General Motors shuts down self-driving unit, Microsoft (MSFT.US) takes $800M charge
Microsoft (MSFT.US) is expected to take a $800m impairment charge in the second quarter related to its minority stake in Cruise, the self-driving unit of General Motors (GM.US), which will have a negative impact of about 9 cents per share, the company said in January 2021. The $800m charge will be against the backdrop of GM's decision to shut down its Cruise autonomous taxi project.
Microsoft's January 2021 minority investment in Cruise was part of a $2bn investment in the self-driving car startup, which is majority-owned by GM. The move gave the Redmond-based software maker a foothold in the emerging connected car services market, while rival Alphabet (GOOGL.US) through its Waymo division has direct exposure to the field.
GM said on Tuesday it would no longer fund the development of Cruise's self-driving taxis, instead integrating the autonomous vehicle unit into its broader technology team. The company said the decision was driven by the increasingly competitive self-driving taxi market, capital allocation priorities and the amount of time and resources needed to develop the business. It added it planned to "reposition its autonomous strategy" to focus on advanced driver assistance systems and self-driving systems for personal vehicles.
GM currently owns about 90 per cent of Cruise and has agreed with other shareholders to increase its stake to more than 97 per cent, CFO Paul Jacobson said on Tuesday. The company expects to complete the acquisition of the remaining Cruise shares from external shareholders by early 2025.
Cruise, an early entrant in the US self-driving taxi market, has struggled and in October 2023 suspended its self-driving taxi service after a crash involving one of its self-driving taxis in San Francisco, a regulatory clash and a suspension of its licence to operate self-driving taxi services in California.
GM announced in July it would indefinitely delay production of Cruise's self-driving truck, Cruise Origin, despite the company's attempts to restart operations. Since then, Cruise has focused on developing its self-driving cars using next-generation Chevrolet Bolts.