GM Shares Are Dipping Wednesday: What's Going On?

Zinger Key Points

General Motors is discontinuing Cruise's robotaxi development, citing high costs and competition, and shifting focus to personal AV tech.
Cruise co-founder Kyle Vogt criticized the move, while analyst John Murphy backed GM’s strategy, stating it improves cash flow long-term.
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General Motors inc. GM shares are trading slightly lower Wednesday after the company announced it would stop funding Cruise’s robotaxi development.

What To Know: Cruise will be integrated into GM's technical teams, with the focus shifting to personal autonomous vehicle (AV) technology and its Super Cruise driver-assistance system instead. GM cited high costs, increased competition and long timelines for scaling robotaxi operations as reasons for the decision.

CEO Mary Barra said the move aligns with GM's goal of disciplined spending while advancing transportation technology. The restructuring is expected to save over $1 billion annually starting in 2025.

Cruise co-founder Kyle Vogt criticized the decision, calling GM "dummies" on X. Vogt left the company in 2023 after regulatory scrutiny stemming from a Cruise robotaxi accident in San Francisco. Tesla CEO Elon Musk commented on GM's move, saying autonomous driving remains a difficult problem to solve without increasing vehicle costs.

Cruise has struggled after the 2023 accident and rising losses, which totaled $2.067 billion in the first nine months of 2024. Plans to develop its autonomous Origin vehicle were scrapped earlier this year due to cost and regulatory hurdles.

Bank of America analyst John Murphy stated that the decision reflects GM's confidence in the potential of personal AVs over robotaxi fleets. He noted that Cruise's robotaxi plans would have required substantial capital to scale, maintain and deploy vehicles, with limited near-term returns. Murphy said the pivot allows GM to streamline operations and improve its earnings and cash flow by 2025.

Murphy maintained his Buy rating on GM, with a price target of $85.

GM Price Action: General Motors shares were down 1.21% at $52.10 at the time of writing, according to Benzinga Pro.