On Wednesday, a consensus among most Wall Street analysts emerged that General Motors should exit its Cruise robotaxi venture, though the automaker’s choice to do so still marks a disappointing conclusion for a project that GM had highlighted as a possible $50 billion revenue source by 2030.
The leading U.S. automaker decided on Tuesday to end its involvement with Cruise after assessing the substantial ongoing investments required within a competitive sector, company executives mentioned, noting that they plan to integrate some of Cruise’s expertise into GM for advancing driver assistance technologies.
“We view this development as a positive move for GM, as investors appeared to be growing impatient with its significant expenditures (around $10B) linked to robotaxi initiatives yielding minimal results,” stated Garrett Nelson, an analyst at CFRA Research.
After the announcement on Tuesday, GM shares rose by 3% in after-hours trading but reversed those gains during regular trading on Wednesday, closing down approximately 1% by late afternoon.
Nelson remarked that the announcement represents “a setback for the credibility of GM’s management, which, just last year, assured investors that the Cruise division could yield $50 billion in annual revenues by 2030.”
Year-to-date, GM has significantly outperformed its rivals. Its stock is up 45% for 2024, while Ford’s shares have decreased by 14%, and Stellantis has seen a 37% decline.
Scheduled to speak with reporters Wednesday evening, GM CEO Mary Barra is expected to address questions regarding the company’s cost-reduction strategies as it adapts to fluctuating EV demand, evolving technologies, and a new presidential administration.
“This decision is part of a series of actions by GM that highlight our commitment to adopting the right technologies for the future of both our company and the industry, and it underscores our dedication to acting swiftly and effectively,” Barra informed analysts on Tuesday.
Recently, GM has reduced its electric vehicle ambitions, divested a stake in one of its joint venture battery facilities, and reported a $5 billion loss in its China operations while restructuring. GM is now intensifying its focus on core business: manufacturing gasoline-powered trucks and larger vehicles.
A 0.3% increase in shelter expenses, primarily for hotel and motel accommodations, was responsible for nearly 40% of the rise in the CPI. Shelter costs increased by 0.4% in October, while lodging prices surged by 3.7%, the largest increase since October 2022, following a 0.5% rise in October.
Food prices rose by 0.4% after a previous increase of 0.2% in October. Prices for groceries jumped 0.5%, with egg prices skyrocketing by 8.2% due to an avian flu outbreak.
The prices of beef and nonalcoholic beverages also experienced increases. However, the costs of cereals and baked goods fell by 1.1%, marking the most significant decrease since the government began tracking this data in 1989. Gasoline prices increased by 0.6%, while the cost of piped gas rose by 1.0%.
Cruise faces stiff competition from well-funded rivals such as Alphabet’s Waymo, Baidu, and Tesla, analysts noted. Waymo, which is broadening its autonomous ride-hailing services, continues to incur billions in annual losses.
According to Barclays, Alphabet, with over $100 billion in yearly earnings, can absorb the financial burdens of Waymo’s development. In contrast, GM is projected to achieve earnings between $14 billion and $15 billion for 2024.
“It’s evident from Waymo that an AV robotaxi business is best owned by an organization with substantial financial resources,” Barclays commented.
