After robotaxi failure, GM software bet turns to driver assistance
GM's push on hands-off driving system Super Cruise comes as the automaker exits its multi-billion-dollar-losing robotaxi business Cruise, which focused on self-driving vehicles hailed by an app.
GM forecast on Tuesday that Super Cruise would bring in about $2 billion in total annual revenue within five years, aiding in its efforts to be known like Tesla for technology as much as it is for vehicles.
The revenue from Super Cruise "is much higher-margin than manufacturing vehicles" and would pave the way for consumer acceptance of completely self-driving cars, said Morningstar analyst David Whiston.
Super Cruise is conceptually similar to Tesla's Autopilot in that they both offer partially automated driving technology.
The difference is Super Cruise uses a more robust sensing system than Autopilot to ensure the driver stays attentive to the road, according to Sam Abuelsamid, vice president of market research for Telemetry Insights.
Super Cruise is available on about 20 newer higher-end gasoline and electric vehicle models, including many Cadillacs and large SUVs.
It is standard on some vehicles and optional on others. For the optional vehicles, customers can access the technology for $2,200 to $2,500. Super Cruise is free for three years and then customers are offered a subscription at $25 a month or $250 a year.
GM's push into the technology has yet to bring Tesla-like benefits to its stock valuation.
The Elon Musk-run electric vehicle maker's stock is trading around 120 times expected earnings, reflecting a perception of it as a high-growth tech company, according to LSEG data. By comparison, GM is valued at around 5 times its earnings.
Investors are also concerned about the effect of the Trump administration's proposed tariffs on Canada and Mexico on GM, which sent shares down 8.9% after its results on Tuesday and a further 0.5% on Wednesday.
But driver assistance technology remains a promising growth area, GM CEO Mary Barra said on Tuesday, with the automaker expecting to double the about 360,000 vehicles in the Super Cruise fleet in 2025.
In 2024, about 20% of roughly 18,000 users signed up for a Super Cruise subscription after the complimentary subscription ended, Barra said. Another 33,000 vehicles will end a three-year trial period in 2025 and GM is targeting to more than double subscription revenue, she added.
There are hardware costs associated with Super Cruise, including cameras, radar and the driver attention system.
"However, software tends to be very profitable," Edward Jones analyst Jeff Windau said. "Additionally, if it is a feature the customers value, you could see a high renewal rate (recurring revenue) and it could drive customer loyalty to the brand when they look for a new car."
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