Cruise, the autonomous vehicle unit of General Motors, has announced the suspension of its employee equity program and a reevaluation of its commercialization plans following a self-driving vehicle accident. The incident prompted the company to halt its self-driving operations, which in turn affected the employee equity program. CEO Kyle Vogt explained in an email to staff that this situation has led to a reassessment of the program and delayed the company’s revenue generation timelines.
The accident, which occurred on October 2 in San Francisco, resulted in the California Department of Motor Vehicles ordering Cruise to remove its driverless cars from state roads. Regulators expressed concern over the technology’s safety and accused Cruise of not disclosing all video footage related to the incident. In response, Cruise claims it showed officials the complete video multiple times and launched an internal review of its response to regulators and the automated driving system.
As a consequence of these events, Cruise has let go of hundreds of contractors responsible for operating and maintaining the company’s robotaxi fleets. Additionally, Cruise’s unlisted unit unveiled an equity program last year that allowed current and former employees to sell their vested equity to GM and other investors on a quarterly basis. However, canceling this program designed to retain talent may lead to a quicker departure of employees while also reducing costs for GM.
Regarding compensation packages at Cruise moving forward, a spokesperson stated that GM and Cruise are collaborating on their design. Furthermore, in the email to employees, Vogt mentioned that a bonus payout will be moved up to January 2024 instead of March. The email also declared November 17 as a rest day for Cruise employees to recharge.
GM’s financial disclosures indicate that Cruise has accumulated losses exceeding $8 billion since 2017, with $728 million lost in the third quarter of this year alone. However, Cruise still has cash reserves of $1.7 billion as of September 30, enough to sustain the company’s current cash burn rate for approximately nine months.
Overall, this recent accident and subsequent suspension of autonomous vehicle operations have prompted Cruise to reassess its employee equity program and commercialization plans. The company’s response to regulators and its automated driving system is undergoing an internal review. Cruise’s decision to suspend its equity program may lead to a faster departure of employees but will help reduce costs for GM. As Cruise navigates these challenges, it continues to work with GM on compensation packages and seeks to optimize its operations for the future.
