On December 11th local time, General Motors announced that it will no longer fund the development of its Cruise division's Robotaxi. Since Cruise was acquired in 2016, General Motors has invested over $10 billion in developing autonomous taxis.
The company stated that the decision was made due to two factors: firstly, considering the increasingly fierce competition in the autonomous taxi market, and secondly, considering capital allocation priorities and the significant time and resources required for business development.
Currently, technology companies including Google's Waymo and Tesla are actively expanding into the field of autonomous taxis. Musk sees Robotaxi as the next driving force for Tesla's move towards a $10 trillion market value. Tesla's stock price rose nearly 6% at the close of the day.
Annual expenditure of up to 2 billion US dollars
General Motors Chief Financial Officer Paul Jacobson stated that General Motors currently spends approximately $2 billion annually on Cruise, and the restructuring will reduce this expenditure by more than half.
In the future, GM plans to "readjust its autonomous driving strategy", focusing on advanced driving assistance systems and auto drive system for private vehicles. The Cruise team will also merge with General Motors' technical team.
Cruise has nearly 2300 employees, and the company has not yet determined how many of its employees will switch to General Motors.
Over the past year, General Motors' stock price has fallen by nearly 55%, with a current market value of approximately $57 billion.
General Motors stated in a statement that it currently owns approximately 90% of Cruise's shares and has reached an agreement with other shareholders to increase its stake to over 97%. It is expected to complete the acquisition of the remaining Cruise shares from external shareholders by early 2025.
Cruise's external shareholders also include Honda Motor, which has a total investment of $850 million in Cruise. The company originally planned to launch autonomous taxi services in Japan in early 2026, but will now reassess these plans and make adjustments if necessary.
It is worth mentioning that SoftBank Vision Fund was also an investor in Cruise, holding nearly 20% of the shares, but General Motors repurchased these shares for $2.1 billion in 2022.
Cruise, as one of the earliest technology companies in the United States to enter the autonomous taxi business, is facing the risk of abandoning this business, which has shocked and saddened the market. But in the past year, Cruise's development has faced challenges.
Last October, Cruise was fined $1.5 million by the National Highway Traffic Safety Administration and suspended its autonomous driving business in the United States for failing to disclose details of a serious pedestrian accident that month.
Last November, Cruise founder Kyle Vogt resigned. After General Motors announced the abandonment of its autonomous taxi business, he posted on X accusing General Motors of being a "bunch of fools".
Just as Cruise's autonomous driving department tried to restart its operations, in July this year, GM announced that it would postpone the production of the Original autonomous vehicle indefinitely.
Competitors are rapidly developing
Another background for Cruise's exit from the market is that other competitors in the autonomous taxi industry are making rapid progress. Google's Waymo has started operating commercial autonomous taxi services in several major metropolitan areas in the United States, and the company announced plans last week to expand its business to Miami.
Zoox, Amazon's self driving taxi division, also tested its autonomous vehicle without steering wheel in several American cities, including San Francisco. Wave, a British self driving start-up funded by Softbank, also tested its autonomous vehicle in San Francisco.
The reporter from China Business News has learned that Chinese autonomous vehicle manufacturers, including Baidu, AutoX, Xiaoma Zhixing and Wen Yuanzhixing, have also launched autonomous taxis in overseas markets. However, as the United States plans to impose more strict restrictions on cars equipped with Chinese automated driving software for road testing, and the market has been occupied by leading companies such as Waymo, the investment layout of Chinese automated taxis in the United States is decreasing in recent years.
At the same time, Tesla is actively promoting the development of autonomous taxis. The company showcased the design concept of the autonomous taxi Cybercab at an event in October this year and stated that this autonomous taxi will begin production in 2026, with a price not exceeding $30000.
Tesla CEO Musk stated that Tesla will ultimately produce 2 million Cybercabs annually and provide autonomous taxi hailing services in Texas and California as early as 2025. He also said that Tesla has developed a ride hailing app, and some employees in California can already use it this year.
It is reported that the operating cost of Cybercab is 20 cents per mile, using an induction charger that does not require any plugs. They will also rely solely on cameras and artificial intelligence, without the need for other hardware used by autonomous taxi players. This may significantly reduce the cost of producing autonomous taxis for the company.
According to Musk's previous plan, Tesla will operate a fleet of autonomous taxis that passengers can hail through an application. Tesla owners can also register their vehicles as autonomous taxis and earn money through the application.
But currently, Cybercab still needs to be equipped with human security personnel. If Cybercab can really be successfully launched, the market potential is indeed great, "AutoX founder and CEO Xiao Jianxiong told First Financial reporters.
Xiao Jianxiong believes that determining the success of autonomous driving taxis requires complete reliability in terms of technology and safety; Secondly, whether there can be a sustainable profit model in commercial promotion.
Wedbush analyst Dan Ives previously wrote in an investor report that Tesla's self driving taxis will be a "new chapter" in Tesla's growth. We believe this is a critical moment for Tesla as the company prepares to release its years long hidden Robotaxi development, while Musk and his team articulate the company's future vision, "said Ives.
On December 11th local time, Tesla's stock price hit a historic high, with a market value exceeding $1.36 trillion, and Musk became the first billionaire in history to have a personal net worth exceeding $400 billion.