GM Chair and CEO Mary Barra reiterated Wednesday plans for Cruise to be more “deliberate” when operations eventually resume at the troubled self-driving vehicle subsidiary. For GM, that will include slashing spending at Cruise “by hundreds of millions of dollars” in 2024, an action that is expected to result in widespread layoffs at the San Francisco-based company that employs about 3,800 people.
Barra and CFO Paul Jacobson said Wednesday there would be more specific information in the coming weeks about what this new Cruise will look like following the outcome of two independent safety and incident reviews that are already underway.
The pair’s comments were part of a broader GM update that aimed to boost confidence in the automaker following a protracted United Autoworkers strike and softening demand for EVs. GM also Wednesday reinstated its 2023 guidance to include an adjusted earnings of $11.7 billion to $12.7 billion, compared to the previous outlook of $12 billion to $14 billion, an accelerated $10 billion share buyback program and a 33% increase in its quarterly dividend next year to 12 cents per share.
“What Cruise accomplished over the past eight years since we acquired the company is remarkable,” Barra said during the Wednesday morning conference call. “Our priority now is to refocus them on safety, transparency and accountability and build trust with regulators at the local state and federal levels, including first responders and the communities in which we will operate.”
Barra added that she expects “the pace of Cruise expansion to be more deliberate when operations resume and spending will be substantially lower in 2024 than it was in 2023.” Jacobson later added spending would be cut by hundreds of millions of dollars.
GM has invested billions of dollars in Cruise since it acquired the company in March 2016. Spending has ballooned in recent years in step with Cruise’s aggressive plans to launch in more than a dozen U.S. cities. The company burned through $732 million in the first three quarters of 2023, according to GM’s last earnings report.
Barra’s comments come after weeks of disarray at Cruise following the California Department of Motor Vehicles’ October 24 decision to suspend the company’s permits to operate self-driving vehicles on public roads after an incident that saw a pedestrian — who had been initially hit by a human-driven car and landed in the path of a Cruise robotaxi — run over and dragged 20 feet by the AV. A video, which TechCrunch viewed a day after the incident, showed the robotaxi braking aggressively and coming to a stop over the woman. The DMV’s order of suspension stated that Cruise withheld about seven seconds of video footage, which showed the robotaxi then attempting to pull over and subsequently dragging the woman 20 feet.
Cruise received in August 2023 the last permit required to operate its robotaxi service in San Francisco. Almost immediately, a number of incidents began stacking up, including videos of the robotaxis blocking traffic, driving into wet cement and a crash with an emergency responder vehicle. However, it was the October 2 incident that prompted DMV, and soon after California Public Utilities Commission, to pull permits, effectively ending Cruise’s ability to operate in the state.
Cruise soon paused all of its driverless operations across its fleet, including in newly launched locations in Austin, Houston and Phoenix. Last week, co-founder and CEO Kyle Vogt abruptly resigned. His co-founder Dan Kan also resigned.
GM has since circled the executive wagons, by elevating some Cruise insiders and inserting its own leaders at the top.
GM didn’t name a replacement for Vogt, instead appointing co-presidents. Mo Elshenawy, who is executive vice president of engineering at Cruise, is now CTO and co-president. Craig Glidden, a Cruise board member and GM’s EVP of legal and policy who was recently put in charge as chief administrative officer at Cruise, is also in the co-president role. Jon McNeill, a member of GM’s board, was been appointed vice chairman of the Cruise board.
“We have a lot of confidence with what the two co presidents will do,” Barra said “And GM will be leaning in to make sure that it meets our strict requirements from a safety perspective.”
While specific details about Cruise’s restructuring were scant, Barra did hint that the automaker was already looking for ways to be more efficient and reduce spending prior to its recent problems. She noted that the company had found “synergies” between Cruise and what Mike Abbott, a former Apple executive leading GM’s software is working on.
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