Al Root
The fallout from General Motors' decision to move away from self-driving robotaxis is starting to spread.
Microsoft said on Wednesday it would take an $800 million charge to write down its investment in Cruise -- GM's troubled robotaxi unit.
Cruise lost its license to drive in California in October 2023 after a Cruise robotaxi dragged a pedestrian. GM has decided to combine Cruise's operations into GM's driver assistance operations. Cruise will cease to be a separately held company.
Microsoft invested $2 billion in Cruise in 2021, which valued the operation at $30 billion. Microsoft lost 40% of its money.
GM owns about 90% of Cruise -- before buying out remaining partners -- but it doesn't mean GM has a $10 billion-plus write-down coming. It invested at different levels over the years. GM initially invested in Cruise in 2016 for an undisclosed sum. It was likely hundreds of millions of dollars.
GM didn't immediately respond to a request for comment about the purchase price or any potential write-down.
GM stock dropped 1.3% on Wednesday after announcing its decision Tuesday evening. The S&P 500 was up 0.8% and the Dow Jones Industrial Average fell 0.2%.
Robotaxi news seemed to spread throughout the market. Tesla stock added 5.9%, closing at a record high. Alphabet shares added 5.5%. Alphabet and Telsa are seen as the last entities standing in the race to deliver robotaxi service.
Alphabet's Waymo has made a lot of progress with self-driving cabs. It completes more than 150,000 driverless rides a week. Tesla hosted a Robotaxi Day to update investors on its plans and technology in October. It plans to launch a self-driving cab service in late 2025.
Uber Technologies and Lyft shares dropped 5.8% and 4.8%, respectively. Investors are worried their ride-hailing services can be disrupted by the tech giants.
Write to Al Root at allen.root@dowjones.com
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(END) Dow Jones Newswires
December 11, 2024 20:00 ET (01:00 GMT)
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