Recently, with the increasing popularity of self-driving taxis like Tesla's and Luobo Kuaipao, the concept of Robotaxi has gained significant traction, prompting various self-driving taxi companies to rush towards public listings. However, just as the market was heating up, a prominent automotive giant's Robotaxi program suddenly fell silent. This company was none other than GM. Why did GM withdraw from the market at its peak popularity? What are the objectives of GM, which has lost over 70 billion yuan?

I. GM's Loss of Over 70 Billion Yuan

According to NBD News, GM announced that due to the excessive time and costs required to expand the business scale, coupled with intensifying competition, it will cease funding support for the Cruise self-driving taxi project after nearly a decade of research and development, with investments exceeding $10 billion (approximately RMB 72.5 billion). The company will shift its R&D focus to autonomous driving technology for personal vehicles.

Affected by this news, GM's U.S. stock prices rose 2.2% after the market close on Tuesday. GM CEO Mary Barra stated in an investor meeting, "In an increasingly competitive market, self-driving taxis require a significant amount of time and capital to achieve scale, so consolidating resources aligns better with our capital usage strategy."

Cruise was founded in 2013 and acquired by GM for approximately $1 billion in 2016. At the time, Cruise was a Silicon Valley startup with only 40 employees. Within a few years, GM attracted billions of dollars in external investments from major companies such as SoftBank, Honda, and Microsoft.

It is reported that since acquiring Cruise in 2016, GM has invested a cumulative total of approximately $10 billion. CEO Mary Barra stated that the high costs of operating a fleet of self-driving taxis far exceed GM's core business and are unsustainable.

Although investors had long been urging GM to cut its losses, Mary Barra remained a staunch supporter of the Cruise project. This year, Mary Barra pushed for a complete reorganization of Cruise, replacing the founding team and appointing seasoned managers from the automotive and technology fields.

According to China Business News, Cruise currently employs approximately 2,300 people. GM stated that they will merge Cruise's technical team with their own and focus on developing assisted driving systems for personal vehicles. GM expects this reorganization to reduce the company's annual expenditures by $1 billion.

Cruise's founder, who left the company a year ago, expressed anger on X after GM's announcement, calling GM a group of fools.

According to NBD News, an insider who has worked at Cruise for many years told reporters, "From our grassroots employees' perspective, nothing major happened. Suddenly, today (December 10), all employees were informed that GM was canceling funding and halting the self-driving taxi business. A few months ago, it seemed like the company had many partnerships and the business was restarting. I've been working overtime these past few months to push forward with new projects and was preparing for tests this week, but suddenly it all collapsed. Most of us feel it was too sudden."

II. Why Did GM Suddenly Abandon Its Popular Robotaxi Program?

Faced with GM's incomprehensible decision to abruptly abandon its heavily invested self-driving taxi Robotaxi project, what is GM's rationale?

Firstly, Robotaxi is a Money-Burning Venture. Self-driving taxi projects have been accompanied by massive capital investments since their inception. After taking over the Cruise self-driving taxi project, GM's funds continued to drain rapidly. The cost of operating a fleet of self-driving taxis is extremely high, far exceeding what GM's traditional business core can bear.

On the one hand, technological R&D investment is a bottomless pit. To enable Robotaxi to operate safely and efficiently, continuous investment is required in sensor technology, algorithm development, high-precision map creation, data processing, and more. For example, advanced LiDAR, cameras, and other sensor equipment are expensive and require constant updates to improve performance. Developing complex self-driving algorithms also requires a large number of top engineers and research resources, and their labor costs, experimental equipment, testing sites, and other expenses constitute a heavy burden.

On the other hand, vehicle acquisition and maintenance costs cannot be overlooked. Vehicles used for Robotaxi operations often require special modifications and configurations to meet the needs of autonomous driving. These modifications not only increase the initial acquisition cost of the vehicles but also result in higher maintenance requirements and significantly higher repair costs due to the complexity of the autonomous driving system. Furthermore, to ensure the normal operation of the fleet, a large backend monitoring and dispatching system needs to be established, which also requires significant funds for construction and maintenance.

Therefore, for GM, these operating costs have become a key factor constraining its further development in the Robotaxi field.

Secondly, the Robotaxi Market has Become a Red Ocean. Although the Robotaxi market appears to be booming, competition is also extremely fierce. Tesla, with its leading position in electric vehicles and autonomous driving technology, has been exploring the possibility of a Robotaxi business. Waymo, a subsidiary of Google's parent company Alphabet and a pioneer in autonomous driving technology, has accumulated extensive experience in technology research and development and testing. Companies such as Wayve, invested by SoftBank, Zoox, a subsidiary of Amazon, and Luobo Kuaipao, a subsidiary of Baidu, have also joined this competitive landscape. In such a market environment surrounded by strong competitors, GM's Cruise faces tremendous competitive pressure.

In such a fiercely competitive market environment, GM faces tremendous pressure. Each competitor is going all in on technology research and development, market promotion, and partner expansion. For example, Waymo has conducted large-scale test operations in multiple cities, accumulating rich operational data and experience. Tesla, leveraging its huge electric vehicle user base, is expected to quickly expand its Robotaxi services. In comparison, although GM has made certain investments and progress in the Robotaxi project, it has not demonstrated a clear competitive advantage or unique differentiation strategy.

In this situation, if GM continues to blindly invest in the Robotaxi project, it may fall into an endless money-burning battle, with uncertain returns. As competition intensifies, market share competition becomes increasingly difficult, and profit prospects become increasingly bleak. Without a clear chance of winning, continuing to insist on the Robotaxi project is undoubtedly a risky move that will only continue to expand losses, further impacting GM's overall financial situation.

Thirdly, GM's Financial Constraints. As a giant in the automotive industry, GM is facing unprecedented challenges. In the traditional fuel vehicle business, with increasing global attention to environmental protection, the rise of new energy vehicles has had a significant impact on the fuel vehicle market. GM's fuel vehicle business has been declining, with sales and profits decreasing year by year. In the new energy vehicle sector, while GM is also actively deploying, it has yet to form a strong support system.

During this critical period of business transformation, GM's financial situation is not optimistic. On the one hand, the decline of the traditional fuel vehicle business has reduced its cash flow. On the other hand, the development of the new energy vehicle business requires significant capital investments, including R&D, production facility construction, and supply chain integration. With limited funds, it has become difficult for GM to allocate additional resources to support the Robotaxi project, which still lacks clear prospects.

Rather than continuing to burn money on the Robotaxi project, it is more practical to concentrate limited resources on assisted driving systems for personal vehicles, which can directly generate revenue and support business development. The assisted driving system for personal vehicles is more closely related to GM's traditional business, can better utilize existing production, sales, and service networks, and has a greater likelihood of achieving profitability or at least reducing losses in the short term.

Fourthly, the Future of Robotaxi. Currently, Robotaxi is still in its early stages of development, with typical growth project characteristics. This stage inevitably requires large-scale capital investment and may not yield significant returns in the short term.

From a technical maturity perspective, while autonomous driving technology has made some progress, many unresolved issues remain. For example, in complex weather conditions (such as heavy rain, heavy snow, dense fog, etc.) and special traffic scenarios (such as construction sites, traffic accident scenes, etc.), the reliability and safety of autonomous driving systems still need to be further improved. This means that continued investment in technology research and development is required to continuously optimize and improve the system.

Only companies with substantial capital and the confidence to continue investing are likely to see hope in the long-term development of Robotaxi projects. GM's retreat is not accidental. In the future market development process, as competition intensifies and project development deepens, other companies may also choose to withdraw or adjust their strategies for similar reasons. Market shuffling will continue, and only companies with strong capabilities in technological innovation, cost control, market expansion, and capital operation are likely to ultimately stand out in the Robotaxi field.

Therefore, GM's decision to abandon its popular Robotaxi project was not impulsive. Choosing to abandon it after investing over 70 billion yuan was a wise decision to cut losses and adjust strategic direction from a long-term business strategy perspective. This decision also presents another option for other industry participants.