Robotaxi operator Cruise continues to be a major loss leader for General Motors (NYSE: GM) this quarter, however the automaker vows to cut back on spending.
In its Q2 earnings report, GM posted a $1.24 billion loss on Cruise before income taxes compared to $651 million the same quarter of 2023. This figure includes a one-time charge of $600 million in restructuring costs as part of its plan to indefinitely halt production of the Cruise Origin, a fully autonomous vehicle with no driver's seat or steering wheel. GM will instead use the next generation of Chevy's Bolt for Cruise's operations going forward.
In January, GM CEO Mary Barra vowed to cut Cruise spending by $1 billion in 2024. The company's shift away from producing the Origin may aid in its cost cutting measures.
However, GM has already lost $1.76 billion on Cruise in the first half of the year. If it continues this spending it would be on track to nearly meet its 2023 losses of $3.48 billion. The company now must rely on staving off losses and reducing spending in the second half of the year to meet its cost cutting targets.
Cruise vehicles were once a staple of street life in San Francisco until last year in October when one of its robotaxis dragged a woman 20 feet in a pull over maneuver gone wrong. The company's handling of the incident with state regulators caused it to lose its license to operate in California and resulted in Cruise pulling its entire fleet of vehicles from the road nationwide, letting go of its CEO Kyle Vogt.
Now under the leadership of former Xbox exec Marc Whitten, Cruise has resumed operations in Phoenix, and Dallas, while expanding to Houston with plans to add new cities to its coverage areas.
Cruise still maintains offices in San Francisco as its headquarters, but its logo will no longer appear on uniforms of the San Francisco Giants. GM will continue the partnership, but with the Chevrolet logo with "EV" bolded in orange.
GM acquired YC-backed Cruise for over $1 billion in 2016.
Despite the losses at Cruise, GM beat quarterly estimates with earnings before interest and taxes reaching $4.44 billion, beating estimates of $3.88 billion.
However its stock was down 6.42% at market close Tuesday.
