Kirsten Korosec
Wed, November 22, 2023
Image Credits: Darrell Etherington / Getty
Cruise executives are taking a measured business approach that preserves cash and improves safety culture in an attempt to put GM's troubled autonomous vehicle subsidiary on the right path.
The first steps in this rebuilding plan, which includes pausing production on its Origin robotaxi, were laid out in an internal email sent to employees by Mo Elshenawy, who was executive vice president of engineering at Cruise and ascended into the president role after co-founder and CEO Kyle Vogt resigned.
For now, this strategy includes more "realistic" plans, according to Elshenawy. That means focusing on its current robotaxi platform the Chevy Bolt AV instead of the custom-built Origin shuttle that GM started producing earlier this year. GM recently temporarily paused production of Origin. This latest email notes that while development of the Origin program will continue, the vehicle will not be produced in 2024. The company also is reviewing its layoff plans and will provide an update in several weeks.
While Elshenawy didn't provide a timeline for when Cruise would restart operations, he did say the company would relaunch in just one city at first. That's a departure from the aggressive multi-city launch strategy Cruise and GM had been focused on in 2023.
“As we work to rebuild trust with regulators and communities, we’ve made the decision to focus on the Bolt-based Cruise AVs in the near term with a longer term strategy around the Origin," the company wrote in an emailed statement in response to the internal email. “Once we have taken steps to improve our safety culture and rebuild trust, our strategy is to re-launch in one city and prove our performance there, before expanding.”
The internal email also provided some clarification surrounding its employee share-selling program, which was recently suspended for the fourth quarter. Vogt had reversed this wildly unpopular decision over the weekend, but employees were still waiting for more information. The email sent Wednesday said employees who own the restricted stock units that settled from the beginning of year to October would be eligible for a new tender offer to help with tax qualifications.
The internal email comes three days since Vogt abruptly resigned and about a month after the California Department of Motor Vehicles suspended Cruise’s permits to operate self-driving vehicles on public roads after an October 2 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, which had already faced increasing opposition from city officials in San Francisco, soon found itself hamstrung by investigations and pressure to stop operations. Without commercial permits to operate in San Francisco and an internal decision to pause its driverless fleets in other states, the company laid off contract workers, further deepening the malaise.
GM's Cruise plans small relaunch of driverless robotaxis
Samrhitha A and David Shepardson
Wed, November 22, 2023
(Reuters) -General Motors' robotaxi unit Cruise is planning to re-launch in one unspecified city before expanding to others, just weeks after California barred its self-driving vehicles from public roads following an accident last month.
Cruise last week paused all supervised and manual car trips in the United States while also expanding a safety review of its robotaxis, causing tumult within the company and compelling its CEO Kyle Vogt and chief product officer Daniel Kan to step down.
It is also a setback for an industry dependent on public trust and the cooperation of regulators. Cruise had in recent months touted ambitious plans to expand to more cities, offering fully autonomous taxi rides.
"Once we have taken steps to improve our safety culture and rebuild trust, our strategy is to re-launch in one city and prove our performance there, before expanding," the company said in a statement.
The GM unit said it would focus on the Bolt-based Cruise AVs in the near term with a longer term strategy around the Origin, a multi-passenger vehicle designed without a steering wheel or other controls for operation by a human driver.
It told employees in an email, which was read to Reuters, that it will also cut some jobs, "primarily in non-engineering roles" and would provide more details in mid-December.
A GM spokesman said its finance chief Paul Jacobson would likely address the financial impact on the automaker during a call with analysts scheduled for Nov. 29.
Before Cruise suspended operations, GM CEO Mary Barra had said Cruise and its autonomous vehicle technology could generate $50 billion in revenue by 2030, making the robotaxi business a big piece of her strategy to double revenue to $280 billion.
GM lost more than $700 million at Cruise in the third quarter and more than $8 billion since 2016.
Meanwhile, it now faces higher labor costs under a new United Auto Workers contract, slower-than-expected sales of its electric vehicles and costly new emissions standards from Washington.
GM's troubles have led to a 16% slide in its shares so far this year, compared with a near 19% rise in the broader S&P 500 index.
"Investors will be watching closely to evaluate whether management sees GM's challenges as limited to Cruise or if there is broader discussion about capital allocation across GM's portfolio," Morgan Stanley analyst Adam Jonas wrote in a note Wednesday.
NOT IN SAN FRANCISCO
GM and Cruise did not disclose the city where it would relaunch operations but it is unlikely to be in San Francisco, where the accident took place.
The incident involved another vehicle and ended with one of its self-driving taxis dragging a pedestrian. California authorities have pulled the company's license to operate driverless rides.
Cruise has operations in Phoenix and Austin, where regulators have been more accommodating. Its rival Waymo too has extensive operations in the cities.
As part of its previous expansion plans, Cruise had last year asked the National Highway Traffic Safety Administration (NHTSA) for permission to deploy up to 2,500 self-driving vehicles annually without human controls.
Without government approval, GM cannot deploy the Origin on public roads. The NHTSA said in July it "will issue a decision in the coming weeks" before the accident raised questions about safety.
Cruise also said it would compensate employees for potential tax liability of shares granted by the company. It had last week decided to make a new tender offer to allow them to sell shares, two days after cancelling an earlier offer.
Suspension of the program had sparked backlash from some employees who said they would face heavy tax burdens on the stocks that were vested at a much higher valuation on Oct. 15.
(Reporting by Samrhitha Arunasalam in Bengaluru, David Shepardson in Washington and Joe White in Detroit; Editing by Sayantani Ghosh and Arun Koyyur)
Samrhitha A and David Shepardson
Wed, November 22, 2023
(Reuters) -General Motors' robotaxi unit Cruise is planning to re-launch in one unspecified city before expanding to others, just weeks after California barred its self-driving vehicles from public roads following an accident last month.
Cruise last week paused all supervised and manual car trips in the United States while also expanding a safety review of its robotaxis, causing tumult within the company and compelling its CEO Kyle Vogt and chief product officer Daniel Kan to step down.
It is also a setback for an industry dependent on public trust and the cooperation of regulators. Cruise had in recent months touted ambitious plans to expand to more cities, offering fully autonomous taxi rides.
"Once we have taken steps to improve our safety culture and rebuild trust, our strategy is to re-launch in one city and prove our performance there, before expanding," the company said in a statement.
The GM unit said it would focus on the Bolt-based Cruise AVs in the near term with a longer term strategy around the Origin, a multi-passenger vehicle designed without a steering wheel or other controls for operation by a human driver.
It told employees in an email, which was read to Reuters, that it will also cut some jobs, "primarily in non-engineering roles" and would provide more details in mid-December.
A GM spokesman said its finance chief Paul Jacobson would likely address the financial impact on the automaker during a call with analysts scheduled for Nov. 29.
Before Cruise suspended operations, GM CEO Mary Barra had said Cruise and its autonomous vehicle technology could generate $50 billion in revenue by 2030, making the robotaxi business a big piece of her strategy to double revenue to $280 billion.
GM lost more than $700 million at Cruise in the third quarter and more than $8 billion since 2016.
Meanwhile, it now faces higher labor costs under a new United Auto Workers contract, slower-than-expected sales of its electric vehicles and costly new emissions standards from Washington.
GM's troubles have led to a 16% slide in its shares so far this year, compared with a near 19% rise in the broader S&P 500 index.
"Investors will be watching closely to evaluate whether management sees GM's challenges as limited to Cruise or if there is broader discussion about capital allocation across GM's portfolio," Morgan Stanley analyst Adam Jonas wrote in a note Wednesday.
NOT IN SAN FRANCISCO
GM and Cruise did not disclose the city where it would relaunch operations but it is unlikely to be in San Francisco, where the accident took place.
The incident involved another vehicle and ended with one of its self-driving taxis dragging a pedestrian. California authorities have pulled the company's license to operate driverless rides.
Cruise has operations in Phoenix and Austin, where regulators have been more accommodating. Its rival Waymo too has extensive operations in the cities.
As part of its previous expansion plans, Cruise had last year asked the National Highway Traffic Safety Administration (NHTSA) for permission to deploy up to 2,500 self-driving vehicles annually without human controls.
Without government approval, GM cannot deploy the Origin on public roads. The NHTSA said in July it "will issue a decision in the coming weeks" before the accident raised questions about safety.
Cruise also said it would compensate employees for potential tax liability of shares granted by the company. It had last week decided to make a new tender offer to allow them to sell shares, two days after cancelling an earlier offer.
Suspension of the program had sparked backlash from some employees who said they would face heavy tax burdens on the stocks that were vested at a much higher valuation on Oct. 15.
(Reporting by Samrhitha Arunasalam in Bengaluru, David Shepardson in Washington and Joe White in Detroit; Editing by Sayantani Ghosh and Arun Koyyur)
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