Microsoft takes a $800M hit as General Motors discontinues Cruise robotaxi project
The autonomous ride hailing industry has suffered another major blow as General Motors (GM) announced it will discontinue funding for its Cruise robotaxi project, shifting focus toward autonomous technology for personal vehicles. The decision leaves a trail of challenges for stakeholders, including Microsoft, which revealed an $800 million impairment charge tied to the unraveling of Cruise.
GM’s retreat from robotaxis
GM’s decision to wind down Cruise marks a significant pivot in its autonomous vehicle strategy. The automaker cited the increasing competition in the robotaxi market, alongside the substantial resources required to scale the business, as reasons for the move.
“Refocusing on personal vehicles allows us to leverage autonomous technology where we see the most potential for growth and value creation,” said Mary Barra, GM’s CEO.
Cruise has faced significant setbacks in recent times, starting with the revocation of its driverless testing permit in Californias in October 2023. This was after a serious incident in which one of Cruise’s vehicles hit and dragged a pedestrian. Adding to the turmoil, Cruise was forced to suspend all U.S. operations and slash 900 jobs, about a quarter of its workforce, in December 2023.
The company’s co-founder Kyle Vogt departed shortly after the incident. Following GM’s announcement, Vogt did not waste the opportunity to call them out. “In case it was unclear before, it is clear now: GM are a bunch of dummies,” he wrote on X.
Impact on Microsoft
As a minority investor in Cruise, Microsoft is among the companies feeling the ripple effects of GM’s decision. In a filing with the U.S. Securities and Exchange Commission (SEC) this week, Microsoft disclosed that it expects to record an $800 million impairment charge in the second quarter of fiscal year 2025.
The charge, categorized under "Other income and expense," will reduce Microsoft's diluted earnings per share by approximately $0.09 for the quarter. This unexpected financial impact was not accounted for in Microsoft’s earlier guidance provided on October 30.
Microsoft’s involvement in Cruise began in January 2021, when the company joined Honda and other institutional investors in a $2 billion funding round, valuing Cruise at $30 billion. Microsoft was also Cruise’s preferred cloud provider, with CEO Satya Nadella touting the partnership as a step toward “making autonomous transportation mainstream.”
Microsoft now faces a significant financial write-off, underscoring the risks associated with high-profile investments in experimental technologies.
Challenges in the robotaxi industry
GM’s decision follows a broader trend of major automakers retreating from autonomous taxi projects. In 2022, Ford and Volkswagen shuttered their joint self-driving venture, Argo AI, citing similar challenges in scaling the technology.
Despite these setbacks, competition in the robotaxi industry remains fierce, with Tesla, Waymo (owned by Alphabet), and Amazon’s Zoox among the key players vying for dominance. Tesla recently unveiled its Cybercab robotaxi, showcasing Elon Musk’s commitment to cracking the market.
What’s next?
While GM winds down Cruise, it will increase its ownership stake to over 97% by acquiring shares from other stakeholders. The company has yet to clarify the fate of Cruise’s remaining employees or its long-term strategy for integrating autonomous technology into personal vehicles.
As for Microsoft, the $800 million charge is a substantial amount, but only represents a fraction of the tech giant’s overall earnings. They will be just fine.
