Chip Ganassi Racing, based in Concord, North Carolina, said in statement it thoroughly weighed all options before cutting ties with Larson for using the N-word during an esport event on Sunday.
“After much consideration, Chip Ganassi Racing has determined that it will end its relationship with driver Kyle Larson," according to the team's statement.
"As we said before, the comments that Kyle made were both offensive and unacceptable especially given the values of our organization. As we continued to evaluate the situation with all the relevant parties, it became obvious that this was the only appropriate course of action to take.“
Larson, who is half-Japanese with grandparents sent to an internment camp during World War II, apologized on Monday for using the N-word.
The 27-year-old Northern California native is one his sport's rising stars and is currently seventh in the NASCAR Cup Series standings.
He was set to be one of NASCAR's most sought free agents after this season, but now it's possible that Sunday's incident will cost him millions of dollars.
Larson was competing in an iRacing event, virtual races that his fellow drivers have been participating in since the coronavirus pandemic has shut down nearly every pro sports league in the world.
He appeared to lose audio contact with his spotter and, while checking the microphone, asked “You can’t hear me?" Apparently thinking he was muted, he then said the N-word.
NASCAR fans have been drawn to iRacing because drivers can link into one another on a live stream, where they banter, argue, make jokes and discuss the racing. But that open mic could prove costly to Larson.
“Kyle, you’re talking to everyone, bud," Xfinity driver Anthony Alfredo said after the racial slur was heard.
“Yep, we heard that," another driver, Aron MacEachern, said.
"Yikes," IndyCar driver Conor Daly responded.
“We were extremely disappointed and appalled to hear about this incident," McDonald's said. "The comments made by Kyle Larson are insensitive, offensive and not reflective of our inclusive values and will not be tolerated. McDonald’s is taking immediate action to terminate the relationship with Larson.”
But sponsor Plan B Sales wants to give him another chance.
"Although we do not condone or appreciate the slur Kyle used during his iRacing event ... we know he is an awesome young man that made a mistake and we are going to stand behind him," the company said.