Cruise announces a significant reduction in its workforce 1

Cruise, the autonomous vehicle subsidiary of General Motors (GM), is undergoing a significant workforce reduction, cutting 24% of its employees, approximately 900 people. This strategic move is part of a broader cost-cutting initiative following a concerning incident on October 2, where a pedestrian was struck and dragged by one of Cruise’s robotaxis.

Cruise announces plans to cut 900 employees

In an internal email sent by Mo Elshenawy, the newly appointed President and Chief Technology Officer (CTO), the decision to implement layoffs was presented as a difficult but necessary step in the company’s ongoing restructuring efforts. The layoffs predominantly target non-engineering roles, focusing on positions in the field, commercial operations, and corporate staffing. The market responded positively to the news, with GM’s shares rising by 4.8% to $35.64.

Elshenawy outlined the company’s plan to simplify operations, concentrating efforts on delivering exceptional service in one city initially. The strategic focus is on the Bolt platform before considering scaling up operations. Notably, engineering roles, constituting the majority of Cruise’s workforce, are expected to be largely preserved in this restructuring. Affected employees will remain on the payroll through February 12, with eligibility for an additional eight weeks of pay. Long-term employees will receive an extra two weeks’ pay for every year spent at Cruise over three years.

The severance package includes health benefits until the end of May, a two-month contribution to the 401(k) plan, and continued payroll through March 24 for immigrants, allowing additional time for a smooth transition and managing immigration status. Cruise assured that all employees, irrespective of being laid off, will receive their January 15th vesting through the employee share-selling program. In response to the layoffs, Cruise issued a statement acknowledging the difficulty of the decision and emphasizing a commitment to safety in their commercialization plans.

Refocused vision and the promise of operational excellence

The company expressed gratitude to departing employees for their roles in building Cruise and supporting its mission. The layoffs come on the heels of the dismissal of nine senior leaders at Cruise, including COO Gil West and head of government affairs David Estrada. These leadership changes are part of the company’s broader efforts to refocus its business approach, improve safety culture, and overcome challenges in the autonomous vehicle sector.

Mo Elshenawy, now in a leadership role, reiterated the company’s intention to narrow and refocus its efforts, aligning with the rebuilding plan outlined after the departure of co-founder and CEO Kyle Vogt. The plan involves a measured business approach, including pausing the production of the Origin robotaxi and concentrating on delivering a quality service in one city initially. Cruise had previously faced public and regulatory scrutiny for issues with its robotaxi operations in San Francisco, including instances of vehicles blocking traffic and entering construction sites.

However, the turning point came with the October 2 incident, prompting a thorough review by state, local, and federal agencies. GM and the Cruise board have been actively addressing challenges since the incident, with plans to cut spending at Cruise by “hundreds of millions of dollars” in 2024. This cost-cutting measure was widely anticipated to lead to substantial layoffs. The layoffs at Cruise mark a critical phase in the company’s efforts to recover from setbacks and reshape its approach to autonomous vehicle development, with a renewed focus on safety and a deliberate, scaled approach to resuming operations.