General Motors' Pivot May Be Paying Off -- and It Could Generate Billions in Revenue

Late in 2024 when General Motors (NYSE: GM) announced it would no longer fund robotaxi development with its majority-owned Cruise business, some investors considered it a blow to its long-term potential. Once hyped as the next big thing for GM, something that could potentially generate billions in revenue and earnings was no longer in its plans.

What investors might not have expected, though, was that the company's pivot toward advanced driver-assist programs would pay off so quickly. But that's exactly what recent data suggests.

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Super Cruise

Rather than develop robotaxis, which the company admitted would take considerable time and resources to scale up in an increasingly competitive market, GM refocused its efforts on driver-assist technologies that could generate revenue in the near term.

The pivot gave GM a way to feel out consumer willingness to pay extra for these technologies, and so far, so good. In fact, about 20% of the roughly 18,000 Super Cruise customers subscribed to keep the tech after their three-year trial ended in 2024, CEO Mary Barra said during GM's fourth-quarter earnings conference call.

The Detroit automaker predicts that revenue will double in 2025 as the Super Cruise trial ends on an additional 33,000 vehicles. While GM hasn't given details about current revenue being generated, the automaker did note that it's targeting nearly $2 billion in total annual revenue from the technology within five years.

That might seem like a drop in the bucket when investors consider the automaker generated roughly $187 billion in revenue in 2024, but this is a valued chunk of business due to its high margins. In a notoriously low-margin automotive business, carving out a niche in technology that can deliver more of each dollar to the bottom line is ideal.

Here to stay?

According to Automotive News, Barra said that 2025 will be a year of rapid growth for Super Cruise across all of the company's brands: "Our customer-focused strategy with Super Cruise is to continuously refine and expand its capabilities to make it indispensable. This is how we are setting the stage for recurring high-margin revenue streams from subscriptions."

Some analysts believe it's a race against time for GM. Companies have to monetize this technology while they can because, in the automotive industry, today's state-of-the-art technology becomes tomorrow's commoditized tech, and consumers will expect it at no extra charge rather than pay a subscription fee.

This is still an early step, and currently Super Cruise is considered a Level 2 system, which essentially means a human is still responsible for driving operations at all times. Management plans to build on Super Cruise to improve its autonomous capabilities to Level 3 (where the vehicle can perform most driving tasks) and beyond, which could unlock more revenue and profits if the company's subscribers keep seeing the value.

For investors, the takeaway is more vague, and this is just the latest management move that has seemingly panned out. The automaker continues rolling out popular vehicles, expanding revenue, cutting back in difficult markets such as China, and focusing on profitable ventures while escaping from long-term money pits such as robotaxis despite all their potential.

General Motors continues to prove why it's one of the best investments in the automotive industry with decisions such as pivoting to Super Cruise.

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Daniel Miller has positions in General Motors. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.