Tuesday, November 12, 2024
HomeTechnologyCruise lost $435 million this quarter despite robotaxis being on hiatus

Cruise lost $435 million this quarter despite robotaxis being on hiatus

Cruise, the fully owned subsidiary of General Motors (GM), experienced a loss of $435 million in the third quarter of 2024, as reported by GM. This marks a significant reduction from the $791 million loss reported during the same period in 2023. Cruise, dedicated to autonomous vehicle technology, has largely paused its operations since October 27, 2023, following an incident where a driverless vehicle in San Francisco injured a pedestrian.

Despite halting its primary operations, Cruise has made incremental progress in restarting its robotaxi service, with test vehicles now operating in Arizona and Texas. The company has announced plans to introduce manually driven vehicles in the Bay Area later this year but has not specified when its commercial service will resume.

Cruise’s financial transparency, due to its parent company GM, offers insight into its net sales and revenue, which stood at $26 million for the third quarter. The total cost and expenses amounted to $442 million, resulting in an operating loss of $417 million.

For investors, the reduction in losses is a positive sign, considering Cruise’s substantial $3.48 billion loss in 2023. GM’s CEO, Mary Barra, remains committed to the company’s endeavors in autonomous vehicles, despite other automakers withdrawing from such investments. In 2022, Barra expressed GM’s ambition to sell fully autonomous vehicles by the mid-decade.

Although meeting this ambitious target appears unlikely, Barra remains supportive of Cruise, overseeing a significant reorganization that replaced the founders with industry veterans. Furthermore, Cruise has implemented cost-cutting measures, such as laying off 25% of its workforce and discontinuing the Origin project, incurring substantial financial penalties to address regulatory issues from the pedestrian incident.

Barra has stated that GM will maintain a disciplined approach to investments in Cruise, projecting a loss of no more than $2 billion in 2025 for the autonomous vehicle division. Additionally, upcoming announcements are expected regarding Cruise’s funding strategy, hinting at potential partnerships to mitigate operational expenses.

The commercial viability of driverless cars remains uncertain, with no company, including Waymo backed by Alphabet, profiting from the technology thus far. However, GM continues to explore the potential for autonomous vehicles, aiming to demonstrate that they can be both safe and profitable in the future.

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