• General Motors will no longer fund its Cruise division's robotaxi development, the company said on Tuesday. 
• The Detroit automaker cited the increasingly competitive robotaxi market, capital allocation priorities and the considerable time and resources required to grow the business. 
• GM said it plans to instead "realign its autonomous driving strategy" to focus on advanced driver assistance systems and autonomous systems for use in personal vehicles.

After spending more than $10 billion on its robotaxi unit, General Motors is abandoning its Cruise driverless ride-hailing service.

The Detroit automaker on Tuesday said it will no longer fund its Cruise division's robotaxi development and will instead fold the unit into its broader tech team. GM shares rose 2.3% in extended trading.

"Cruise was well on its way to a robotaxi business — but when you look at the fact you're deploying a fleet, there's a whole operations piece of doing that," GM CEO Mary Barra said on a call Tuesday. Barra said GM would instead focus on the development of autonomous systems for use in personal vehicles.

GM cited the increasingly competitive robotaxi market, capital allocation priorities and the considerable time and resources necessary to grow the business as reasons for its decision.

The company will combine the majority-owned Cruise LLC with GM technical teams. Barra, who also serves as board chair of Cruise, said the companies have yet to determine how many employees will move to GM. Cruise has nearly 2,300 employees, a GM spokesperson told CNBC.

GM acquired Cruise in 2016. The automaker currently owns about 90% of Cruise and has agreements with other shareholders that will raise its ownership to more than 97%, GM said in a statement. GM anticipates it will complete the acquisition of remaining Cruise shares from outside shareholders by early 2025, CFO Paul Jacobson said Tuesday.

GM's current annual expenditure on Cruise amounted to about $2 billion, and the restructuring would cut that by more than half, Jacobson said.

Honda, an outside investor in Cruise, told CNBC that it had planned to launch a driverless ride-hail service in Japan in early 2026, but will now re-assess those plans and make adjustments if needed.

"Honda remains committed to various research and development initiatives aimed at providing new mobility solutions to our customers in Japan," a Honda spokesperson said on Tuesday. Honda said its total investment in Cruise was $852 million.

Cruise founder Kyle Vogt, who left the company in November 2023, posted on X after the announcement, "In case it was unclear before, it is clear now: GM are a bunch of dummies."

An early entrant in the U.S. robotaxi market, Cruise grounded its driverless operations in October 2023, shortly before Vogt's departure. The National Highway Traffic Safety Administration fined Cruise $1.5 million after the company failed to disclose details of a serious crash that month involving a pedestrian.

A third-party probe into the incident ordered by GM and Cruise found that culture issues, ineptitude and poor leadership fueled regulatory oversights that led to the accident. The probe also investigated allegations of a cover-up by Cruise leadership but found no evidence to support those claims.

In July of this year, GM announced that it would indefinitely delay production of the Origin autonomous vehicle as its Cruise self-driving unit attempted to relaunch operations. At that point, Cruise began to focus on using the next-generation Chevrolet Bolt for development of its autonomous vehicles.

As Cruise's operations were on hold, its robotaxi rivals gained ground.

Alphabet-owned Waymo has begun to operate commercial robotaxi services across several major U.S. metro areas, with the company last week announcing its plans to expand into Miami. Chinese autonomous vehicle makers including Pony.ai and WeRide have rolled out in overseas markets as well.

Tesla, meanwhile, showed off design concepts for a self-driving Cybercab at an event in October. Tesla still classifies the Autopilot and Full Self-Driving software in its vehicles as "partially automated driving systems," which require a human to be ready to steer or brake at all times. In an October earnings call, Tesla CEO Elon Musk said the company will launch a self-driving ride-hailing service in California and Texas as early as 2025.

SoftBank-funded Wayve is testing its autonomous vehicles in San Francisco, and Amazon-owned Zoox is also testing its autonomous vehicles, which do not feature steering wheels, in several U.S. cities including San Francisco.

SoftBank's Vision Fund was also an investor in Cruise, with a nearly 20% stake, until GM repurchased the shares for $2.1 billion in 2022.

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