Cruise is laying off nearly a quarter of its staff after grounding its robotaxi fleet

Cruise, the self-driving division of General Motors, will lay off nearly a quarter of its employees, or 900 employees, after grounding its fleet in response to an incident in which a crash victim became trapped under a Cruise vehicle and was then dragged twenty feet to the side of the road.

Following the incident, the California Department of Motor Vehicles suspended Cruise’s license to operate self-driving cars in the state. The company subsequently grounded its entire fleet nationwide. (It also had vehicles in Arizona, Texas and Florida.) In response to the lull in operations, GM said it would reduce spending on Cruise and appoint its own executives to oversee the company.

In response, several top executives have left the company, including co-founder and CEO Kyle Vogt and chief product officer Dan Kan. Yesterday, nine more executives were fired, including Chief Legal and Policy Officer Jeff Bleich and Senior Vice President of Government Affairs David Estrada. .

Following Vogt’s resignation, Mo Elshenawy, the company’s vice president of engineering, was promoted to president and chief technology officer. In a memo to employees today, Elshenawy struck a down-to-earth tone.

“We knew this day would come, but that doesn’t make it any less difficult – especially for those whose jobs are affected,” he wrote.

Today we are implementing a workforce reduction that will affect 24% of full-time cruisers through no fault of their own. We’re simplifying and focusing our efforts to return with exceptional service in one city to start with and focusing on the Bolt platform for this first step before we scale. As a result, we are reducing the number of employees in operations and other areas. These impacts are largely outside of technology, although some technology positions are also affected. As you may have heard, yesterday we took action to say goodbye to several SLT members.

The affected employees were primarily in the company’s commercial division, as well as related corporate functions, a spokesperson said. She added that the company’s top priority was to “do the right thing” for these departing employees.

Those laid off will remain on the payroll until February 12 and will be eligible for an additional eight weeks of pay. Long-term employees at Cruise are offered an additional salary of two weeks per year for three years. Everyone receives an end-of-year bonus, as well as comprehensive medical and dental coverage, immigration assistance and other benefits. The full memo was posted on Cruise’s website.

Cruise has said it will eventually relaunch its self-driving ridehail business in just one city. The company will also “prioritize” the Chevy Bolt platform it uses for its fleet, indicating that production of its steering wheel and pedalless Origin shuttle will be halted indefinitely.

It’s been seven years since GM first announced its plan to acquire Cruise with the aim of quickly commercializing the technology. The company has scored some major victories in recent months, including a vote in California to allow its driverless robotaxi service to operate 24 hours a day, 7 days a week — only to see most of that progress disappear after a series of mistakes has exposed major problems with Cruise’s management.

The October 2 crash has sent the company into crisis mode. In the aftermath, the company hired two outside law firms to review Cruise’s safety protocols and determine whether Cruise purposefully withheld video footage from the California DMV of his self-driving vehicle towing the hit victim to the side of the road. The company initiated a voluntary recall for all 950 Cruise vehicles earlier this month to update the software to prevent similar incidents in the future.

The October 2 crash has sent the company into crisis mode

GM is also deploying its own people to keep a closer eye on Cruise. Craig Glidden, the automaker’s executive vice president of legal and policy and a member of Cruise’s board of directors, will serve as president and continue as chief administrative officer. Jon McNeill, who joined Cruise’s board last month, has been named vice chairman of the board, alongside GM CEO Mary Barra.

GM has lost $8.2 billion on Cruise since 2017, but expects to lose much less in the future. In a recent call with investors, the automaker didn’t share specific cash rebates, but Chief Financial Officer Paul Jacobson said it would likely amount to “hundreds of millions” of dollars.

But GM isn’t ready to completely retreat from self-driving technology like some of its competitors. In an interview in Washington DC yesterday, Barra said that fully self-driving cars will scale up faster than many people think.

“Some of the challenges that we just faced, I think, were more of not working with the regulators to help them understand the technology and then being transparent when issues arise,” she said. “But the technology had already been evaluated by a third party and said it was already safer than a human driver.”

Update December 14 12:55 ET: GM’s cuts to Cruise were the result of the pause in driverless operations. The layoffs were the result of the pause, not the cuts. This story has been updated to better reflect that fact.

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