- GM Cruise
- Wall Street has been concerned about GM’s Cruise division struggling to launch commercially in 2019.
- GM CEO Mary Barra tried to ease those worries on the carmaker’s Q4 earnings call.
- When asked about Cruise losing less than expected in 2018, Barra said that the division is benefitting from good management – and GM’s CFO said that the company will spend a billion on Cruise in 2019.
GM reported fourth-quarter and full-year 2018 earnings on Wednesday, beating analysts’ estimates and sending shares up about 4% before they dropped back in afternoon trading.
In its earnings statement, GM broke out results for its Cruise self-driving division. The carmaker had said in 2018 that it would spend $1 billion on Cruise, but for the year, the tally was just $700 million.
On a call with analysts after earnings were announced, CEO Mary Barra reinforced GM’s plans to Cruise, stressing that although the division has been pushing for a 2019 commercial launch, the company continues to be guided by a safety-first mission.
Goldman Sach’s David Tamberrino, in a follow-up question, called Barra’s comments “squishy” and noted the $300-million difference between what Cruise was expected to spend and what it did (the entire $700 million, by the way, was recorded as a loss).
Barra quickly countered that impression.
“We’re not squishy at all,” she said.
The explanation for Cruise losing less than anticipated? The management skills of Kyle Vogt, Cruise’s co-founder and, until last year its CEO (he shifted to being the division’s president and chief technology officer when former GM president Dan Ammann assumed the chief executive’s role).
“Kyle spends every dollar as if it’s his own,” Barra said.
She added that if Cruise required more resources, GM is ready to provide them.
GM intends to fund Cruise at the same level it has previously, however. When asked what the budget is for 2019, CFO Dhivya Suryadevara was decisively succinct.
“Our guidance for GM Cruise for 2019 is approximately $1 billion,” she said.