Cruise, the fighter GM’s self-driving car subsidiary is laying off 900 employees, or about 24% of its workforce, according to TechCrunch exclusively. The layoffs are part of a plan to cut costs and try to revamp the company following an Oct. 2 incident that left a pedestrian pinned down and then swept away by one of its robots.
An email, written by newly appointed president and CTO Mo Elshenawy, was sent this morning to the entire workforce of 3,800 people. The email, seen by TechCrunch, began in a resigned tone: “We knew this day was coming, but that doesn’t make it any less difficult—especially for those whose jobs are affected,” Elshenawy wrote. Workers were expected to be told within an hour of receiving the company’s email whether they would lose their jobs.
GM, which bought Cruise in 2016, was rewarded by shareholders for the cuts. GM shares rose 4.8% to $35.64 after the news.
Cruise is targeting non-engineering jobs in the layoffs, particularly those who worked in the field, commercial operations and corporate staff, according to the email. The company also ended additional deployments of workers who supported its driverless operations. Engineering, a category that makes up the bulk of Cruise’s workforce, is largely being held back, according to the content of the email and discussions with internal sources.
The email continued:
Today, we are making staff reductions that will affect 24% of full-time Cruisers, through no fault of their own. We’re simplifying and focusing our efforts to come back with a great service in one city to start with, and we’re focusing on the Bolt platform for that first step before we scale. As a result, we are reducing our workforce in business and other areas. These effects are largely outside of engineering, although some technology positions are also affected.
The workers will remain on the payroll until Feb. 12 and will be entitled to an additional eight weeks of pay, with longtime employees offering an additional two weeks of pay per year to Cruise for three years, according to the email to staff. Anyone laid off will also receive their 2023 bonus (matching target pay) on January 5, 2024. Other parts of the severance package include health benefits through the end of May, two months’ contribution to their 401(k) plan and continued payroll time to 24 March for immigrants instead of a lump sum severance payment to give visa holders extra time to help with the transition and manage their immigration status.
The company also said all employees, regardless of whether they were laid off, will receive the Jan. 15 vesting through its employee stock sale program.
Cruise issued a statement confirming the layoffs.
“We have shared the difficult news that we are reducing our workforce, primarily in commercial activities and related corporate functions,” the emailed statement said. “These changes reflect our decision to focus on more intentional commercialization plans with security as our north star. We are supporting the affected Cruisers with robust severance and benefits packages, and we are grateful to the departing employees who played an important role in building Cruise and supporting our mission.”
The layoffs come just a day after nine Cruise senior executives (SLTs), who worked in its commercial, legal and policy departments, were sacked by the company’s board. COO Gil West and David Estrada, who headed government affairs, were among that group.
Elshenawy reiterated that the company will scale back and refocus its efforts, information shared last month following the resignation of co-founder and CEO Kyle Vogt and some executive reshuffles that included the appointment of Craig Glidden, its EVP of legal and policy GM and board member of Cruise. chief administrative officer at Cruise. Jon McNeill, a GM board member, was also named vice chairman of the Cruise board. McNeill, who recently joined Cruise’s board and was previously chief operating officer at Lyft and president of Tesla, now serves alongside GM chairman and CEO Mary Barra.
Cruise executives said at the time they wanted to take a measured business approach that conserves cash and improves safety culture in an effort to get GM’s troubled autonomous vehicle subsidiary back on track. The first steps in that rebuilding plan, which included ceasing production of the Origin robotaxi, were outlined in an internal email sent to employees in late November by Elshenawy, who was executive vice president of engineering at Cruise and took over as president after from co. -Founder and CEO Vogt resigned.
Elshenawy reiterated that intent in his Thursday morning email, stating that the company was “simplifying and focusing our efforts to come back with a great service in one city to launch and focus on the Bolt platform for this first step before moving on to scale”.
Cruise used Chevy Bolt all-electric vehicles, which are specially built to support the autonomous driving system, in its fleet of robots. The company intended to turn to a purpose-built autonomous vehicle called Origin.
The layoffs had been widely expected at Cruise for weeks. Last month. Barra reiterated plans for Cruise to be more “intentional” when work finally resumes at the troubled self-driving subsidiary. For GM, that includes cutting spending on Cruise by “hundreds of millions of dollars” in 2024, an action that most expected would lead to widespread layoffs.
GM and Cruise’s board have been battling since the Oct. 2 incident put the company in the crosshairs of state, local and federal agencies. However, Cruise’s robotaxi operations in San Francisco were criticized by the public and city officials almost immediately after the California Public Utilities Commission in August issued the company the final license needed to operate commercially. Videos of a Cruise robotaxi blocking traffic and driving into a construction site have been shared on social media. But it was a collision with an emergency response vehicle that began to drive away from the company’s seemingly impenetrable exterior.
This story is evolving….
