Tuesday, July 16, 2024

Cruise CEO Apologizes and Reinstates Share Buyback Program Amid Operational Halts

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CEO Kyle Vogt of General Motors’ self-driving unit, Cruise, issued an apology over the weekend in response to the recent operational challenges faced by the company. The apology came after an accident last month led to a suspension of operations and triggered internal and external investigations. The CEO expressed regret for the impact on employees and pledged to address the situation in an email to staff.

Following reports of Cruise suspending an employee share buyback program, Vogt announced the reinstatement of the program after employees raised concerns about tax obligations. In the email, Vogt acknowledged the need for improvement in safety, transparency, and community engagement, taking responsibility for the current situation under his leadership.

The initial suspension of the buyback program, which allowed workers to sell shares back to GM, was part of a cost-cutting measure during the comprehensive review of Cruise’s operations. Workers faced potential tax burdens on stocks vested at higher valuations on October 15, prompting the company to reconsider the decision.

“We’ve heard your concerns and are developing a plan to conduct a new tender offer that would provide some RSU liquidity to mitigate potential tax obligations,” Vogt assured employees.

Cruise has been facing challenges beyond the share buyback program, including the suspension of its self-driving permit by the California Department of Motor Vehicles (DMV) after a driverless robotaxi accident in early October. The incident triggered investigations by the National Highway Traffic Safety Administration (NHTSA) and the state, with Cruise conducting internal reviews of software and incident response.

In addition to the accident fallout, Cruise has laid off hundreds of contractors responsible for operating and maintaining driverless fleets in multiple locations. The California DMV accused Cruise of “misrepresenting” and “omitting” details related to the pedestrian accident. Cruise also halted the production of GM’s Origin driverless van and recalled nearly 1,000 of its driverless vehicles on U.S. roads.

The reinstatement of the share buyback program follows a series of setbacks for Cruise, highlighting the importance of addressing internal challenges and ensuring a transparent and accountable approach in the self-driving technology industry.

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