GM to cut spending on Cruise driverless vehicles by ‘hundreds of millions of dollars’
This comes after weeks of setbacks, including California pulling its permits.
GM is massively slashing spending on its self-driving vehicle subsidiary Cruise after a string of debilitating setbacks, according to a conference call by company executives transcribed by TechCrunch. GM Chair and CEO Mary Barra said that operations would resume in some capacity, but that any plans for Cruise moving forward would be more “deliberate.”
To that end, the cuts will amount to hundreds of millions of dollars in the next year. This is expected to result in widespread layoffs at the San Francisco-based company that currently employees nearly 4,000 people. Earlier this month, Cruise CEO Kyle Vogt told staffers at an all-hands meeting that he’d have information regarding layoffs in the coming weeks, but he resigned shortly thereafter along with co-founder Dan Kan.
It looks like the entire company may get an overhaul, with CFO Paul Jacobson saying in today’s conference call that there would be specific restructuring information in the coming weeks after two independent safety and incident review boards finish their work. These boards were instituted after a collision between a Cruise robotaxi and a pedestrian. It was also found that the company’s driverless algorithm had trouble recognizing children, which is never good.
GM has invested billions of dollars in Cruise since acquiring the company in 2016. This spending has increased in recent years as the company had planned an aggressive launch in more than a dozen cities throughout the US before everything fell apart. To that end, GM’s latest earnings report indicates that Cruise spent $732 million in the first three quarters of 2023.
The point of today’s call wasn’t just to offer ill tidings for Cruise. Barra and Jacobson also noted that the recently-penned labor deal with United Autoworkers would cost GM $9.3 billion in the long-term, but the company remains optimistic about future growth, noting an adjusted earnings of $12.7 billion in 2023 and an accelerated $10 billion share buyback program.
GM has also named new executives to run Cruise. Mo Elshenawy was promoted from VP of engineering to co-president, with GM’s previous EVP of legal and policy taking up the other co-president role. GM’s CEO said that the company has “a lot of confidence with what the two co-presidents will do,” but notes that “GM will be leaning in to make sure that it meets our strict requirements from a safety perspective.”
