KEY HIGHLIGHTS
- Significant Workforce Reduction: Cruise, GM’s autonomous unit, is cutting 900 jobs, about 25% of its workforce, as part of a major overhaul in commercialization efforts.
- Executive Departures Linked to Accident: Nine executives, including COO Gil West, left after a recent incident where an autonomous Cruise vehicle dragged a pedestrian, prompting safety concerns.
- Fleet Shutdown and Safety Focus: Cruise halted its fleet of 950 autonomous vehicles to address safety issues, changed commercialization plans, and will now relaunch in one city to enhance safety standards.
- Shift in Product Development: Cruise is abandoning the mass production of the Origin autonomous vehicle without steering wheels or pedals. Instead, it will focus on autonomous versions of GM’s Chevrolet Bolt.
- Financial Pressures: Cruise’s refocus aligns with GM’s goal to cut operating expenses. The unit reported a $1.9 billion loss between January and September, prompting plans to reduce spending by “hundreds of millions of dollars.”
- Competitive Landscape: Cruise, acquired by GM in 2016 for $1 billion, faces competition from well-funded autonomous startups and Alphabet’s Waymo, currently testing an autonomous ride-hailing service in multiple cities.
In a fresh round of layoffs, Cruise, the autonomous driving unit of General Motors (GM), has announced a substantial workforce reduction, cutting 900 jobs, which accounts for nearly 25% of its employees. The decision is part of a major restructuring effort aimed at revamping its commercialization strategy.
Workforce Reduction and Leadership Changes at GM’s Cruise
Reports of the layoffs surfaced earlier today via TechCrunch, and a Cruise spokesperson later confirmed the development, causing a notable uptick of over 6% in GM’s stock during trading hours.
This announcement comes on the heels of a series of high-profile departures from Cruise, including former Chief Operating Officer Gil West, in the wake of an incident where an autonomous Cruise vehicle was involved in an accident, dragging a pedestrian for 20 feet. Co-founders Kyle Vogt and Dan Kan have also stepped down.
Following the safety concerns prompted by the incident, Cruise temporarily halted its fleet of approximately 950 autonomous vehicles. Moreover, the company revised its commercialization plan, originally slated to launch an autonomous ride-hailing service in more than a dozen cities next year. The new approach involves relaunching the service in a single city initially, focusing on enhancing safety standards and processes before expanding further.
In an internal memo to employees, Cruise President and Chief Technology Officer Mo Elshenawy explained that the layoffs were a consequence of the decision to scale back commercialization efforts. The impact is primarily on Cruise’s commercial operations group and related teams, while the engineering organization, which constitutes the majority of the workforce, remains largely unaffected.
To support the affected employees, Cruise is offering at least 16 weeks of severance pay, over four months of continued healthcare coverage, stock vesting, and additional support in terms of immigration and career guidance. Simultaneously, the company is reorganizing remaining teams to align their work with the revised commercialization roadmap.
Cruise’s Commercialization Shift and Product Development Reorientation
Cruise’s shift in strategy extends beyond commercialization, with adjustments to its product development roadmap. The company, once planning to mass-produce the autonomous vehicle called Origin, is now discontinuing work on it. However, Elshenawy assured employees that Cruise remains committed to its future programs.
In the immediate future, Cruise will concentrate on developing autonomous versions of GM’s Chevrolet Bolt electric car, aligning with GM’s goal of reducing Cruise’s operating expenses. The company has disclosed a loss of approximately $1.9 billion for the unit between January and September. Last month, GM announced plans to cut Cruise’s spending by “hundreds of millions of dollars” in the coming year.
Cruise, originally acquired by GM in 2016 for a reported $1 billion, has received substantial funding from both GM and external investors over the years. The company faces competition from well-funded autonomous driving startups and Alphabet Inc.’s Waymo unit, which is actively testing an autonomous ride-hailing service in multiple cities.
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Source(s): Cybernews
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