General Motors's struggling Cruise business | Dorleco

General Motors’s struggling Cruise business to cut one-quarter of its workforce

Cruise, a self-driving car division of General Motors (GM.N), will lay off 24% of its employees as it attempts to reorganize operations after an incident that prompted it to suspend testing in the United States, the company announced on Thursday.

For weeks, General Motors’s money-losing robotaxi division has been in disarray. Following an October accident that resulted in California suspending its authorization for driverless testing, Cruise withdrew all of its vehicles from testing for autonomous driving. Both co-founder Dan Kan and CEO Kyle Vogt of the division departed last month.

Of its 3,800 employees, 900 are being laid off, mostly from commercial operations and related corporate duties. Additionally, according to Cruise, several “contingent workers who support our driverless operations” had lost their jobs.

On Thursday, General Motors’s stock increased 5.4%.

“This reflects our new future and a more deliberate go-to-market path, meaning less immediate need for field, commercial operations, and corporate staffing,” Cruise commented on the staff reductions.

A man struck by another car on October 2 was flung into the path of a Cruise autonomous vehicle and hauled 20 feet (6 meters) away. After California revoked the testing permission, Cruise stopped conducting any tests in the United States.

In the wake of an outside inquiry into the catastrophe and Cruise’s response, headed by the legal firm Quinn Emmanuel, the cruise line dismissed nine executives on Wednesday, including its chief operating officer and top legal and policy officer.

Cruise lost more than $700 million in the third quarter and more than $8 billion since 2016. General Motors announced last month that it would reduce expenses at Cruise.

A representative for GM stated, “GM supports the tough employment decisions made by Cruise as it reflects their more deliberate path forward, with safety as the north star.”

Cruise stated in November that it would eventually grow after launching in one city that would not be named. In the past, Cruise has made great claims about his aspirations to open up additional cities and provide fully autonomous taxi rides.

The public’s confidence and the authorities’ cooperation are essential for the emerging autonomous car business. The California Department of Motor Vehicles issued an order against Cruise in October, stating that the firm had misrepresented the safety of its technology and that the autonomous cars posed a risk to the public. The National Highway Traffic Safety Administration (NHTSA) launched an inquiry into the risks to pedestrians at Cruise in the same month.

When Reuters inquired about whether Cruise is giving the NHTSA the information it needs, Acting NHTSA Administrator Ann Carlson responded that the organization makes sure automakers “are aware of our authorities and that they understand the circumstances if they don’t comply.”

Because Cruise withheld information about the accident, a California agency has suggested that the company would be subject to fines and other penalties totaling $1.5 million.

At an all-hands meeting in December, Mo Elshenawy, who took over as president of Cruise last month, stated that the autonomous car unit had reached an “all-time low.”

David Shepardson reported from Washington, Nathan Gomes from Bengaluru, and Krishna Chandra Eluri and Sharon Singleton edited the piece.

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