General Motors continues looking at its business with a critical eye, planning to cut back its spending on its robocab subsidiary Cruise. The company recently revealed plans to slow its cadence on electric vehicle introductions. The new cuts come after a Cruise robocab was involved in a collision with a pedestrian.
GM spends about $700 million per quarter to help Cruise develop its self-driving technology.
GM plans to cut its spending on its Cruise self-driving vehicle subsidiary in the wake of a collision with a pedestrian in San Francisco in early October.
The Detroit-based auto company, according to a Financial Times report, will outline the plans Wednesday. While GM hasn’t offered any official comment, it has scheduled an early morning “business update” to talk with analysts about “financial materials” it will release before the call. CEO Mary Barra and CFO Paul Jacobson will be on the call.
Zeroing out
The company’s been one of the leaders in the shift to electric vehicles, and Cruise played a role in not only developing self-driving technology, but it also gave the company a way to prove out the durability and feasibility of its all-electric vehicles, in this case the Chevrolet Bolt EV.
It projected to have more than half its new vehicle sales be battery-electric only by the end of the decade, using “zero crashes, zero emissions and zero congestion” to push its EV product development as well as moving forward with Cruise and its robocabs.
While it’s not eliminating its funding for Cruise’s development, it’s making a significant cutback, which it has already outlined in a recent announcement out its plans to reduce its vehicle testing cities back to just one: San Francisco.
General Motors Chair and CEO Mary Barra told investors the company was slowing the cadence of its affordable EV development to focus on profitability.
GM funnels about $700 million a quarter into Cruise currently.
Cruise lost $1.9 billion through the first nine months of the year. Through September, it had $1.5 billion of cash at the end of September. It burned through $500 million in the third quarter. Cruise also has a deal with GM’s financial arm to borrow up to $4.3 billion to run the business, such as buying self-driving cars from GM or other expenses.
Focusing on the black
Not only is it reducing that, but it’s also dialing back its production cadence for its next several electric vehicles. Officials made note of this during the company’s third quarter earnings call with Barra specifically pointing out the company was “taking immediate steps to enhance the profitability of its EV portfolio.”
To that end, the company’s slowed the roll out of many of its new electric vehicles. The company is delaying EV truck production at Orion (MI) Assembly, including the Silverado EV RST and the Sierra EV Denali plus the launch of the Chevrolet Equinox EV for a few months, officials noted.
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