GM Cruise: From Loss Maker to Profitable

Wednesday - August 30 2023, 18:57 UTC - 1 year ago

GM Cruise's robotaxi service has expanded to 300 robotaxis operating in San Francisco and by 2030, the company plans to have a global fleet of 10,000 robotaxis. GM Cruise faces annual net losses of $2 to 3 billion this year and will likely surpass the ten billion per year losses that Uber had in 2021 before it crossed over into profitability. Cruise's robotaxis will eventually have an operational efficiency of around 16 trips per day and made about $100k per year in revenue. To achieve this growth, major companies in the self driving vehicle industry need to support the combined 50,000 to 100,000 robotaxi by 2025-2026.

GM’s Cruise robotaxi service has expanded from 70 to 300 robotaxis operating in San Francisco and will soon expand to Phoenix, Los Angeles, Austin and Dubai. GM Cruise had increasing losses of $561 million in the first quarter of 2023. This will be over $2 billion in losses in 2023. GM Cruise will having increasing billions in net losses until they reach profitable scale. IF GM Cruise grows revenue by 1000 to 2000 times (100,000% to 200,000%) by 2030 and achieves operational and financial efficiency then it would become very profitable. Robotaxi’s must continue to undercut Uber, taxi and public transit pricing to get the market share. This will take perhaps $100 billion or much more cumulative losses to finally reach profitability. GM Cruise will have an annual net loss of $2 to 3 billion in 2023 and will likely surpass the ten billion per year losses that Uber had in 2021 before Uber crossed over into profitability.

Here we will go over the current Cruise business and business plan and compare it to Uber and look at GM Cruise plans to about 2030.

Revenue from 300 robotaxis is about $5 to 20 million per year. Cruise is driving about 1 to 2 million miles per quarter. Reports have indicated that Cruise robotaxis in San Francisco currently have less than 10% utilization. This means only 10% of miles are paid. Eventually, this could rise to near 50% utilization. Cruise charges a base fee of $5 and a $0.90 per mile and $0.40 per-minute rate. Fares also include a 1.5% city tax and are calculated using the estimated time and distance of the fastest, most optimal route. This is about $12 for a 2.6 mile trip and $18 for a 5.2 mile trip. The San Francisco Transportation Network Company (SFCTA) reports the average robotaxi trip in San Francisco is 2.6 miles. The trips should get longer on average as the area of operation expands.

Cruise is currently charging customers about 20% lower prices than Uber for the same trips. Ridehail vehicles should be able to eventually average around 26 to 29 trips per day in San Francisco and perhaps other cities. The number of trips for Cruise is still much lower. They could reach between 16 trips per day with the expanded service area and expanded fleet for the second half of 2023. 25 paid trips at 2.6 miles per trip per day would be 100 paid miles per day. This would be $300 per day per robotaxi. This would be about $100k per vehicle per year in revenue.

This would need about a global GM Cruise fleet of 10,000 robotaxis. This is 30 times more robotaxis and the number of paid miles would need to increase by 100 times. This will mean about 80,000 Lidar units and 80,000 millimeter radar. This would be all of the available Lidar units available for robotaxi in 2022. However, the major Lidar companies are expanding and will probably be able support Cruise, Apollo, Waymo and the other major global robotaxi companies reaching a combined 50,000 to 100,000 robotaxi in 2025-2026.

If Cruise gets 500 self driving cars operating for the fourth quarter in San Francisco making 16 trips per day then they will make 500 robotaxi * 16 trips per day * 90 days in quarter * $12 per trip.

This would be a quarter revenue for GM Cruise of $8.64 million or about $34.5 million annually before R&D costs.