Cruise hopes ramping up its robotaxi service will reverse its cash-burning – TechCrunch

Cruise, the General Motors subsidiary dedicated to commercializing autonomous vehicles, saw a rise in costs in the second quarter as the company launched its first commercial robotic taxi service in San Francisco.

Cruise’s spending was approximately $550 million, compared to $332 million in the year-ago quarter. Operating losses in the second quarter were $605 million, compared to $363 million last year. The rise in costs can be attributed to an increase in the workforce from the ramping up of Cruise’s robotic axi service, as well as a change in compensation costs, CEO Kyle Vogt said.

Cruise has a self-described “aggressive” growth strategy that Vogt described as “exponential” during Tuesday’s GM Q2 earnings call. In the past, the company has said the production and rapid scaling of its purpose-built Origin AVs will be a critical part of that growth. But with General Motors experiencing a 40% drop in profits, which the automaker attributes largely to semiconductor shortages and supply chain issues, it’s not clear how Cruise can get around those same issues and get “hundreds of thousands” of Origins into production over time. to get. next year, as former Cruise CEO Dan Ammann promised last October.

Aside from the availability of parts and semiconductors, Cruise is understandably burning money as it works to expand. Earlier this week, Cruise began mapping the streets of Dubai for a planned 2023 launch, and the company recently expanded its autonomous delivery pilot to include Walmart in Arizona. While the company is not yet announcing any new target cities, one can only assume that an aggressive growth strategy means more vehicles in more cities next year.

Right now, Cruise has $1.8 billion in cash, which seems like a lot right now. But let’s not forget that Cruise’s operating expenses totaled $868 million in the first half of 2022 alone, and that money was spent mostly on launching a robotic-axi service with retrofit Chevrolet Bolts in one city.

GM and Cruise executives were hesitant about providing guidance on Cruise’s spending in 2023, instead deferring investors and analysts to the announcements that will be made at a Goldman Sachs conference in September.

“I’d say we’re going to make sure that we fund Cruise and that the spending is done in such a way that we can gain market share and also have a leadership position, and we have plans to take the cost down as the technology matures.” GM CEO Mary Barra said during Tuesday’s earnings call. “Obviously, the Origin will be a big part of that as well.”

Without updated guidance, investors assume that losses could increase next year as San Francisco gets more cars and new cities launch. But Vogt said Cruise has done the work to “reduce the technical approach” and apply what has worked well in San Francisco to other similar ride-share markets.

“When you get the chance to go after a $1 trillion market where you can have a highly differentiated technology and product, you don’t just weigh in,” Vogt said. “You attack it aggressively. And given our strong cash position in Cruise, we’re able to do this and aggressively presenting the market I think is a competitive advantage. And given our position at the moment, I think the results speak for themselves. But what you’re seeing now is early commercialization.”

Cruise has his initial net income for the quarter at $25 million, so it’s possible the growing losses could be offset somewhat by higher earnings going forward.

“With what they’re demonstrating in 30% of the San Francisco area with the ability to pay for rides, and with the plans we have for this year and next year, we’re going to make sure we have all the resources we need to get that company up and running quickly. scale up because we think there’s a first-mover advantage,” said Barra. “And so one of the strengths and the work Cruise and GM are doing together is making sure we have a plan and we have the funding available to support a rapid growth strategy.”

This post Cruise hopes ramping up its robotaxi service will reverse its cash-burning – TechCrunch was original published at “”

Leave a Reply

Your email address will not be published.