Microsoft will have to admit to investors during its next earnings call that it lost $800 million betting on General Motors and its Cruise robotaxi plans as the automotive company officially halts development.
Microsoft’s latest Securities and Exchange Commission (SEC) filing has a disclosure buried in it that relates to the company’s $800 million dollar investment in GM’s Cruise robotaxi build out that was supposed to help spark a broader autonomous vehicle revolution. Rather than coasting on the winds of change, Microsoft is now readjusting investor earnings by diluting them $0.09 as it failed to update or disclose the $800 million miss in its Q2 guidance report.
In January 2021, Microsoft announced a minority investment in Cruise, an autonomous vehicle company which is a majority-owned subsidiary of General Motors Company (“GM”). On December 10, 2024, GM announced its intent to realign its autonomous driving strategy, no longer fund Cruise’s robotaxi development work, and pursue the acquisition of minority investor shares. As a result, we expect to record an impairment charge of approximately $800 million in the second quarter of fiscal year 2025. This charge will be recorded in other income and expense and was not included in our second quarter guidance provided on October 30, 2024. It is estimated to have a negative impact of approximately $0.09 to second quarter diluted earnings per share.
Unfortunately, for Microsoft, GM has run into the same headwinds as most other car companies exploring autonomous development and deployment, and as a result, is pivoting from fleet implementation of driverless technologies to a scaled back effort of advanced driver assistance systems (ADAS) for consumer cars.
General Motors (NYSE: GM) plans to realign its autonomous driving strategy and prioritize development of advanced driver assistance systems on a path to fully autonomous personal vehicles. GM will build on the progress of Super Cruise, the company’s hands-off, eyes-on driving feature, now offered on more than 20 GM vehicle models and currently logging over 10 million miles per month.
Beyond the expensive egg on its face, Microsoft is now tasked with salvaging its Azure-led partnership with Cruise as it gets absorbed into GM. With GM pivoting to bolstering its own ADAS that powers over 20 car models and is currently tracking 10 million miles a month, where does Microsoft’s Azure technology now fit in?
General Motors and Microsoft struck a separate partnership to help simplify GM’s software development processes using Azure and other AI products from Microsoft. However, the deal between Microsoft and GM was specific to the car company’s Ultifi end-to-end platform that appears to be aimed at delivering apps and services, and not powering autonomous technologies.
The technology involved with Ultifi will make use of Internet of Things (IoT) and sensory data, but to what extent it justifies a separate expensive collaboration between Microsoft and GM remains an unknown.
