General Motors (GM) is planning to significantly reduce spending at its self-driving vehicle subsidiary, Cruise, by “hundreds of millions of dollars” in 2024, according to Chair and CEO Mary Barra. The move, expected to result in widespread layoffs, is part of a broader strategy to reevaluate operations and improve transparency and accountability within the company. Barra emphasized the need to rebuild trust with regulators and communities, and to prioritize safety in the development and deployment of autonomous vehicles.
Key Takeaway
GM plans to cut spending at its self-driving vehicle subsidiary, Cruise, by “hundreds of millions of dollars” in 2024 as part of a broader strategy to refocus the company on safety and accountability. The move follows the suspension of Cruise’s permits to operate self-driving vehicles, highlighting the need for transparency and compliance with regulations in the development of autonomous technology.
New Focus on Safety and Accountability
In a recent conference call, Barra outlined GM’s plans to shift Cruise’s expansion strategy to a more deliberate pace and implement substantial spending reductions in the coming years. The decision follows the suspension of Cruise’s permits to operate self-driving vehicles on public roads by the California Department of Motor Vehicles, citing a failure to disclose crucial video footage. The incident involved a pedestrian who was hit by a human-driven car and subsequently run over by a Cruise robotaxi.
Barra stated that GM intends to collaborate closely with regulators at the local, state, and federal levels to address safety concerns and ensure compliance with regulations. The company aims to foster transparency and build trust with stakeholders as it develops and deploys autonomous vehicle technology.
Reevaluating Financial Priorities
The reduction in spending at Cruise comes as GM faces financial pressures and seeks to streamline its operations. The automaker recently finalized a labor deal with United Autoworkers, which is expected to cost the company $9.3 billion. However, GM reinstated its 2023 guidance, including adjusted earnings projections of $11.7 billion to $12.7 billion and plans for a $10 billion share buyback program. The company also announced a 33% increase in its quarterly dividend for next year.
Barra and CFO Paul Jacobson indicated that additional information about Cruise’s restructuring and future plans will be released after the completion of two independent safety and incident reviews that are currently underway.
