Cruise plans to have ‘tens of thousands’ of Origin AVs on roads in coming years

Driving costs down with technological advancements

It might seem counterproductive, but Cruise says it has thrown a lot of money into the compute power of the Origin to get it to a place where it’ll be able to commercialize and scale profitably.

“Even though the technology carries a higher cost, we’re able to amortize that cost over a high-utilization fleet, high-mileage vehicle, and do that at a compelling cost point,” said Ammann. “The cost advantage of the Origin relative to a retrofitted vehicle, even including a Bolt AV, is about 60% to 70% lower cost per mile.”

That said, Cruise has plans to bring down the cost of that compute power over the next four generations by 90%. One way to do this is to start manufacturing custom silicon, which Cruise says will help it both scale compute use and cut costs. Ammann didn’t go into detail about what it will use the silicon for — a tidbit that will be touched upon further at the company’s “Under the Hood” recruitment event in November — but at the very least, the company is signaling a move toward vertical integration.

Considering the damage the semiconductor shortage has done to GM’s production lines and the fact GM has just announced a supplier agreement with Wolfspeed to provide silicon carbide semiconductors for GM’s EV program, it’s probably safe to say Cruise has put chips on the menu. Others in the industry, like Tesla, are also securing the supplies and production of their own silicon chips.

Cheaper than a human by nature

The Origin is purpose-built to provide excellent customer service at a low cost for both ride-hail and delivery, said Ammann. The vehicle itself is only as long as a Chevy Cruze, but the inside will be optimized to provide plenty of space to make for a pleasant ride-hail experience. It’ll also be able to convert from passenger mode to delivery mode, complete with a delivery unit that can slide in and out multiple times within a 24-hour operating cycle to make the most use of each vehicle.

Cruise thinks within just a few years, its Origin will be able to outstrip Uber and Lyft with cheaper prices and higher revenues. In some cities, Uber and Lyft prices are up almost 80% from pre-pandemic prices, but the companies are still “not materially profitable today,” said Ammann. That’s due to their business model, he claimed. In San Francisco today, a rider is paying about $5 per mile, three-quarters of which probably goes to the driver and the rest gets spent on funding expenses and other costs, which results in companies just breaking even.

“There are two fundamental differences in our model, the first being that we don’t split the revenue — we get all the revenue,” said Ammann. “Because we have a lower cost structure, we’re able to charge less and make a profit. It’s as simple as that.”

Can Cruise scale as rapidly as it hopes?

Cruise didn’t share its revenue projections, but it did compare itself to other companies that have brought breakthrough products to very large markets and within a decade or so have gotten to “say $50 billion in revenue.” Ammann did say that Cruise conservatively expects to make about $100,000 in revenue per vehicle per year.

The company plans to own everything to do with its services, from the vehicles and autonomous software to the ride-hailing app and customer service. It hopes that by bringing more services in-house, it’ll be able to scale quickly and save money in the long run through constantly improving software that will allow it to begin to ditch sensors along the way.

Ammann even went so far as to say that it’ll be able to get its autonomous system’s cost curve so far down that it’ll be at a price point where it can be deployed into retail vehicles.

“You can go to your local dealer and buy a car that has Cruise L4 system capability inside of it, and with a partnership with GM, that obviously gives us a huge opportunity to turn that into a reality, and to do that at a really large scale,” he said.

That reality is likely many, many years off, but Cruise isn’t shy about dreaming big.

“When you look out eight to 10 years from now, I think we’ll look back and we’ll see that we’ve started to actually bend the curve on road safety in the United States and around the world,” he said. “Cities will be given back to the humans … our cities will be cleaner and less congested. And people will have access to transportation that don’t have access to transportation today.”