The Future Fund LLC Managing Partner Gary Black highlighted on Tuesday that General Motors Co. (NYSE:GM) is abandoning its robotaxi ambitions to save $1 billion annually, marking a significant shift in the autonomous vehicle race.
What Happened: "Cruise and GM's technical teams will be combined into a single effort focused on developing autonomous and advanced driver safety technology for future models sold by GM," Black wrote on X, noting the strategic realignment of GM's autonomous driving efforts.
Black, a prominent Tesla Inc. (NASDAQ:TSLA) bull, emphasized GM's decision to exit robotaxi development "given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market."
"The move could clear the way for GM to begin licensing TSLA's full-self-driving technology," Black wrote on X.
$GM Cruise will exit the robotaxi business, a move that will save $GM $1B/year in annual costs. Cruise and GM's technical teams will be combined into a single effort focused on developing autonomous and advanced driver safety technology for future models sold by GM. GM said it...
— Gary Black (@garyblack00) December 10, 2024
Why It Matters: The move comes after Cruise suspended operations following an October incident where one of its vehicles dragged and injured a pedestrian. GM plans to increase its ownership in Cruise from 90% to 97% through shareholder agreements.
"GM is committed to delivering the best driving experiences to our customers in a disciplined and capital efficient manner," said GM CEO Mary Barra in a company statement. The automaker will now focus on expanding its Super Cruise driver assistance system, currently available in more than 20 vehicle models.
The retreat from robotaxis comes as Alphabet Inc.'s (NASDAQ:GOOGL) (NASDAQ:GOOG) Waymo expands its autonomous taxi service to more cities and Tesla targets a 2026 launch for its robotaxi business. The decision follows industry peers Ford Motor Co. (NYSE:F) and Volkswagen AG (OTC:VWAGY), who shuttered their self-driving venture Argo AI in 2022.
Price Action: General Motors' stock closed at $52.74 on Tuesday, up 0.057%. In after-hours trading, the stock rose by 2.20%, to $53.90. Year to date, the stock has gained 46.30%.
According to data from Benzinga Pro, General Motors has a consensus price target of $56.10 from 24 analysts, with a high of $96 and a low of $28. The three most recent ratings from Morgan Stanley, Mizuho, and Bernstein suggest an average price target of $57, indicating a potential upside of 5.75%.
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