By Nora Eckert and David Shepardson

DETROIT (Reuters) – General Motors had to exit its cruise robotaxi business, most Wall Street analysts agreed on Wednesday, but the automaker’s decision to do so was still a disappointing end to an operation , which GM had touted as a potential $50 billion revenue generator by 2030.

The largest U.S. automaker on Tuesday pulled the plug on Cruise after assessing further investments needed in a competitive environment, executives said, adding that they intend to integrate some of Cruise’s talent into GM to develop driver assistance systems to continue.

“We consider the news to be a step in the right direction for GM as we believe investors have lost patience with the large outlays (approximately $10 billion) associated with robotaxi development and very little of the investment,” said Garrett Nelson, an analyst at CFRA Research wrote.

GM shares rose 3% in after-hours trading on Tuesday immediately following the announcement, but gave up those gains during Wednesday’s regular session to close down 1.3%.

Nelson said the announcement was “a black eye to the credibility of GM management, which as recently as last year told investors that the cruise business could generate $50 billion in annual revenue by 2030.”

Speaking to reporters Wednesday evening, GM CEO Mary Barra explained why the automaker was optimistic about Cruise.

“At the time, we really felt like we were getting our vehicles to market quicker than was the case,” Barra said, adding, “There was definitely a regulatory component where we didn’t have the right relationships with our regulators have built.”

Cruise came under scrutiny after an October 2023 accident in which one of his robotaxis struck and seriously injured a pedestrian in San Francisco after she was struck by another vehicle. Last month, Cruise admitted submitting a false report to influence a federal investigation and agreed to pay a $500,000 fine as part of a deferred prosecution agreement with the U.S. Justice Department.

So far this year, GM has far outpaced its competitors. Its stock is up 45% for 2024, while Ford’s is down 14% and Stellantis’ is down 37%.

“I hope you see us being proactive in decision-making,” Barra said, while also facing other questions about cost-cutting measures the automaker is taking as it navigates turbulence in electric vehicle demand, changing technologies and a new presidential administration coped.

GM recently scaled back its electric vehicle plans, sold a stake in one of its joint-venture battery factories and posted a $5 billion loss in its China business as it restructured. GM is now focusing on its core business: making gasoline-powered pickup trucks and other large vehicles.

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