These companies stand to gain after GM drops out of robotaxi race

The long road to the robotaxi revolution has come to an end… for General Motors (NYSE:GM). The company, which has been developing driverless taxis under its Cruise brand, has pulled the plug on the project due to the amount of time and resources needed to scale the business, as well as “an increasingly competitive robotaxi market.” It’s a big step back for the automaker, which has plowed more than $10B into Cruise since 2016, and also comes along with plans by GM (GM) to scale back investment in electric vehicles.

Backdrop: Cruise has been in hot water since last year. Its license to offer robotaxi rides in California got suspended after one of its robotaxis dragged a pedestrian for 20 feet and it just admitted to submitting a false report to influence a federal investigation. Uber (UBER) also gave up on its ambitions following a fatal self-driving crash in 2020, with its operations being absorbed by Aurora (AUR), while Lyft (LYFT) left the driverless road in 2021 and Ford (F) shuttered Argo AI in 2022. Notable reports have also suggested that Apple’s (AAPL) Project Titan, which was aiming for an autonomous electric vehicle, got disbanded this past February.

While halting its robotaxi efforts (which requires zero human intervention), GM (GM) will focus on driver assistance technology for personal vehicles by combining its know-how from Cruise with its technical teams. The restructuring is expected to save the company $1B annually once the plan is completed, expected to occur in the first half of 2025. GM (GM) CEO Mary Barra previously said the Cruise business could generate $50B in annual revenue by 2030, but it appears that reality has now hit the road.

Still in the game: The clear front-runner in the robotaxi revolution is Waymo by deep-pocketed Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), which just expanded robotaxi services in Los Angeles and Miami. Next up is Tesla (NASDAQ:TSLA), which has staked its future on the driverless Cybercab (most recently promised for 2026). What has made things so complicated is the myriads of inputs that are needed to achieve near-100% accuracy, and the sheer costs of engineering and manufacturing to support the new technology. Other drivers in the race include Zoox by Amazon (NASDAQ:AMZN), as well as global players like Apollo Go by Baidu (NASDAQ:BIDU) in China.

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