though shares fell more than 4% the following day. UBS analyst Joseph Spak noted that “most investors did not want to see GM commit more capital to Cruise,” suggesting Wall Street’s skepticism about the near-term viability of robotaxi businesses for traditional automakers.
Key Quotes
In case it was unclear before, it is clear now: GM are a bunch of dummies.
Kyle Vogt, Cruise founder who resigned in 2023, posted this scathing criticism on X following GM’s announcement. The harsh words from the company’s founder underscore deep frustration with GM’s decision to abandon the robotaxi business after years of development and over $10 billion in investment.
Cruise was well on its way to a robotaxi business — but when you look at the fact you’re deploying a fleet, there’s a whole operations piece of doing that.
GM CEO Mary Barra explained the rationale behind shutting down Cruise’s robotaxi operations during a conference call. Her statement acknowledges the technical progress made while emphasizing that the operational and financial challenges of running an autonomous fleet proved insurmountable for the automaker.
While some bulls may have hoped for external funding to give Cruise a life extension, we strongly believe that most investors did not want to see GM commit more capital to Cruise.
UBS analyst Joseph Spak wrote this in a note to clients, reflecting Wall Street’s sentiment that GM’s continued investment in Cruise was viewed unfavorably. The comment suggests investors preferred GM to focus on core business and cost savings rather than pursuing expensive autonomous vehicle ambitions.
Our Take
GM’s Cruise shutdown represents more than just one company’s strategic pivot—it’s a reality check for the entire autonomous vehicle industry. The $10 billion investment with no clear path to profitability demonstrates that AI-powered autonomous driving remains extraordinarily difficult to commercialize, even with massive resources. The divergence between traditional automakers (GM, Ford) retreating and tech companies (Waymo, Tesla) advancing suggests this technology may require the patient capital and software expertise that tech giants possess. The October 2023 pedestrian injury incident also reveals how a single safety failure can derail years of progress, highlighting the zero-margin-for-error environment autonomous vehicles operate within. As the industry consolidates, we’re likely seeing the end of the “many players” phase and entering an era where only well-funded, technology-first companies with decade-long timelines will survive. Vogt’s angry response, while unprofessional, reflects genuine frustration that technical achievements can be undone by corporate financial pressures.
Why This Matters
GM’s withdrawal from robotaxis represents a pivotal moment for the autonomous vehicle industry, highlighting the stark divide between tech companies and traditional automakers in the race toward self-driving transportation. The decision underscores the massive capital requirements and operational complexities of deploying autonomous fleets at scale—challenges that even a major automaker with over $10 billion invested couldn’t overcome.
This development signals that the path to profitable robotaxis may be longer and more expensive than many anticipated, particularly for legacy car manufacturers facing simultaneous pressures from EV transitions and changing market dynamics. The contrast between GM’s retreat and the continued expansion of tech-driven competitors like Waymo and Tesla suggests that software-first companies may have inherent advantages in developing and deploying AI-powered autonomous systems.
For the broader AI industry, Cruise’s setback demonstrates that advanced AI technology alone isn’t sufficient—successful deployment requires sustainable business models, regulatory navigation, and public trust. The safety incident that triggered Cruise’s suspension also highlights ongoing concerns about AI safety and accountability in high-stakes applications. As autonomous vehicle development continues, this story may mark a turning point where the industry consolidates around fewer, better-capitalized players with longer-term horizons.
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Source: https://www.businessinsider.com/gm-cruise-shutdown-founder-reaction-2024-12