Shares of ride-hailing companies Uber Technologies Inc (NYSE:UBER) and Lyft Inc (NASDAQ:LYFT) declined following an announcement from General Motors Co (NYSE:NYSE:GM) that it will cease funding for the development of Cruise's robotaxi. The cessation of support by GM comes as the company evaluates the significant investment and time required to expand the robotaxi business amidst a growing competitive landscape in the autonomous vehicle (AV) sector.
Uber's stock experienced a 3.4% decrease, while Lyft's shares saw a sharper decline of 6.2%. The decision by GM to halt its financial backing of Cruise's robotaxi development is noteworthy, as Cruise had previously formed a partnership with Uber.
Bank of America analyst Justin Post commented on the situation, noting that the market's concern 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 to Uber in the long run. Despite this potential benefit, he acknowledged that the uncertainty surrounding the AV industry and the risks associated with headlines will likely persist.
The announcement by GM signals a strategic shift as it reassesses its involvement in the autonomous vehicle market, which could have implications for other companies in the space, including those with partnerships and investments in AV technology.
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