Cruise, General Motors' embattled autonomous vehicle subsidiary, said Thursday it would cut about 900 jobs, about a quarter of its workforce, as the company sought to control costs after an incident in October led to the California regulators to close. its robotaxi operations.
Most of the job cuts are in corporate and commercial roles, which have become less important since the company voluntarily suspended all of its driverless operations nationwide in October. The shutdown came two days after the California Department of Motor Vehicles said the company “misrepresented” its technology and ordered Cruise to stop operating in the state.
Cruise's troubles date back to an Oct. 2 accident when a car hit a woman at an intersection in San Francisco and threw her into the path of one of Cruise's driverless taxis. The Cruise car dragged the woman about 20 feet before stopping onto the sidewalk, causing serious injuries. Regulators accused Cruise of omitting car footage of him dragging the woman in a video he provided to state officials.
The accident, and its consequences, have called into question the future of the technology and automotive industry's pursuit of autonomous vehicles. Since Google began working on the first self-driving car more than a decade ago, dozens of companies have spent tens of billions of dollars creating software and persuading regulators to allow on-road testing of everything. the country.
But many self-driving car executives now fear that Cruise's problems could lead regulators to increase enforcement and scrutiny of the nascent technology. And financial pressures have increased for startups that sell sensors and other technologies to autonomous vehicle companies.
Waymo, a division of Google parent company Alphabet, still offers a driverless taxi service in San Francisco. Industry leaders see the city as a critical testing ground for the potential of the technology and the viability of the $8 trillion market it could create.
“The problem is not just the technology, which is a problem,” said Mike Ramsey, an automotive analyst focused on the autonomous vehicle industry at Gartner, a technology research firm. “It has always been about the business model. “There has been a desperation that it makes sense to do this and they still haven't found a way to justify it.”
GM, which bought Cruise in 2016 for $1 billion, stepped in to boost the autonomous vehicle company. In November, Cruise hired the Quinn Emanuel law firm to investigate the accident and Cruise's response. The self-driving car maker's founders, Kyle Vogt and Dan Kan, resigned last month. And yesterday, the company fired nine top executives, including its heads of operations and government affairs.
Instead of naming a new CEO, GM named two presidents who report to its board of directors: Mo Elshenawy, Cruise's executive vice president of engineering, and Craig Glidden, GM's general counsel.
The company has been preparing employees for layoffs for more than a month; In late October, Vogt told employees at a company-wide meeting that lost sales from ceasing operations would lead to cuts.
“We knew this day would come, but that doesn't make it any less difficult, especially for those whose jobs are affected,” Elshenaway said in an email to staff on Thursdaywhich was published on the company's website.
Cruise said the laid-off employees would continue to receive their salaries through April 8, have health benefits through May and receive their 2023 bonuses. News of the layoffs was Previously reported by tech news site TechCrunch.
The layoffs come at the end of a year of cuts across the tech industry. Big tech companies, including Microsoft and Google parent Alphabet, cut tens of thousands of jobs this year as they tried to cut costs after hiring too many employees during the pandemic.
While most tech companies have recovered and begun rebuilding their workforces, Cruise's future is less clear. The company expects Quinn Emanuel to conclude its report early next year, according to two people familiar with the investigation. The company will make some, if not all, of the report available to the public.
Vogt, 38, should feature prominently in the law firm's report. Under him, Cruise prioritized rapidly expanding its driverless fleet to overtake its main rival, Waymo, in new markets.
In April, Cruise began offering all-day driverless taxi rides in San Francisco. His 400 car quickly racked up headlines for a series of problems, including a collision with a fire truck and another incident in which a vehicle hit wet concrete and became stuck.
In an interview with The New York Times in September, Vogt said Cruise cars generated more headlines about problems than Waymo because it operated a larger fleet.
“I have not seen any evidence to suggest that either company is operating in an unsafe manner,” Vogt said. “I want both to exist.”
Even when Cruise struggled in San Francisco, Vogt pushed for expansion. Before his departure, the company was testing cars in Phoenix, Dallas, Houston, Miami and Austin, Texas.
The driverless fleet had enormous costs for GM. The automaker spent an average of $588 million per quarter on Cruise last year, a 42 percent increase from the previous year. Each Chevrolet Bolt Cruise operated cost between $150,000 and $200,000, largely due to its suite of expensive sensors and computing power.
Cruise hoped to defray its costs by collecting fares from passengers in more and more cities. Before closing its fleet, it had a goal of reaching $1 billion in revenue by 2025.
