SAN FRANCISCO, Nov 16 (Reuters) – Cruise, the robot taxi unit of General Motors (GM.N), on Thursday suspended the program under which GM buys back shares from its employees, following an accident which led to a break. -conduct of vehicle operations.
In an email to staff seen by Reuters, Cruise CEO Kyle Vogt said the company would reevaluate the employee equity program in light of the suspension, which “has pushed back our time to market and income generation”.
He said recent events have “significantly changed the situation that existed at the time of the last assessment.”
In November, California regulators ordered Cruise to remove its driverless cars from state roads, calling the vehicles a risk to the public and saying the company had “misrepresented” the safety of the technology. The regulator said Cruise did not initially release all video footage of an Oct. 2 crash in which Cruise’s car dragged a pedestrian in San Francisco.
Cruise said he showed California Department of Motor Vehicles officials the full video of the crash several times and provided a copy to officials. Cruise has since launched an internal review of the response to regulators and the company’s automated driving system.
Cruise this month laid off at least hundreds of contractors who operate and maintain its robo-taxi fleets in California, Arizona and elsewhere, according to sources.
Cruise’s unlisted unit introduced a stock program last year in which current and former employees can sell their vested shares to GM and other investors each quarter. Canceling the program designed to attract and retain talent could lead to some people leaving more quickly, while helping to reduce costs for GM.
“They could look to cut some costs in various areas,” said Sam Abuelsamid, an analyst at Guidehouse Insights, adding that the labor agreement between the automaker and the United Auto Workers (UAW) will be costly.
Asked about Vogt’s Thursday email, a Cruise spokesperson said, “GM and Cruise are working together on what competitive compensation programs will look like at Cruise in the future.”
The email states that Cruise will increase the bonus payment through January 2024 instead of March. It also noted that Friday, November 17 “will be a day off for the cruise – please take time to recharge.”
Cruise has lost more than $8 billion since 2017, including $728 million in the third quarter of this year, according to GM financial disclosures. Cruise had $1.7 billion in cash on hand as of September 30, enough to last nine months at current burn rates.
Reporting by Hyunjoo Jin and Greg Bensinger in San Francisco and David Shepardson in Washington; Editing by Jonathan Oatis, Matthew Lewis and Daniel Wallis
Our Standards: The Thomson Reuters Trust Principles.
Greg Bensinger joined Reuters as a technology correspondent in 2022, focusing on the world’s largest technology companies. He was previously a member of the editorial board of The New York Times and a technology reporter for The Washington Post and The Wall Street Journal. He also worked for Bloomberg News, writing about the automotive and telecommunications industries. He studied English literature at the University of Virginia and received a journalism degree from Columbia University. Greg lives in San Francisco with his wife and two children.