US car giant General Motors is reportedly losing $US5 million a day as passengers are slow to embrace it autonomous ride-share service.
General Motors’ ambitious move into an autonomous ride-sharing business in the US has cost more than $US5 billion – with losses continuing to mount at a rate of $US5 million a day.
Slow acceptance of the Cruise project in San Francisco – and delays in approvals for its driverless Origin model – are the main drivers of the epic losses.
The latest setback came as General Motors began charging for Cruise rides in its Chevrolet Bolt electric cars for the first time.
It has also been hurt by reports of crashes involving Cruise automated taxis, and brief traffic snarls caused by Cruise-operated hatchbacks.
Even so, General Motors chief executive Mary Barra is still upbeat about the long-term prospects for Cruise as a potential $50 billlion-a-year business.
She said increasing demand for automated vehicle services and technology would allow General Motors to hit its financial target by 2030, according to a report by news agency Reuters.
“I would say we are going to make sure we fund Cruise and the spending is done in such a way that we can gain share and have a leadership position. We have plans that we’re taking cost out as well, as the technology matures,” Ms Barra was quoted by Reuters as saying.
The latest financial results, headlined by a second-quarter loss of $US500 million, were included in an investor report as a number of companies specialising in autonomous vehicle technology — including Aurora Innovation Incorporated — have taken big hits recently to their share price.
But there are outside factors that affect General Motors’ ability to stem its losses on Cruise.
They include winning approval from California state regulators to greatly expand Cruise’s operating hours and widening the territory covered for its automated taxis.
It is also relying on deployment of the specially-designed Origin, a radical driverless pod with train-style side doors, but that is not expected until sometime in 2023.
GM will give more detail on its Cruise strategy at an event in San Francisco in September, but the chief executive of Cruise — Kyle Vogt — is painting the losses, which began in 2018, as the cost of building a new business.
“When you’ve got the opportunity to go after a trillon-dollar market, you don’t casually wade into that,” Vogt said.