Dive Brief:
- General Motors expects shutting down its Cruise robotaxi unit will lead to $1 billion in annual savings, CEO Mary Barra said during a call with analysts on Tuesday.
- The move, however, doesn’t mean the automaker is abandoning autonomous technology, the CEO said. Instead, GM is shifting its strategy to advance its development of personal vehicles to capitalize on the popularity of the Super Cruise hands-free driving system.
- “We see it being consumer demand driven,” Barra said. “When people arrive at their destination after using Super Cruise, they're more rested, which is why 80% of our customers say they either wouldn't buy a car without it or they strongly would desire it to be on their next vehicle.”
Dive Insight:
The potential to quickly grow a new revenue stream may be the reason GM is exploring prioritizing making the Super Cruise system standard equipment on electric Cadillac models.
Offering the technology on more expensive luxury SUV EVs could sway more consumers toward those vehicles, Barra said. GM posted its highest-ever quarterly EV sales to close out 2024.
“EV adoption has been higher in luxury segments,” Barra said. “We are being guided by the customer and will continue to be.”
However, the automaker isn’t limiting the technology’s expanded integration to just luxury vehicles. Barra said on the call that 2025 will be a rapid growth year for Super Cruise across all GM brands.
GM projects Super Cruise subscription revenue to approach $2 billion within five years.
Boosting EV sales is a priority for GM, which produced 189,000 battery electric vehicles in North America last year. GM reported 43,982 EV sales in Q4, which the automaker estimates accounted for 12% of all U.S. EV sales during the period, according to an investor filing.
For the year, GM reported net income of $6 billion, a 41% drop from a year ago. The automaker reported a $3 billion income loss in Q4, fueled by $4 billion in restructuring costs in China and $500 million in expenses connected to shuttering its Cruise robotaxi unit.
GM announced in December it was halting development of Cruise robotaxis due to high operating costs. Executives said the net income drop was expected, given the restructuring expenses and decision to abandon robotaxi development.
Barra expects Super Cruise revenue growth to be partially driven by users who want to continue using the service after their trial periods end. However, she added that about 60% of GM’s 360,000 Super Cruise customers regularly use the technology and expects subscription numbers to continue rising as the service is routinely upgraded.
“Our customer-focused strategy with Super Cruise is to continuously refine and expand its capabilities to make it indispensable,” Barra said.
With more resources directed toward driver assistance tools like Super Cruise, Barra said she believes advanced autonomous technology will lead to sales growth.
“We remain committed to autonomy because we do think it has such a dramatic impact from a customer experience perspective for the better and actually changes the margin profile of the business as well,” the CEO said.
