Last month, GM expanded its ownership stake in Cruise by buying out SoftBank Vision Fund 1’s equity ownership in the company for $2.1 billion. On top of that, the automaker invested an additional $1.35 billion in Cruise, bringing its total stake up to around 80%, which GM has said would provide more value for its stakeholders.
The increased ownership percentage in Cruise also triggered a reconsolidation for income tax purposes and lowered GM’s expected full-year adjusted effective tax rate by three percentage points to about 20%, Jacobson said during GM’s Q1 2022 earnings call on Tuesday. To address this discrepancy, the automaker increased its full-year EPS diluted adjusted guidance by $0.25.
“This transaction is directly in line with our capital allocation priorities to invest in businesses that drive outsized growth opportunities,” said Jacobson, noting that GM sees Cruise as a tremendous money maker in the long term.
So far, Cruise has not made GM any money. In the first quarter of this year, Cruise spent $300 million, a figure that is exclusive of the $1.1 billion in compensation expenses per Cruise’s recurring liquidity opportunity program for employees. Cruise spent $200 million in Q1 2021.
The company recently opened its driverless robotaxi operations to members of the public in San Francisco. It currently covers 70% of the city and aims to operate across all of San Francisco 24 hours a day, seven days a week, in the near future. Cruise co-founder and CEO Kyle Vogt confirmed during the briefing that Cruise has indeed applied for the final permit it needs from the California Public Utilities Commission to be able to finally begin charging for robotaxi services in the state.
“We do believe that this is going to be highly disruptive, both in the long term for personal car ownership and the short term for ride-hailing type businesses based on early customer feedback, and right now we’re maniacally focused on making sure that we delight our early customers and build the foundation for a really strong business down the road,” said Vogt.