General Motors (GM) will withdraw from the Cruise robotaxi sector.

General Motors (GM) announced on Tuesday its decision to cease funding and withdraw from the development of robotaxis at its majority-owned subsidiary, Cruise, marking a significant setback for the automaker that had prioritized this advanced technology initiative.

The company stated that it would discontinue financial support for the robotaxi project due to the substantial time and resources required to scale the business, coupled with the intensifying competition in the robotaxi sector. GM has invested over $10 billion in Cruise to date.

Following this announcement, GM's stock experienced a 3.2% increase in after-hours trading on Tuesday.

In 2023, GM's CEO, Mary Barra, projected that the Cruise division could potentially generate $50 billion in annual revenue by the year 2030.

"This decision is part of a broader strategy that GM has been implementing, emphasizing our commitment to adopting the appropriate technologies for the future of our company and the industry, while also demonstrating our dedication to executing with agility and efficiency," she remarked on Tuesday.

Several of GM's rivals have already halted funding for their autonomous driving initiatives, citing the high costs and challenges associated with developing such advanced technologies. In October 2022, Ford Motor Company redirected its investments away from its Argo AI division, which was also backed by Volkswagen, ultimately winding down that venture. Ford continues to pursue advanced driver assistance systems internally, distinct from the fully autonomous technologies being developed at Argo AI.

Last month, Cruise acknowledged that it had submitted a misleading report to influence a federal investigation and agreed to pay a $500,000 criminal fine as part of a deferred prosecution agreement. The Justice Department indicated that Cruise failed to provide critical information regarding an October 2023 incident in which one of its robotaxis in San Francisco collided with and seriously injured a pedestrian.

GM anticipates that this restructuring will result in annual savings exceeding $1 billion once the plan is fully implemented by the end of June.

General Motors (GM), which currently holds approximately 90% of Cruise, has entered into agreements with other shareholders that will increase its stake to over 97% and intends to acquire the remaining shares.

In July, GM announced its decision to cease the development of a proposed robotaxi that would operate without a steering wheel or any human controls.

In 2022, GM submitted a petition to the National Highway Traffic Safety Administration (NHTSA) requesting authorization to deploy up to 2,500 self-driving Origin vehicles each year, which would lack human controls such as brake pedals or mirrors. The agency has yet to respond to this request, and GM has indicated that regulatory uncertainties influenced its decision.