Cruise, Motional backers slash robotaxi funding

Listen to this article

The road continues to be bumpy for robotaxi developers. Earlier this week, Cruise and Motional, two leading U.S.-based robotaxi companies, lost major funding sources that could significantly alter their futures.

Let’s start with Cruise. And this news shouldn’t be shocking if you’ve been following Cruise for the past few months. General Motors, which acquired Cruise in 2016, said this week it will cut spending on the robotaxi unit by about $1 billion in 2024.

What is surprising is that the cuts seem more significant than previously thought. GM said in November 2023 that it would reduce spending on Cruise by “hundreds of millions.”

According to GM financial documents, GM has lost a preposterous $8.2 billion on Cruise since 2017. GM also said Cruise lost $2.7 billion in 2023, compared with a loss of $1.9 billion in 2022.

However, GM CEO Mary Barra insisted this week that Cruise still has a future. “We are committed to Cruise,” she said. “When we look at the technology, the foundational technology is sound. We had already demonstrated and validated externally that Cruise technology is already safer than a human driver.”

While Barra didn’t provide specifics about how Cruise will relaunch, GM dropped some hints on Feb. 1 at the J.D. Power Auto Summit in Las Vegas. According to the Detroit Free Press, GM president Mark Reuss said at the event that it will likely take Cruise four to five years to earn back the trust of the public.

“In the next four to five years, you’ll see, hopefully, we regain that trust,” he said. “We continue on the technical progress for that.”

“I’d say in the next one to two years, we return back to the roads with great products and great delivery for both the taxi piece of it, but also delivering goods to people that can’t, don’t have mobility perhaps, or for companies that need an autonomous delivery system,” added Reuss. “So we’ll do that. And I think we’re capable of doing it.”

Cruise tries to come back from safety setbacks

Cruise has been in freefall since an incident on Oct. 2, 2023. A Cruise robotaxi dragged a woman after she was hit by a different car driven by a human. After being hit by the first car, the woman was thrown into the path of the Cruise vehicle, which didn’t brake in time to avoid her.

Following the incident, the California Department of Motor Vehicles (DMV) called Cruise’s robotaxis a risk to the public and suspended its autonomous vehicle permits.

This then sent Cruise into a tailspin. Cruise paused its robotaxi operations nationwide in mid-October, and co-founder and CEO Kyle Vogt resigned on Nov. 19. In mid-December, Cruise laid off 900 employees, or 24% of its workforce.

Before all this, Cruise was running or testing robotaxi services in San Francisco, Austin, Houston, and Phoenix, with plans to expand to more than a dozen cities in 2024. According to co-founder and former chief product officer Dan Kan, who also recently stepped down, Cruise was giving up to 10,000 autonomous rides per week.

Aptiv no longer funding robotaxi developer Motional

But Cruise is not alone. Motional, the $4 billion joint autonomous vehicle venture created in 2017 by Hyundai and Aptiv, lost one of its main financial backers. Aptiv, a leading automotive parts supplier, said it will stop further funding after incurring millions in losses.

During this week’s earnings call, Aptiv said its 2024 profit forecast includes a non-cash equity loss of about $340 million related to Motional’s losses.

“While our Motional joint venture continues to make progress on their technology roadmap, we’ve decided to no longer allocate capital to Motional and are pursuing alternatives to further reduce our ownership interest,” Aptiv CEO Kevin Clark said in the call.

“The costs related to delivering the tech, principally in and around hardware, really make it challenging from an adoption standpoint in the mobility on-demand market,” he added.

Motional started testing its robotaxis at night in Las Vegas in Feb. 2023. | Credit: Motional

Motional to continue pursuing roadmap, partnerships

Motional is testing its autonomous vehicles with human safety operators behind the wheel in Boston, Pittsburgh, Las Vegas, Los Angeles, and Singapore. At CES 2024, Motional announced plans to work with Kia on a next-generation vehicle that will enter commercial operations later this decade.

Joe Massaro, chief financial officer at Aptiv, said Motional is “exploring steps to reduce a significant portion of our common equity while working within the construct of the joint venture agreement.”

Motional released a statement that said: “We’re confident in our funding roadmap and are well-positioned for the next phase of our commercialization. Our team is focused on scaling our driverless services, expanding Motional’s commercial partnerships, and furthering development on Motional’s next-generation robotaxi in collaboration with Kia. Aptiv and the Hyundai Motor Group remain Motional shareholders, and there are no ownership updates at this time. Motional is uniquely positioned through our strategic partnerships with our shareholders, and we continue to have their strong support and collaboration.”

Follow along here, but Aptiv started out as Boston-based nuTonomy in 2013. It was founded by Karl Iagnemma and Emilio Frazzoli and had early success testing autonomous vehicles on public roads near Boston’s Seaport District.

Automotive parts supplier Delphi acquired nuTonomy in 2017 for $450 million. But Delphi soon split into two companies, one of which was Aptiv. Hyundai and Aptiv partnered in 2017 on Motional.