General Motors Stock In Focus After Automaker Hits The Brakes On Cruise Robotaxi: Retail Still Unconvinced

General Motors shares opened slightly higher on Wednesday after the automaker announced it would halt funding for its Cruise robotaxi program to focus on integrating autonomous technology into personal vehicles. 

The company cited the significant resources required to scale the robotaxi business in a highly competitive market as a primary factor behind the decision. 

GM plans to redirect efforts toward developing advanced driver-assistance systems (ADAS), including its hands-free Super Cruise technology, and will consolidate Cruise’s technical teams into its broader strategy for personal vehicle autonomy.

During a conference call, GM CEO Mary Barra reportedly described the shift as an opportunity to simplify operations and accelerate progress in areas aligned with the company’s core business. 

GM owns a 90% stake in Cruise and expects to restructure the unit by mid-2025, a move projected to save over $1 billion annually and reduce Cruise’s current $2 billion yearly expenditure by more than half. 

"We're always looking to drive capital efficiency, and that's when we look at the amount of money to deploy a robotaxi business and then to maintain that business and grow it," Barra reportedly said on the call. "A robotaxi business is not General Motors' core business."

Morgan Stanley analyst Adam Jonas maintained an ‘Equal Weight’ rating with a $54 price target on GM, expressing optimism about the decision. 

Jonas said most investors had not significantly factored Cruise’s robotaxi potential into GM’s valuation and viewed the shift as a practical way to address ongoing losses at a time when “better capitalized players - like Waymo and Tesla (TSLA) - continue to push the L4 autonomous ridesharing/robotaxi market into the next era.”

GM sentiment and message volume on Dec 11 as of 9:45 am ET | source: Stocktwits

Despite the strategic realignment, retail sentiment on Stocktwits remained ‘bearish,’ with increased message volume reflecting concerns about GM’s competitive positioning in the autonomous vehicle market. 

GM shares are up more than 45% year-to-date. 

However, the latest decision has sparked mixed reactions as investors weigh the cost savings against potential long-term opportunities in autonomous ride-sharing.

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