San Francisco Cruise Robotaxi Folds Following $10 Billion In Losses

General Motors, the parent company of the San Francisco-based robotaxi firm Cruise, announced on Tuesday that Cruise would be folding following $10 billion in losses and a disastrous rollout attempt in San Francisco over the last few years.

In 2022 and most of 2023, Cruise enjoyed extensive growth in San Francisco and other cities in the U.S. alongside Google’s robotaxi service Waymo. In August 2023, Cruise had 300 vehicles driving around San Francisco at night and 100 during daytime hours, with Waymo only operating 250 vehicles during the day. While there were many complaints with the service, including reports of blocked traffic, blocking emergency workers, blocking mass transit, and other worrying behavior, the California Public Utilities Commission (CPUC) voted 3-1 in August to expand robotaxi services in San Francisco by being able to offer paid rides at any time during the day throughout the city, and not be constrained by prior geographic limits, designated operating hours, and paid ride limits.

However, this was to be short-lived. While there were numerous incidents involving Cruise robotaxis before the CPUC expansion, the number soon skyrocketed that month. The rapid expansion caused more accidents to occur – 10 Cruise robotaxis stalled and caused a major backup. Another taxi careened into a construction site and got stuck in wet concrete. A Cruise vehicle even caused a passenger injury when it crashed into a firetruck. Faced with more and more of the public opposing robotaxis, and concerns growing over their safety, Cruise announced on August 22, 2023 that their fleet of robotaxis would be cut in half.

Even with the reduced fleet, Cruise incidents still occurred at a high frequency. On October 2, 2023, a pedestrian who had just been struck by another car was struck by a Cruise vehicle despite otherwise stopped traffic, dragging the passenger for an additional 20 feet. Those accidents caused large-scale protests to break out statewide against driverless cars and robotaxi services.

Only days later on October 25th, the California DMV ordered Cruise to stop all operations in the state because of safety concerns over recent accidents. With San Francisco in doubt, and Los Angeles looking at ways to reign in robotaxis, Cruise announced on October 27th that they would be suspending operations nationwide because of safety concerns. In November 2023, Cruise then announced massive layoffs because of the suspension of operations, GM putting less money into Cruise in 2024, as well as the resignation of Cruise CEO Kyle Vogt and co-founder Dan Kan. Despite this, CPUC continued to look into Cruise accidents, in particular the October 2nd pedestrian dragging incident.

Last December, CPUC set up a court date to fine the company an additional $1.5 million over the October crash, as well as the firing of nine executives at the beleaguered company. It was also announced that they would be laying off over 900 employees, roughly 24% of their workforce, as a result.

While they got back on the road by May 2024, Waymo and Tesla autotaxis had taken a huge leap in the market share. Not only had they won over the San Francisco market, but they also made significant inroads into Los Angeles, Phoenix, and other places. Waymo in particular won over Californian markets by getting CPUC approval and having a safer record than Cruise. While Cruise had a much safer 2024, it was not enough to win back consumers, and on Tuesday, GM decided to axe robotaxis in favor of driverless consumer cars. Cruise had planned to be making $1 billion a year with Cruise by 2025. Instead, they now exit the market with $10 billion in total losses.

$10 billion in losses

“GM intends to combine the majority-owned Cruise LLC and GM technical teams into a single effort to advance autonomous and assisted driving. Consistent with GM’s capital allocation priorities, GM will no longer fund Cruise’s robotaxi development work given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market,” said GM in their press release on Tuesday.

“We know people everywhere love to drive their own vehicles but not in every situation, so it makes sense to develop autonomous technology for them,” GM CEO Mary Barra said later on Tuesday during an investor call. “Given the considerable time and expense required to scale a robotaxi business, and an increasingly competitive market, combining forces would be more efficient and therefore consistent with our capital allocation priorities.”

While Cruise had been expected to report large losses this year, many industry experts had expected that GM would keep Cruise in the robotaxi game. However, with Cruise now out of the market, Waymo and Tesla are now expected to be the big two for the time being. As of Tuesday, it is also unknown how many workers, how much in taxes, and how much more occupied office space San Francisco would lose as a result of Cruise shutting down.

“Get through all the corporate-ese that GM and their people were spouting off on Tuesday, and it boiled down to that Cruise had too many accidents, too many problems and cost GM too much money,” explained Charles Berg, a former auto industry advisor, to the Globe on Tuesday. “Cruise caused so many issues for the Bay Area, so they won’t likely be missed.

“As for San Francisco, they’ll lose out on Cruise going away. They’re still in the automated car market and may keep a presence in San Francisco. But it won’t be anything like what they had. This is yet another tech cautionary tale out of San Francisco. And a particularly expensive one for one of America’s largest companies. I mean, $10 billion in losses. You actually have to be trying to do that to make it possible.”

As of Tuesday, it is currently unknown how much in resources that GM will be pulling out of San Francisco.