Robotaxi reset: Cruise’s pivot has big implications for Uber, Tesla, and Waymo

Uber Technologies (NYSE:UBER) is being watched closely after General Motors (GM) announced that it is realigning its autonomous vehicle strategy to focus on building an advanced driver assistance system for its personal vehicles. Notably, the Detroit automaker will no longer fund Cruise’s robotaxi and ridehailing network development, but will combine the Cruise and GM technical teams into a single effort to advance its autonomous personal vehicles.

The announcement means that Cruise’s multi-year partnership with Uber (UBER) to deploy its AVs on the Uber platform starting in 2025 will change. When asked about the partnership with Uber, General Motors (GM) CEO Mary Barra did not specify what would come in the future. She said those are issues that have to be worked out from a Cruise perspective.

Bank of America analyst Justin Post said over the long-term, the firm still sees the potential for General Motors (GM) AVs to end up on Uber using “SuperCruise” self-driving software instead of the previous version of the Cruise Chevy Bolt. That is, if GM (GM) can achieve Level 4 autonomy.

BofA sees possible issues for Uber (UBER) in that it will have one less potential competitive AV partner to help drive down near-term AV costs, and noted that the announcement underscores the considerable capital needed to create an AV + ride hailing network service. That development suggests to BofA an even bigger moat for Tesla (TSLA) and Waymo (GOOG), which are unlikely to be capital constrained. On the positive side, Uber (UBER) has one less potential ride hailing network competitor in the market long-term, and the development is seen highlighting the potential value of Uber’s ride-hailing network for other AV OEMs.

Buy-rated Uber (UBER) is still seen as having multiple paths to becoming a major beneficiary of autonomous progress over the long term.

Shares of Uber (UBER) were down 0.71% in premarket action. General Motors (GM) was up 1.1%.