Regulatory Setback Prompted Suspension of Operations
The incident in question involved a Cruise vehicle dragging a pedestrian before coming to a stop, causing severe injuries. California’s Department of Motor Vehicles subsequently criticized Cruise, accusing the company of misrepresenting its technology and ordering it to halt operations in the state. This setback has forced Cruise to reassess its operations and make necessary adjustments.
Persistent Challenges for the Self-Driving Car Industry
The self-driving car industry has faced numerous challenges in its development, with companies like Google dedicating vast amounts of resources to build sophisticated software and secure regulatory permissions for testing on roads across the US. While Alphabet’s subsidiary Waymo continues to offer a driverless taxi service in San Francisco, it is evident that the issues faced by Cruise are not solely related to technology.
Mike Ramsey, an automotive analyst at Gartner, emphasizes that the technology itself poses challenges. General Motors, which acquired Cruise for $1 billion in 2016, has taken a more active role in directing the subsidiary’s future. The company has hired the law firm Quinn Emanuel to investigate the crash and Cruise’s response. Additionally, Cruise’s founders, Kyle Vogt and Dan Kan, resigned last month, and the company has recently terminated nine senior executives, including heads of operations and government affairs. Cruise has appointed Mo Elshenawy, its executive vice president of engineering, and Craig Glidden, General Motors’ general counsel, as presidents reporting to the board.
Cruise has been preparing employees for these job cuts for over a month. In late October, CEO Kyle Vogt addressed the workforce in a companywide meeting, informing them of the forthcoming cuts due to the loss of sales resulting from the operational suspension. Although the layoffs are undoubtedly challenging for the affected employees, Cruise will provide continued pay until April 8, healthcare benefits until May, and 2023 bonuses to those impacted.
It’s worth noting that other prominent tech companies, such as Microsoft and Alphabet, have also experienced layoffs this year as they sought to reduce costs after increasing staff numbers during the pandemic. While most tech companies are on the road to recovery and rebuilding their workforce, the future for Cruise remains uncertain.
The law firm Quinn Emanuel is expected to conclude its investigation and release a report early next year. The findings will likely shed light on the actions and decisions made under the leadership of Kyle Vogt. During his tenure, Cruise focused on rapidly expanding its driverless fleet to outpace its main competitor, Waymo. Cruise’s fleet of 400 vehicles encountered notable challenges, including collisions with a fire truck and getting stuck in wet concrete. Nevertheless, Vogt maintained that both Cruise and Waymo operated safely.
Prior to the suspension of its operations, Cruise had set a revenue target of $1 billion by 2025. However, the company’s recent job cuts and cost-saving efforts indicate that achieving this goal may become increasingly challenging.