Cruise slashes 24% of self-driving car workforce in sweeping layoffs

Cruise, the embattled GM self-driving car subsidiary, is laying off 900 employees, or about 24% of its workforce, TechCrunch has exclusively learned. The layoffs are part of a plan to slash costs and attempt to revamp the company following an October 2 incident that left a pedestrian stuck under and then dragged by one of its robotaxis.

An email, penned by newly minted president and CTO Mo Elshenawy, was sent this morning to the entire 3,800-person workforce. The email, which TechCrunch has viewed, began with a resigned tone: “We knew this day was coming, but that does not make it any less difficult—especially for those whose jobs are affected,” Elshenawy wrote. Workers were expected to be informed within the hour of receiving the company wide email as to whether they would be losing their job.

GM, which acquired Cruise in 2016, was rewarded by shareholders for the cutbacks. GM shares rose 4.8% to $35.64 following the news.

Cruise is targeting non-engineering jobs in the layoffs, particularly those people who worked in the field, commercial operations and corporate staffing, according to the email. The company has also ended additional assignments of contingent workers who supported its driverless operations. Engineering, a category that makes up the bulk of the Cruise workforce, is largely being preserved, 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 are simplifying and focusing our efforts to return with an exceptional service in one city to start with and focusing on the Bolt platform for this first step before we scale. As a result, we are reducing our employee counts in operations and other areas. These impacts are largely outside of engineering, although some Tech positions are impacted also.

Workers will remain on the payroll through February 12 and will be eligible for an additional eight weeks of pay, with long-term employees offered an additional two weeks’ pay per every year at Cruise over three years, according to the email to staff. Anyone laid off will also receive their 2023 bonus (eligible target payout) on January 5, 2024. Other parts of the severance package include health benefits through the end of May, two months contribution into their 401(k) plan and continued time on payroll through March 24 for immigrants in lieu of a lump-sum severance payment to allow visa holders additional time to help transition and manage their immigration status.

The company also said that all employees, regardless of whether they were laid off, will receive their January 15th vesting through its employee share-selling program.

Cruise issued a statement confirming the layoffs.

“We shared the difficult news that we are reducing our workforce, primarily in commercial operations and related corporate functions,” the emailed statement reads. “These changes reflect our decision to focus on more deliberate commercialization plans with safety as our north star. We are supporting impacted Cruisers with strong severance and benefits packages and are grateful to the departing employees who played important roles in building Cruise and supporting our mission.”

The layoffs come just a day after nine senior leaders (SLT) at Cruise, who worked in its commercial operations, legal and policy departments, were dismissed by the company’s board. COO Gil West and David Estrada, who was head of government affairs, were among that group.

Elshenawy reiterated the company would be narrowing and refocusing its efforts, information shared last month following the resignation of co-founder and CEO Kyle Vogt and some executive shuffling that included appointing Craig Glidden, GM’s EVP of legal and policy and a Cruise board member, as chief administrative officer at Cruise. Jon McNeill, a member of GM’s board, was also named vice chairman of the Cruise board. McNeill, who joined the Cruise board recently and was previously chief operating officer at Lyft and president of Tesla, now serves alongside GM Chair and CEO Mary Barra.

Cruise executives said at the time they wanted to take 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 that rebuilding plan, which included pausing production on its Origin robotaxi, were laid out in an internal email sent to employees in late November by Elshenawy, who was executive vice president of engineering at Cruise and ascended into the president role after co-founder and CEO Vogt resigned.

Elshenawy repeated that intent in the Thursday morning email stating that the company was “simplifying and focusing our efforts to return with an exceptional service in one city to start with and focusing on the Bolt platform for this first step before we scale.”

Cruise used all-electric Chevy Bolt vehicles, which have been specifically manufactured to support its self-driving system, in its robotaxi fleet. The company intended to shift toward a custom-built autonomous vehicle called the Origin.

The layoffs have been largely expected at Cruise for weeks now. Last month. Barra reiterated plans for Cruise to be more “deliberate” when operations eventually resume at the troubled self-driving vehicle subsidiary. For GM, that includes slashing spending at Cruise “by hundreds of millions of dollars” in 2024, an action that most expected would result in widespread layoffs.

GM and the Cruise board have been scrambling ever since the October 2 incident put the company in the crosshairs of state, local and federal agencies. However, Cruise’s robotaxi operations in San Francisco had been criticized by the public and city officials almost immediately after the California Public Utilities Commission issued the company in August the final permit required to operate commercially. Videos of Cruise robotaxis blocking traffic and driving into a construction site were shared on social media. But it was a crash with an emergency response vehicle that began to chip away at the company’s seemingly impenetrable exterior.

This story is developing ….