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Over 900 jobs are being cut by Cruise, the autonomous vehicle arm of General Motors, which constitutes around a quarter of its staff. This decision comes as part of the company’s cost-saving measures and strategic overhaul following a serious incident in San Francisco and subsequent regulatory investigation. The recent recall of all robotaxis that were under testing on California roads led to regulators accusing Cruise of downplaying the severity of the situation.
In a letter addressed to Cruise’s 3,800 employees, President and Chief Technical Officer Mo ElShenawy announced the workforce reductions. ElShenawy emphasized that the job cuts were not due to the performance of the employees. This announcement followed the departure of nine key leaders at Cruise amid an ongoing probe into an October crash involving one of its driverless robotaxis, which resulted in the suspension of operations.
“Our focus is on streamlining operations and concentrating on providing a top-notch service in one city initially,” stated ElShenawy. “As we scale back our commercial activities, we are reorganizing to prioritize enhancing our technology and vehicle performance to instill confidence in our autonomous vehicles,” the letter detailed.
These workforce changes stem from an initial review of the October 2nd crash and the subsequent actions taken by the company following an incident where a Cruise robotaxi struck and injured a pedestrian who had been previously hit by another vehicle driven by a human, after which the Cruise vehicle dragged the pedestrian to the roadside.
California regulators have accused Cruise of concealing the magnitude of the October crash, potentially leading to a fine of approximately $1.5 million. Additionally, the autonomous taxi service is under scrutiny by US auto safety regulators following reports of possible risks to pedestrians and passengers.
Employees who have been laid off will receive notifications via email on Thursday. The letter informed them that they would continue to receive their salaries until February 12, along with an additional eight weeks of pay. Employees with longer tenures will receive two extra weeks of pay for each year of service beyond three years.
ElShenawy expressed, “Today is one of the toughest days we’ve encountered as we bid farewell to many talented individuals.”
The departures of executives include leaders from legal, government affairs, commercial operations, and safety and systems teams, as announced by Cruise. These changes follow the resignation of Kyle Vogt as Cruise’s CEO a few weeks earlier.
Cruise has been grappling with significant challenges in recent times. Shortly after the October incident, the California Department of Motor Vehicles effectively suspended Cruise’s license to operate the robotaxi service in the state.
In response, Cruise announced the temporary cessation of driverless operations for an assessment by impartial experts and subsequently issued a recall for all 950 cars to implement software updates.
General Motors has incurred substantial losses during the development of its driverless service, which was anticipated to generate $1 billion in revenue by 2025, with intentions to expand beyond San Francisco.
GM is planning to reduce expenditure at Cruise, which it acquired eight years ago. In the first three quarters of this year, Cruise reported pre-tax losses amounting to $1.9 billion.
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