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

By David Shepardson

(Reuters) – General Motors (NYSE:)’ self-driving business Cruise will slash 24% of its workforce, affecting about 900 of its 3,800 employees, the company said Thursday.

The layoffs are primarily in commercial operations and related corporate functions. Cruise fired nine executives on Wednesday, including its chief operating officer, following weeks of turmoil at the robotaxi unit, which had to pull all of its vehicles from testing after an October accident.

CEO Kyle Vogt and co-founder Dan Kan both resigned in recent weeks and Cruise is preparing for a round of layoffs this month.

On Oct. 2, a woman was struck and dragged by a Cruise vehicle in San Francisco. California responded by suspending Cruise’s its driverless testing permit and the company shortly thereafter halted all U.S. testing operations.

“GM supports the difficult employment decisions made by Cruise as it reflects their more deliberate path forward, with safety as the north star,” a GM spokesman said. “We are confident in the team and committed to supporting Cruise as they set the company up for long-term success with a focus on trust, accountability and transparency.”

GM shares rose 4.9% on Wednesday.

Cruise’s troubles are also a setback for an industry dependent on public trust and the cooperation of regulators. The unit had in recent months touted ambitious plans to expand to more cities, offering fully autonomous taxi rides.

In October, the California Department of Motor Vehicles ordered Cruise to remove its driverless cars from state roads, calling them a risk to the public and saying the company had misrepresented the safety of its technology.

Further, the National Highway Traffic Safety Administration in October opened an investigation into pedestrian risks at Cruise.

Cruise could face $1.5 million in fines and additional sanctions over its failure to disclose details surrounding the accident, a California agency has said.

Mo Elshenawy took over as Cruise’s president last month and told an all-hands meeting earlier in December that the autonomous vehicle unit has hit an “all time low.”