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Robotaxi Cruise is cutting a quarter of its workforce, eliminating 900 jobs as the General Motors subsidiary’s monetary decline threatens to spread.
GM bought the company for more than $1 billion in 2016, just three years after it was founded, but the once-promising company is now at risk of dying in thousands of cuts following a fateful twist of fate in October that resulted in the loss of its license in California.
GM CEO Mary Barra had hoped to generate $50 billion in annual profits from the company through 2030, but has since had to revise her plans because of the crisis. Plans to expand beyond San Francisco to a dozen cities have now been scrapped to just one.
“We knew this day would come,” Cruise said Thursday in a letter to staff published via CNBC. “A lot of you will be affected because we don’t get to the market as temporarily and therefore we don’t want to in certain cities or facilities. “
San Francisco residents weren’t initially keen about the state lifting all limitations for Cruise in August. A number protested by placing traffic cones on the cars’ hoods to force them to come to a halt, while the fire department chief said it wasn’t her job to “babysit” the vehicles.
The disturbances began shortly after the restrictions were lifted, when a robotaxi failed to recognize a first responder in the lane due to an emergency, resulting in a collision. But Cruise’s problems grew exponentially when he became puzzling about cases surrounding a pedestrian’s critical situation. injury, in which he was inadvertently involved.
Subsequently, CEO Kyle Vogt and Chief Product Officer Daniel Kan left the company they had founded and took care of things, along with COO Gil West.
https://www. youtube. com/watch?v=mZBeIoa0kHM
GM has traditionally suffered from a reputation of being a company focused on short term earnings targets and run by bean counters saving costs in the wrong places. It was an early pioneer in electric vehicles with the EV1 in the late 1990s, but instead of developing the technology it shelved the concept and focused on gas-guzzling SUVs like the Cadillac Escalade and Hummer H2.
Being a leader in the field of autonomous driving was an opportunity for Barra to mislead the warring parties regardless: not only had the 2009 taxpayer bailout that hoarded the doomed automaker’s money been well spent, but control had even learned to disrupt the industry.
When rival Ford finalized its investment in Argo AI self-driving last year, the path also seemed clear for Barra. Only Alphabet’s Waymo unit stood out as a serious contender in the robotaxis space. Tesla’s fully autonomous driving, which has been in beta for more than 3 years now, remains a long way off due to its resolve to rely solely on cheap cameras for all sensory information.
But the San Francisco debacle brought GM back to its pre-bankruptcy roots as a monetary engineer. He cut Cruise’s investment by many millions of dollars next year to expand it, shelved a committed robotaxi model called Origin, and backed $10 billion. to shareholders in the form of acquisitions.
Cruise admitted that the loss of 900 full-time workers would be painful and blamed himself for budget cuts. “They’re leaving us through no fault of their own. Other corporations will have the privilege of having those professionals on their teams. “he said.
Fortune may simply not be able to get GM to comment.
This story appears in Fortune. com