GM Cruise Lost $500 Million In Second Quarter Of 202221
GM-owned autonomous driving company Cruise has had a rough go in recent months. It garnered negative media attention in May after one of its vehicles was reported to have blocked a San Francisco Fire Department vehicle that was trying to respond to an emergency and has faced more intense scrutiny after one of its vehicles was involved in a crash in June that sent the occupant of the Cruise AV to the hospital.
It’s beginning to seem as though safety-related concerns aren’t the only potential problem for Cruise. GM lost nearly $500 million on its Cruise robotaxi business in the second financial quarter of 2022, the automaker said this week, compounding with the $300 million loss recorded in the first quarter for a net loss of around $900 million in the first six months of the year. GM Chief Financial Officer Paul Jacobson said this spending is “consistent with the run rate,” that it expects for the remainder of the year, signalling losses of well over $1 billion this year.
Cruise CEO Kyle Vogt said the financial struggles the company is currently experiencing are the result of “early commercialization,” of self-driving vehicle tech and that it sees potential for the technology to make trillions of dollars one day in the future.
“When you’ve got the opportunity to go after a $1 trillion market where you can have a highly differentiated technology and product, you don’t casually weigh into that,” Vogt said this week. “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 right now, I think the results speak for themselves.”
GM sees the potential for Cruise to take over the ride-hailing market, offering advantages over rivals like Uber and Lyft, which spend large amounts of money paying human drivers. Cruise, by comparison, would not need to pay human drivers, leaving more profit on the table for GM and Cruise investors. Cruise began charging San Francisco residents for rides in its Chevy Bolt EV-based test vehicles in March and recorded $25 million in revenue in Q2 operating in a geofenced portion of the city.
GM plans to begin production of its dedicated Cruise Origin robotaxi at its Factory Zero plant later this year, which will serve as the basis for the company’s driverless, app-based ride-hailing business. The automaker was recently spied testing the vehicle in public by GM Authority photographers – albeit with a human driver operating the vehicle using traditional vehicle controls.
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It may be a $ Trillion Market for AV technology, but when Mary wants to keep the technology for herself, and finance the technology from GM’s bottom line, it is nothing but a weight to hold the company down. The division should have been split off to take advantage of investor capital and sales of the technology to other manufacturers. Instead, it will continue to eat away at profits until it becomes unbearable before they split it off.
Maybe they should have spent this money on a CHIP factory!
It’s becoming more and more obvious, Roger Smith won’t go down as the worst GM CEO in history.
Indeed. And Roger was terrible. The parallels I see are that both stubbornly saw themselves as pioneering visionaries that were pushing the company forward with technology (FWD, EDS and Hughes for Smith) and rebuilding the enterprise for a bright future ahead. Instead they misread the market, disrupted everything and left a path of destruction in their wake. I often wonder if GM would still be the all-conquering juggernaut if Roger B. Smith had never made it to the fourteenth floor.
If you ever wondered what a FEMALE dictator looks like. Look very closely at the face of Mary. Every day she is becoming more and more a monster dictator. All high-level managers know to stay clear of her or become another Dan Amman. Poor Kyle Vogt, why do they have him on the earning reports? He is so scared and nervous and does not have a clue of what to say.
Kyle didn’t want to be CEO. I just wonder what threat they used to push him into it.
The problem with having a female at CEO or any other important position these days, is that they’re given extra latitude and chances, after bad mistakes, to the point where they’re practically fire proof. It’s made me wince every time I hear about another female getting an important leadership job these days. I don’t have any problem with them leading, it’s just that when they’re not up to the job, it’s almost impossible to get rid of them!
Haha…you gotta love these C-Suite executives. Who else could “lose” $1 Billion at their job and take the high road and justify those losses?!? Meanwhile, average Joe work-a-day American slob has to watch the stock price slide further as these egomaniacs pontificate about their convoluted rationale for losing more money
I seriously doubt “average Joe” owns any shares let alone GM shares and is more concerned with putting bread on the table !
Y’all are so obsessed with Mary Barra and it’s so weird. Not one of you probably has a clue what crucial business decisions have to be made behind closed doors and yet if it rains on a Tuesday somehow that’ll be her fault. Sheesh.
<—. 16 years at GM. Trust me, I know exactly how they think. I believe it's where the term "pie-in-the-sky" originated. In a GM board room.
I’m just another poor slob with no insider info but the Cruise business plan makes Elon Musk look conservative! Sure I guess GM wants a shot at this fantasy robotaxi thing, but at this price??
She needs to quit wasting money and figure out how to get vehicles to market! That’s her primary function and she is failing!
But yet they cancel so called slow selling products that no one according to GM wants, notwithstanding the fact that they were left basically in the market with little to no investments or advertising.
I’d rather see the profit go to human drivers instead of a greedy company with visions of triple zero fantasies and record shattering profits for the CEO. I hope they lose millions more!
STOP -with this crap. That anyone let it go this far now justifies that they should be fired today!
At GM headquarters the higher the floor the thinner the air. Will someone please bring oxygen bottles to the Boardroom?
Scrap it, it’s always been a stupid idea. It’s cheaper and more reliable to hire human drivers!
GM needs new leadership!
Quit spending money on stupid crap and build mor reliable cars forget this crap that’s going to get people killed
Dump the ugly box! Nobody will ever buy anything that fugly. Just saying…