GM cuts funding for robotaxis and plans to fold Cruise into their larger engineering organization
General Motors ’ decision to focus on driver assist systems highlights challenges with the robotaxi business model. GM plans to fold the business into their larger engineering organization. Instead of focusing on robotaxi, GM will develop advanced driver assist systems with the longer term vision of personally owned autonomous vehicles . Following years of development and over $10B in investment, it’s a fall from the top for Cruise.
The idea of autonomous vehicles has been around for decades. An early concept of self-driving cars was presented at the 1939 New York World Fair when General Motors sponsored Norman Bel Geddes’ “” exhibit that among other innovations showcased self-driving vehicles using radio control and magnetic tracks. The exhibit painted an exciting view about the future of transportation but it wouldn’t be until the early 2000s that AV technology would pick up steam.
That same year, further north from Google’s Mountain View offices, a small startup developed the technology to hail a cab from an app. Uber would go on to become the “” valued at $51B in 2015. Uber’s disruption of the taxi industry and their subsequent investments in autonomous vehicles made them a darling of Silicon Valley; and what could possibly be sexier than Uber? A version of Uber where cars drove themselves.
At the time Google and GM were making these investments, little was known about the economics of rideshare. Uber and Lyft were still private companies but their valuations continued to reach greater and greater heights. In 2019, leading up to Uber’s IPO, some investors were. Compare that to GM’s market cap of roughly $50B that same year, it was hard to resist the urge to stake the future of mobility on robotaxis.
In 2023 and 2024 Uber and Lyft posted their first profitable quarters respectively after years of struggling with the transition from growth stage startups to established public companies. Their efforts took over a decade and a massive effort by both companies. So what does that mean for robotaxis? The whole concept of robotaxis was built from the hype of Uber’s valuation; which, over time proved to be overvalued. The rideshare business model didn’t have the earnings investors expected.
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