The robotaxi market took a sharp turn this week as an industry leader made a shocking announcement.
General Motors (GM) , once hailed as a formidable rival for Tesla (TSLA) in the race to roll out a driverless car ahead of competitors, recently announced that it will be ending its Cruise robotaxi division, the company’s venture into self-driving, ride-sharing technology.
Don’t miss the move: SIGN UP for TheStreet’s FREE daily newsletter
The legacy automaker acquired a majority stake in Cruise in 2016, three years after the autonomous driving (AV) startup’s launch. Since then, it has faced challenges, though, as General Motors has struggled to compete in the race to roll out taxis that don’t require drivers.
Since announcing its pivot on Cruise away from ride-sharing, GM stock has fallen 3%. It’s not the only company hit by its decision, though. Regulatory filings show that one of the most prominent tech companies on the planet is also impacted.
Microsoft (MSFT) took a position in Cruise in 2021. In an 8K-form filed with the SEC on December 10, the tech leader noted General Motors’ decision to cease funding Cruise, stating:
“We expect to record an impairment charge of approximately $800 million in the second quarter of fiscal year 2025. This charge will be recorded in other income and expense and was not included in our second-quarter guidance provided on October 30, 2024. It is estimated to have a negative impact of approximately $0.09 to second quarter diluted earnings per share.”
Related: Google wants government agency to kill AI competitor’s deal
The charge is due to General Motors’ plans to acquire minority stakes from other investors, including Microsoft.
Microsoft’s relationship with Cruise dates back to January 2021, when it joined an equity funding round that netted the startup $2 billion and raised its value to $30 billion. Under this strategic partnership, Cruise agreed to use Microsoft’s Azure cloud computing platform for its autonomous vehicles.
On October 2, 2023, Cruise endured one of the most public failures of autonomous driving when one of its robotaxis made contact with an injured pedestrian, dragging her 20 feet after she had already been struck by another car while crossing the street.
According to Cruise, the vehicle detected a crash, prompting to stop before attempting to pull over, which resulted in the trapped pedestrian being pulled across the road, severely injuring her. On October 24, the California Department of Motor Vehicles suspended Cruise’s AV deployment and driverless testing permits.
