Cruise to Cut Workforce by 50% After GM Funding Reduction

Cruise Announces Significant Workforce Reduction and Strategic Shift

Cruise, the autonomous vehicle company, is implementing substantial layoffs, impacting almost half of its employees. These cuts encompass leadership positions, including the CEO and several other key executives, as the company prepares to cease current operations.

Restructuring Under General Motors

The remaining operations of Cruise will be integrated into its parent company, General Motors. This move will allow the automaker to concentrate its resources on enhancing its Super Cruise driver assistance system and, ultimately, developing personal autonomous vehicles.

Details of the Layoffs

According to a company-wide email from Cruise President and Chief Administrative Officer Craig Glidden, verified by TechCrunch, the workforce reduction affects “nearly” 50% of employees. Affected individuals received a separate notification from Cruise Chief Human Resources Officer Nilka Thomas.

Executive Departures

Several top executives will be leaving Cruise this week. These include CEO Marc Whitten, Chief Human Resources Officer Nilka Thomas, Chief Safety Officer Steve Kenner, and Global Head of Public Policy Rob Grant.

Mo Elshenawy, Cruise’s chief technologist, will remain with the company until the end of April to facilitate the transition process.

Rationale for the Changes

“As a result of the change in strategy announced in December, we will be parting with nearly 50% of our Cruise employee base through a reduction in force,” Glidden stated in the email. “Our staffing and resource needs have dramatically changed with our shift away from the ride-hail business and toward providing autonomous vehicles to customers alongside GM.”

Employee Numbers and Impact

Estimates, based on Slack channel membership data, suggest Cruise employed approximately 2,100 people as of January 2024. This indicates that over 1,000 employees may be affected by these layoffs.

Cruise confirmed the layoffs in a statement, expressing gratitude for the contributions of departing employees and emphasizing a focus on supporting them with severance packages and career assistance.

GM Acquisition Completed

General Motors announced the completion of its acquisition of GM Cruise Holdings LLC, following approval from the Cruise board of directors. Cruise is now a fully-owned subsidiary of GM.

Severance and Benefits

Laid-off employees will remain on the payroll until April 5th and will continue to receive benefits through the end of April. They will receive eight weeks of severance pay, along with additional pay and benefits for long-term employees – two weeks for each full year of employment exceeding three years.

Furthermore, all affected employees will receive three months of company-paid COBRA coverage and a one-year subscription to LinkedIn Premium to aid in their job search.

Shift in Focus from Robotaxis

These layoffs follow GM’s December announcement that it would cease funding the development of a commercial robotaxi business, instead prioritizing the creation of personal autonomous vehicle technology.

Cost Savings

The automaker anticipates annual cost savings of up to $1 billion by ending the Cruise robotaxi development program, as detailed during its fourth-quarter earnings call.

Prior Retention Offers

In mid-January, Cruise management began offering retention packages, primarily to engineers, as the company awaited direction following the board meeting.

Anticipation of Changes

Employees had been anticipating these changes for weeks following GM’s initial announcement regarding the robotaxi program. They had been working in a state of uncertainty awaiting further instructions.

Previous Incident and Suspension

The current restructuring stems, in part, from a safety incident on October 2, 2023, where a Cruise robotaxi struck a pedestrian who had been propelled into its path by another vehicle. The vehicle then dragged the pedestrian approximately 20 feet.

The delayed disclosure of this information to authorities led to the suspension of Cruise’s operating permits by California’s Department of Motor Vehicles and Public Utilities Commission, resulting in a fleet-wide grounding of robotaxis and the resignation of key leaders, including co-founder and CEO Kyle Vogt.

Recent Developments and Investment

Despite the challenges, Cruise was preparing for a relaunch in Austin and had been conducting tests in multiple cities, including Phoenix, Dallas, Houston, and the Bay Area. The company had also developed a retrofitted sensor solution, internally known as Project Rhino, intended to address the issues highlighted by the October incident.

In June 2024, GM invested an additional $850 million into Cruise, bringing its total investment in the company since 2016 to nearly $10 billion.

A previous version of this article incorrectly stated the layoff percentage as 40%. Cruise has since corrected this to nearly 50%, aligning with Glidden’s email.