Legacy automaker General Motors (GM) has decided to exit its robotaxi business, calling it “expendable,” as losses mount with no success in sight. The company runs its autonomous taxi business through its fully-owned subsidiary, Cruise. The unit will now be included in the segment that works on driver assistance technology for personal vehicles. GM did not divulge any more details about the workforce or resources. GM announced its decision yesterday, pushing the shares up nearly 3% in after-hours trading.
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GM’s Tough Journey with Robotaxi Business
The unit has faced several roadblocks and challenges in running the business since its inception in 2016. General Motors has invested over $10 billion in the unit. The company said that it does not intend to spend any more time or resources on the business, given the highly competitive robotaxi market. The exit will help save GM roughly $1 billion annually.
The decision puts in perspective the difficulties faced by one of the largest automakers in scaling a fairly nascent but progressing self-driving taxi business. The robotaxi market is highly regulated, and GM has had its own share of problems with the National Highway Traffic Safety Administration (NHTSA). Despite the challenges, the company is committed to enhancing autonomous driving features in the private auto segment.
A hit-and-drag case of a pedestrian on California streets led to license suspension and forced GM to pull off all its robotaxis from the state. The company also admitted to submitting a false report to the NHTSA related to the crash to resolve the criminal case and agreed to pay a fine of $500,000. Meanwhile, other robotaxi companies, including Ford Motor (F) and Alphabet’s (GOOGL) Waymo, have also faced some hurdles in ramping up their businesses.
Is GM Stock a Good Buy Right Now?
Analysts remain divided on General Motors stock owing to several issues. On TipRanks, GM has a Moderate Buy consensus rating based on ten Buys, five Holds, and one Sell rating. Also, the average General Motors price target of $59.31 implies 12.5% upside potential from current levels. Year-to-date, GM shares have gained 48.4%.
