Microsoft is set to take an $800 million hit due to General Motors’ decision to shut down its self-driving car subsidiary, Cruise. The impairment charge, disclosed in a regulatory filing, stems from Microsoft’s 2021 investment in the robotaxi company. According to the filing, the charge will be recorded under other income and expense and was excluded from Microsoft’s second-quarter guidance shared on October 30, 2024. The impact is estimated to reduce second-quarter diluted earnings per share by approximately $0.09.
General Motors, which owns about 90% of Cruise, revealed plans to increase its stake to over 97% by buying back shares from other minority investors, including Microsoft, Walmart, SoftBank, T. Rowe Price, and Honda. GM has poured more than $10 billion into Cruise since acquiring the startup in 2016 for $1 billion. Initially aiming to commercialize autonomous vehicle technology via a robotaxi business, the automaker announced on Tuesday it would absorb Cruise into its broader operations. The shift redirects Cruise’s resources toward developing driver assistance systems and eventually fully autonomous personal vehicles.
Cruise gained substantial backing in January 2021, raising $2 billion in a round that included Microsoft, GM, and Honda. That round boosted Cruise’s valuation to $30 billion and cemented a long-term strategic partnership with Microsoft. The partnership envisioned Cruise leveraging Azure, Microsoft’s cloud and edge computing platform, for its autonomous ride-hailing services.
The fallout from Cruise’s shutdown extends beyond Microsoft. Honda, another minority investor, announced on Wednesday it would cease funding a joint venture with GM and Cruise aimed at launching a robotaxi service in Japan.
GM’s strategic pivot underscores the challenges of bringing robotaxi services to market, despite significant investments from both itself and external partners.
Featured image courtesy of Government Technology
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