San Francisco-based self-driving car company Cruise made the difficult decision this week to lay off 900 employees, comprising 24% of its workforce. This sweeping round of layoffs comes in the wake of an accident on October 2nd involving one of Cruise’s autonomous vehicles.
The incident brought Cruise’s entire self-driving car program to a standstill, with all testing and rideshare operations suspended indefinitely. As Cruise pauses to reevaluate the safety of its technology, it is also clearly rethinking its aggressive commercialization timeline that has now proven unsustainable.
Pedestrian Badly Injured by Cruise AV After Collision
On the evening of October 2nd, a Cruise autonomous vehicle was traveling in downtown San Francisco when another car collided with it. The impact caused the Cruise vehicle to stop in place.
Tragically, this obstruction led a pedestrian to walk into the right front quarter of the parked Cruise car and be badly injured. Video footage shows the pedestrian made contact with the vehicle traveling at a walking pace, but the force nonetheless knocked the victim to the ground.
The autonomous Cruise then accelerated forward and dragged the pedestrian approximately 20 feet. Bystander intervention brought the self-driving car to a halt.
The pedestrian was transported to the hospital and treated for serious injuries. Further details on their recovery have not been made public to protect privacy.
Fallout: Operations Halted, Leaders Fired, Jobs Slashed
In the days and weeks following this alarming crash, Cruise has undergone substantial internal turmoil leading up to this week’s mass layoffs:
- All AV Testing & Rides Suspended: Cruise immediately grounded its entire fleet of over 100 self-driving cars, ceasing all real-world testing and public rideshare services.
- Commercial Leaders Let Go: On Wednesday this week, Cruise dismissed 9 top leaders responsible for bringing the technology to market across different cities.
- Hundreds of Contractors Cut Last Month: The company quietly laid off an unspecified number of contracted AV operators and other temporary workers in November.
- Hiring Freeze Implemented: Cruise has paused all new recruitment amid restructuring. Open roles posted online have been removed.
Along with these operational impacts, Cruise is clearly charting a new internal course focused on safety and risk mitigation over its previous fast-growth agenda.
Mass Layoffs to “Simplify and Focus” Efforts
In an internal email to staff, Cruise CEO Kyle Vogt detailed the rationale behind the layoffs:
“We knew this day was coming, but that does not make it any less difficult—especially for those whose jobs are affected,” he wrote. “Today, we are making staff reductions that will affect 24% of full-time Cruisers.”
Vogt positioning the cuts as a move to “simplify and focus” technical work on improving AV performance, safety outcomes and risk management. The layoffs targeted employees in commercialization functions more so than core engineering roles.
A Cruise spokesperson provided further context on the company’s revised plans:
“These changes reflect our decision to focus on more deliberate commercialization plans with safety as our north star. We are supporting impacted Cruisers with strong severance and benefits packages.”
Industry observers have noted that Cruise’s original goal to launch driverless taxi services in multiple cities next year was extremely ambitious given persistent technological hurdles. The safety incident thrust these challenges into the spotlight, forcing Cruise to regroup.
The layoffs indicate a pivot to narrower deployment plans in fewer markets for now. Cruise confirmed to media that its new goal is to relaunch ride-hailing with driverless vehicles in one city before considering wider scale commercialization again.
Generous Severance & Career Support for Laid Off Employees
While necessary for Cruise’s new strategic direction, the job cuts dealt emotional blow to the startup’s tight-knit culture. Laid off employees were notified over email given the scale of the reductions.
Cruise aims to support departing staff by providing generous severance packages and career transition assistance. All impacted employees remain on payroll through at least mid-April 2024, qualifying for the following benefits:
- 16+ weeks salary continuance
- Pro-rated annual bonuses
- Fully-paid healthcare premiums
- Financial support for immigration visa holders
- Vesting of stock compensation
- LinkedIn Premium subscriptions
- Alumni networking & job placement resources
“Our first priority is to treat departing Cruisers with fairness,” wrote Kyle Vogt regarding the layoffs.
The CEO also encouraged other companies to appreciate the talent and dedication of departing employees, as Cruise has benefited from greatly over the years. With newfound availability of AV experts on the job market, competitors in the autonomous vehicle space may look to scoop up Cruise alumni to aid their own programs.
Legal, Financial and Brand Fallout Remains Unclear
While Cruise aims to support affected employees, broader fallout from the safety incident and mass layoffs remains unclear.
The company faces investigations at both state and federal levels. The National Highway Traffic Safety Administration has requested extensive data from Cruise pursuant to its powers over the auto industry.
Meanwhile, the California DMV took swift action to suspend Cruise’s permission to test driverless cars on public roads shortly after the crash. That ban remains in place today, preventing Cruise from resuming real-world AV operations.
Restoring regulatory permission for testing will likely involve substantive changes to internal policies, vehicle settings and possibly technology. Cruise states its AVs will now be held to “a new AV performance bar” with enhanced safety standards to be developed.
Shareholders also recoiled in recent months as well amid the turmoil. Cruise is backed by majority investor General Motors along with Softbank, Honda and other institutional players. Cruise achieved a valuation of $30 billion in its last funding round, making it one of the highest valued private startups in automotive and technology.
Whether investors will retain such a lofty perspective of the firm given curtailed plans and tech challenges remains to be seen. GM has maintained public support for Cruise during the fallout, but its stock price has diverged substantially from subsidiary partner’s in recent months.
From a branding perspective, Cruise faces renewed public skepticism toward autonomous vehicle safety and capabilities given the gravity of human injury resulting from its system failure.
The company will likely need to implement substantive changes before expecting to regain passenger trust whenever limited commercial services resume. How extensive AV education and outreach plays into that strategy also awaits to be seen.
The Road Ahead: Safety First, Commercialization Second
Cruise once ranked among the most ambitious players in autonomous mobility, vying to redefine urban transportation with fully-driverless ridesharing services. But October’s accident illustrated sobering deficiencies in the reliability of self-driving systems that Cruise’s breakneck commercialization drive failed to fully anticipate.
In response, 900 employees are suddenly without jobs. And an entire company finds itself heading back to the drawing board, having pressed the pause button on a once fast-moving effort to realize a futuristic vision of hands-free, automated transportation services.
Technology setbacks are common, even for exceptionally well-funded startups. What matters most now is how Cruise moves forward. The company says its primary focus at present is “enhancing safety standards and processes before we scale.” Technical, policy and consumer trust barriers must all be addressed before commercial services come back online at some yet undefined point in the future.
Those remaining engineers not impacted by the layoffs now face the tall task of bolstering autonomous capabilities to enable safer, more robust driverless operations. Recent incidents clearly exposed gaps between Cruise’s prior confidence and actual technological readiness for full autonomy without human safety operators onboard.
Hard questions around technology limitations, risk tolerance, redundancy needs and more now stand center stage as Cruise looks inward to chart its next moves rather than fixating on external growth.
“We have also ended additional assignments of contingent workers who support our driverless operations, as we refined our go forward plans,” wrote Vogt, signaling a broad pullback from commercialization goals.
How Cruise emerges from this transitional period remains highly uncertain given the myriad internal changes still unfolding. But one thing is clear: driverless mobility is an infinitely complex challenge that demands patience and prudence as much as bold ambition.
If Cruise rediscovers this self-awareness born of recent hard lessons, perhaps the company can reorient itself for smarter, more considered advancement of autonomous vehicles that broadly benefits industry innovation rather than mainly serving headstrong commercial interests.
Safety must now be the north star guiding all of Cruise’s
technology development and strategy, Vogt stressed. For an entire emerging sector grappling with balancing promise versus prudence, that newly cautious perspective could mark a watershed moment.