GM Cuts Funding for Cruise Robotaxi, Uber and Lyft Stocks Plunge

Following General Motors Co (NYSE:GM)'s announcement that it will cut funding for Cruise's robotaxi development, the shares of ride-hailing companies Uber Technologies Inc (NYSE:UBER) and Lyft Inc (NASDAQ:LYFT) dropped in value. GM's withdrawal of support comes as the company evaluates the significant investment and time required to expand its robotaxi business in an increasingly competitive autonomous vehicle (AV) sector.

Uber's stock fell by 3.4%, while Lyft's shares experienced a sharper decline of 6.2%. GM's decision to stop financial support for Cruise's robotaxi development is significant, as Cruise had previously partnered with Uber.

Bank of America analyst Justin Post noted that market concerns regarding Uber may stem from the potential concentration of autonomous vehicle technology among a limited number of players. However, Post suggested that the proliferation of autonomous vehicles is likely to be beneficial for Uber in the long run. Despite this potential benefit, he acknowledged that uncertainties surrounding the AV industry and associated risks are likely to persist.

GM's announcement signals a strategic shift as it reassesses its involvement in the autonomous vehicle market, which could have implications for other companies investing in and partnering around AV technology.