Daimler has taken a "reality check" on self-driving taxis, acknowledging that making them safe is proving harder than first thought amid questions over their future earnings potential.
Daimler will "rightsize" its spending level on robotaxis and self-driving technology will more likely be applied to commercial vehicles for freight companies on long haul routes, CEO Ola Kallenius told journalists on Thursday at the company's investor day in London.
Automakers raced to develop self-driving vehicles after Google presented a prototype car in 2012, leading Daimler to develop an autonomous Mercedes-Benz.
The idea of fleets of robotaxis picking up and ferrying customers around cities gained traction, driven by the stellar growth of ride services such as Uber and of delivery services firms.
However, costs and regulatory hurdles have spiraled, leading to a reassessment of the business potential.
"There has been a reality check setting in here," Kallenius said.
Ensuring that self-driving cars are 100 percent safe in crowded urban areas is proving to be a bigger challenge than engineers had assumed a few years ago, Kallenius said.
Even if Daimler is able to make robotaxis safe, the benefits of entering the crowded ride-hailing business with self-driving cars remain unclear, he said.
"The full scale deployment would tie up a lot of capital with some uncertainties around the earnings potential," he said. "At this juncture we said to be the first one, does not make sense."
BMW and Daimler said in July they have entered into a long-term development partnership to develop highly automated driving functions to enable "hands off" autonomous driving on highways as well as automated parking.
Daimler has another project with supplier Robert Bosch to perfect technology for fully driverless cars.
Volkswagen Group has said it is setting up an autonomous driving unit led by a former Apple executive as it seeks to commercialize autonomous driving on a large scale by the middle of the next decade.
In July, VW announced closer cooperation with Ford Motor in autonomous driving and acquired a stake in Ford subsidiary Argo AI, which develops systems for autonomous vehicles.
Automotive News Europe contributed to this report