GM’s Cruise robotaxi business has lost almost $5 billion since 2018

GM’s Cruise increasingly burning cash especially after charging for rides

General Motors robotaxi is burning cash for the company. In its second-quarter earnings report, the company stated that it lost $500 million on Cruises. It amounts to around $5 million a day.

GM's Cruise Robotaxi business has lost $5 billion since 2018
Image credits – Tech Crunch

It appears that the company’s expenses for its self-driving technology are increasing. It is especially after the company starts charging its customers in San Francisco. In the first half of the year, the company lost $900 million. Last year during the same period, the company lost around $600 million.

Despite the mounting expenses, GM CEO Mary Barra has stated that she remains bullish on Cruise. She also reaffirmed the company’s forecast that Cruise could generate about $50 billion a year in revenue from offering autonomous vehicle services and technology by the end of the decade.

Cruise’s chief executive, Kyle Vogt, told analysts earlier this week that the robotaxi unit is pursuing a market with massive potential. “When you’ve got the opportunity to go after a trillion-dollar market, you don’t casually wade into that. Aggressively pursuing the market is a competitive advantage,” Vogt said. Wall Street analysts, however, are skeptical. In a note, Morgan Stanley analyst Adam Jonas noted that while autonomous driving technology is exciting, investor expectations may be poised for a big reset soon.

Autonomous driving

“Can this unit (or any other AV/robotaxi effort) scale without exacerbating the losses? We are fans of autonomy with a 10- to 20-year view, but believe investor expectations are due for a major reset,” Jonas wrote.

Cruise is considered one of the industry’s leaders in autonomous driving. However, achieving autonomy is proving to be an extremely difficult task. Fellow industry leader Waymo is yet to expand its robotaxi service meaningfully, and electric vehicle maker Tesla, whose FSD Beta software has been testing on city streets since October 2020, is still dependent on a human driver monitoring the system today.

While every automaker has its own ways to keep up with advancing technology and also bring in cash flow. GM’s cruise includes LIDAR sensors are other techniques to have accurate results. The expenses are huge. If the company were to reach a higher level of autonomous software, then the business would finally bring profits. Many automakers have implemented their technology by including part of its in their high-end vehicles. Like auto lane parking and other small features are being sold commercially. Though high-end GM vehicles also have such features. Most vehicles are yet to be launched into the market officially. However, this is only far fetched opinion.