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GM’s Self-Driving Car Unit Cruise Announces Sweeping Layoffs Amid Safety Concerns and Leadership Shakeup

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Dec 15, 2023

General Motors’ self-driving car subsidiary Cruise has announced plans to lay off about a quarter of its workforce amid mounting safety issues, leadership changes, and financial pressures.

Cruise to Cut 900 Jobs, Mostly in Operations

Cruise CEO Kyle Vogt announced in an email to employees on Thursday that the company would be laying off approximately 900 workers, about 24% of its 4,000 employees. The cuts will impact Cruise’s operations division in particular, including vehicle operators, fleet maintenance, and ride hail workers. Other unaffected areas include engineering, product, design, and technology.

The layoffs come shortly after Cruise paused its driverless ride-hail service in San Francisco in response to an October crash where one of its vehicles struck and injured a pedestrian. It marked the second injury accident for Cruise this year. The National Highway Traffic Safety Administration has launched an investigation into the San Francisco crash specifically and whether Cruise’s technology played a role.

Cruise’s leadership stated that rebuilding trust through improved vehicle safety will be a top priority going forward before its taxi service can relaunch. “Part of the transition to being a completely driverless service is to really remake the service to minimize the possibility of any human error,” Vogt told employees. The layoffs will allow Cruise to focus engineering efforts on this safety work.

Operatives laid off will receive a minimum of 14 weeks severance pay. GM shares rose over 7% on Thursday following the Cruise restructuring announcement.

9 Executives Fired as Leadership Overhaul Continues

In addition to the broader job cuts, Cruise moved to overhaul leadership on Wednesday by dismissing nine executives from key operational and technical roles. Positions impacted range from senior vice president of operations to heads of hardware and software engineering groups.

GM launched an internal probe of Cruise operations and decision-making after the October pedestrian crash. Sources told Reuters these executive terminations directly resulted from the ongoing investigation which has raised concerns about leadership failures contributing to safety issues.

Last week, Cruise’s Chief Legal Officer Jeff Bleich also departed, though GM maintains it was a planned exit. Nevertheless, the slew of high-profile leadership changes indicates fallout over safety missteps.

Analysts argue that this house cleaning was necessary to change Cruise’s safety culture going forward. Short term, it introduces further uncertainty and disruption. Longer term, new blood may bring fresh thinking and vigor to solving Cruise’s mounting technical and safety hurdles on its autonomous vehicle solutions.

“The moves are pretty consistent with a company trying to reinvent itself around safety and take safety to the next level,” said Guidehouse Insights analyst Sam Abuelsamid.

Financial and Competitive Pressures Mounting

Industry experts note competitive and financial pressures are also motivating Cruise’s sweeping cuts and leadership changes. Key rival Waymo recently expanded testing of fully driverless robotaxi rides to Phoenix residents. Waymo already operates driverless in San Francisco but does not yet offer rides to the public.

“GM’s self-driving car unit has fallen well behind rivals,” notes Bloomberg transportation reporter Keith Naughton.

There may also be tensions with parent company GM which has invested billions into Cruise over the years but has yet to see a return. Cruise was valued at $30 billion in its last funding round but its robotaxi progress continues to hit hurdles.

“GM has got to be a little bit frustrated,” said Abuelsamid. “They see their competitors making progress while Cruise keeps having these setbacks.”

What Comes Next? Pivot to Logistics Being Explored

Cruise CEO Vogt remains adamant that its core vision of “transforming cities through an all-electric self-driving service that safely connects people to the places, things and experiences they care about” will get back on track after this restart.

But an internal strategic review of the robotaxi business is underway. There is talk that Cruise may need to shift focus to logistics, such as self-driving delivery trucks, rather than solely ride hailing to get its autonomous vehicles onto roads sooner. Abuelsamid and other analysts argue a pivot to logistics carries fewer technical challenges and may create revenue faster.

Cruise President Aaron Bambea recently said the company is interested in applying its technology to moving goods in addition to people. But GM maintains passenger vehicles remain the priority for now. Developments and new strategic announcements are likely in the coming months.

“We’re going through a challenging moment and we have to regain our momentum,” admitted Vogt to staff this week while reaffirming belief Cruise will “successfully commercialize this technology.” Industry experts and investors will watch closely for Cruise’s next moves during this critical juncture.

Cruise Self-Driving Car Safety Events in 2022-2023

Date Incident Details Outcome
June 2022 Crash in San Francisco Cruise AV strikes Toyota Prius, causing severe damage No injuries
September 2022 NHTSA Investigation Federal safety regulators launch probe into June crash and Cruise safety culture Investigation ongoing
October 2022 Pedestrian injury accident Cruise AV strikes pedestrian in San Francisco at night Pedestrian hospitalized with serious injuries
December 2022 Executives fired 9 key Cruise operational leaders terminated due to internal safety review Leadership changes aimed to address safety issues
December 2022 Layoffs announced 900+ Cruise jobs cut, about 24% of workforce Refocus engineering on improved vehicle safety
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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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