General Motors Co.’s GM autonomous driving unit, Cruise, experienced increased losses and a lack of revenue in the last quarter, coupled with a suspension from San Francisco’s roads. Nonetheless, management remains unfazed.
What Happened: In the last quarter, Cruise reported an EBIT-adjusted loss of $732 million, a 47% increase from $497 million a year earlier.
The increased expenses were primarily due to the unit’s ambitious scaling efforts, as stated by its parent company. General Motors anticipates maintaining a similar quarterly loss rate as it continues to expand operations while focusing on efficiency.
“We do believe that Cruise has a tremendous opportunity to grow and expand,” GM CEO Mary Barra said during the company’s earnings call on Tuesday while also agreeing that the company’s share price does not get any credit for its Cruise business.
“I think as we continue to expand cruise in a very thoughtful way, focused on safety, I think people will see and start to unlock [value],” the CEO added. Cruise AVs are involved in fewer collisions than human drivers, Barra said, citing research undertaken by Cruise.
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Why It Matters: Following GM’s earnings call on Tuesday, the California Department of Motor Vehicles (DMV) suspended Cruise’s autonomous vehicle deployment and driverless testing permits in San Francisco, citing concerns about “unreasonable risk” to public safety.
The authority additionally accused the company of providing misleading information regarding the safety of its autonomous technology.
However, some analysts have been bullish on Cruise’s prospects. In June, Morgan Stanley‘s Adam Jonas said Cruise is “arguably one of the most advanced robotaxi services” currently on offer and has the potential to rake in $1 billion in revenue by 2025.
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