General Motors' Cruise robotaxi unit has lost nearly $5 billion since 2018 and the losses are accelerating now that the company starts charging for rides in San Francisco.
GM said on July 26 it lost $500 million on Cruise during the second quarter of 2022 as it began charging for rides in a limited area of San Francisco in early June. The losses amount to more than $5 million a day, making Cruise's effort to transform autonomous driving technology from a long-term research project to a profit-making business a costly one.
Cruise's losses for the first half of the year deepened to $900 million from $600 million during the same period in 2021, when the company was not charging for rides. According to GM executives, higher compensation costs to keep staff on board after putting aside plans for an IPO represented one factor in the results.
General Motors CEO Mary Barra said on Tuesday she is still bullish on Cruise and reaffirmed a forecast that the business could generate $50 billion a year in revenue from automated vehicle services and technology by 2030.
Gallery: Cruise Origin Reveal
Cruise has $3.7 billion in cash at the moment and a $5 billion credit facility from GM's financial arm for buying automated Cruise Origin EVs from the automaker. However, if Cruise keeps burning money at the current rate, that cash would run out in less than two years.
Reuters notes that turning the losses around will depend on some factors that are out of GM’s control, such as winning approval from California regulators to greatly expand Cruise's hours of operation and enlarge the territory covered by its self-driving taxis.
In an investor presentation, GM said the permit from San Francisco was "a major event" in pursuing the $50 billion target. In February, Cruise petitioned the National Highway Traffic Safety Administration to grant exemptions to deploy up to 2,500 self-driving vehicles without steering wheels and brake pedals.
The NHTSA last week published the petition and opened it for public comment for 30 days. The petition is likely for the Cruise Origin self-driving vehicle, which GM wants to use for both rideshare and delivery operations.
However, reports of accidents involving Cruise robotaxis and traffic tie-ups caused by them as well as opposition from San Francisco transit unions could represent significant obstacles.
Read more about GM's Cruise robotaxi unit
Source: General Motors via Reuters