GM Shifts Gear: Scaleback and Review for Cruise Self-Driving Unit

General Motors is adopting a cautious approach to the expansion of its Cruise automated driving division, coupled with substantial budget cuts, following a suspension of operations amid safety concerns surrounding its autonomous vehicles.

Initially planning to launch a ride service in San Francisco and three additional cities, GM has revised its strategy, focusing on just one city to enhance the performance of its driverless vehicle fleet. The decision comes in response to safety apprehensions that led to a temporary halt in operations.

GM’s CEO, Mary T. Barra, emphasized the need to rebuild trust with regulators, both local and federal, as well as with communities and first responders. She stated at an investor conference, “We expect the pace of Cruise’s expansion to be more deliberate when operations resume, resulting in substantially lower spending in 2024 than in 2023.”

Last month, Cruise faced a setback when California regulators suspended its operating license following an incident where a self-driving vehicle struck a pedestrian in San Francisco. In response, GM withdrew all autonomous vehicles from the roads, citing the imperative to regain public trust.

GM’s CFO, Paul Jacobson, announced a significant reduction in Cruise’s spending by “hundreds of millions of dollars” in 2024, with further adjustments expected after a thorough review of the division’s operations.

While addressing concerns about the workforce impact, Barra mentioned that more details would be provided after reviewing independent safety reports on the San Francisco incident.

In a broader business update, GM revised its 2023 net income projection to $9.1 billion to $9.7 billion, slightly lower than earlier forecasts. The company cited strikes at three plants in the fall, costing $1.1 billion in operating profit and reducing production by about 95,000 vehicles.

GM also revealed plans to repurchase up to $10 billion of its stock to boost share prices. Barra acknowledged the disappointment in the current stock value and outlined that increased labor costs in 2024, due to new agreements with unions, would be offset by cost-cutting measures implemented over the past year.

Despite the challenges faced by Cruise, Barra expressed optimism about its future, focusing on safety, transparency, and accountability. She highlighted Cruise’s accomplishments since GM acquired the company in 2016 and emphasized the priority of ensuring long-term success.

Founded in 2013 and purchased by GM in 2016, Cruise is among several companies working towards developing self-driving cars for a driverless-taxi business. Despite recent setbacks, Barra remains confident in Cruise’s potential, stating, “Our priority now is to focus the team on safety, transparency, and accountability.”

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