Cruise hopes boosting its Robotaxi service will turn its cash burn U-turn – Meczyki.Net

Cruise, a General Motors subsidiary dedicated to the commercialization of autonomous vehicles, saw a jump in spending during the second quarter as the company launched its first commercial robotic taxi service in San Francisco.

Cruise expenses were approximately $550 million compared to $332 million during the same quarter last year. Operating loss in the second quarter increased to $605 million from $363 million last year. CEO Kyle Vogt said the cost increase can be attributed to headcount growth from revealing Cruise’s Robotaxi service, as well as a change in compensation expense.

Cruz has a self-described “aggressive” growth strategy that Vogt described as “exponential” in Tuesday’s GM Q2 earnings call. In the past, the company has said that production and rapid scaling of its purpose-built Origin AV will be an important part of that growth. But with General Motors experiencing a 40% drop in profits, which the automaker largely blames on semiconductor shortages and supply chain issues, it’s unclear how Cruz will be able to overcome those same problems and ramp up production. “Hundreds of Thousands” will receive the original. Next year, as promised by former Cruise CEO Dan Ammann last October.

Availability of parts and semiconductors aside, Cruise is, understandably, burning through cash as it works to expand. Earlier this week, Cruise began mapping the streets of Dubai for a planned 2023 launch, and the company recently expanded its autonomous delivery pilot with Walmart in Arizona. While the company is yet to announce new target cities, one can only assume that an aggressive growth strategy will mean more vehicles in more cities next year.

At the moment, Cruise has $1.8 billion in cash, which just seems like a lot. But we shouldn’t forget that Cruze’s operating expenses were $868 million in the first half of 2022 alone, and that money was primarily spent on launching a robotaxi service in a city with a retrofitted Chevrolet Bolt.

Rather than defer to investors and analysts for announcements to be made at the Goldman Sachs conference in September, executives at GM and Cruise were concerned about providing guidance for Cruise’s 2023 spending.

“I would say that we are going to make sure that we fund Cruise and the spending is done in a way that we can get the share and also get the leadership position, and we plan to keep the cost in the form of technology. matures,” GM CEO Mary Barra said during Tuesday’s earnings call. “Obviously, Origins will also be a significant part of that.”

Without updated guidance, investors would assume that losses could accelerate next year as San Francisco ramps up with more cars and new cities are launched. But Vogt said Cruise has taken a “risk-taking technical approach” and applies the good work it has done in other similar ride-share markets in San Francisco.

“When you have the opportunity to go after a $1 trillion market, where you can have highly differentiated technology and products, you casually ignore that,” Vogt said. “You attack it aggressively. And given our strong cash position in Cruise, we’ve been able to do that and are aggressively projecting the market, I think, that’s a competitive advantage. And looking at our position right now, I think the results speak for themselves. But what you’re seeing right now is early commercialization.”

Cruise’s initial net revenue for the quarter is coming in at $25 million, so it’s possible that expansion losses could be offset somewhat by increased revenue in the future.

“They are demonstrating the ability to charge for rides in 30% of the San Francisco area and with the plans we have for this year and next, we are going to make sure we have all the resources available to that business. to quickly scale up because we think there is a first mover advantage,” Barra said. “And so a strength and the work that Cruise and GM do together, making sure we have a plan and our We have funds available to support our rapid growth strategy.”