General Motors’ (GM) tumultuous 2023 rolls on with another big departure and setback.
Kyle Vogt, CEO of GM’s Cruise autonomous driving division, announced he was resigning from his role and leaving the company.
Vogt’s departure comes after a series of high-profile missteps at the company.
Last month Cruise paused all autonomous activities across the country with its robotaxis after a recent accident where a Cruise robotaxi ran over a woman, stopped on top of her, and then dragged her for about 20 feet before pulling over. The woman suffered severe injuries from the accident.
Cruise also issued a voluntary recall of all of its 950 robotaxis following the accidents in order to address a safety issue. The California DMV also suspended Cruise’s testing permits for robotaxis.
Before resigning on Sunday, Vogt apologized in an internal email to employees, as reported by Reuters.
"I am sorry we have veered off course under my leadership and that this has affected many Cruisers in a deeply personal way," Vogt wrote in the email. "As CEO, I take responsibility for the situation Cruise is in today. There are no excuses, and there is no sugar coating what has happened. We need to double down on safety, transparency, and community engagement."
Vogt's departure was followed on Monday by news that Daniel Kan, Cruise's co-founder and head of product, had also resigned.
The latest drama with Cruise, and what’s next for the autonomous company, caps off a rocky few months for parent company GM.
After starting the year off strong with big earnings and profit guidance boosts following Q1 and Q2 results, GM management and CEO Mary Barra pumped the brakes on growth projections as the landscape changed for the Detroit giant.
After a bruising contract negotiations cycle with the United Auto Workers (UAW) that lasted more than six weeks, GM and its Big Three partners Ford and Stellantis were able to get tentative deals signed with the union, with membership ratifying the deals late last week.
On the GM side, however, some UAW members balked at the specifics of the tentative agreement, with workers at a series of big GM plants rejecting the deal. Ultimately GM’s UAW workers ratified the agreement by a 54.7% vote, squeaking though the majority needed for approval.
Prior to reaching a tentative deal, however, GM management may have sensed negotiations might last longer than expected, or at least that getting a deal through rank-and-file workers may be more challenging. GM has more older, veteran UAW workers on its payroll, and getting those workers to ratify a deal that gave big boosts for younger workers would be an issue.
In its Q3 earnings report filed in late October, GM pulled its full-year profit guidance of $12 billion to $14 billion in EBIT, citing uncertainty due to the UAW strikes. GM CFO Paul Jacobson said the automaker lost roughly $800 million in pre-tax earnings due to lost vehicle production, including $200 million during the third quarter (through late October).
GM’s labor issues weren’t the only obstacle facing the automaker. In mid-October the company said it was delaying a planned electric pickup truck expansion at one of its plants, pushing production to late 2025 in order to “better manage capital investment while aligning with evolving EV demand.” Vehicles delayed by this move include the Chevrolet Equinox EV, Chevrolet Silverado EV RST, and GMC Sierra EV.
Mary Barra later elaborated on the move.
"We are also moderating the acceleration of EV production in North America to protect our pricing, adjust to slower near-term growth in demand, and implement engineering efficiency and other improvements that will make our vehicles less expensive to produce, and more profitable," Barra said in her shareholder letter.
Though the company was sticking to its 1 million EV production goal by the end of 2025, it effectively withdrew its prior goal of building 400,000 EVs in North America by 2024.
GM’s big bet on EVs was a cornerstone long-term goal for GM and its CEO. GM had committed to spend $35 billion by 2025 for its electrification plans, with a goal of being all-electric by 2035.
With that soaring EV vision likely in jeopardy, the company now in the near-term is just targeting "low to mid-single-digit EBIT EV margin in 2025."
In the here and now, GM’s current business is doing well, with the company delivering 674,336 vehicles in the US in the third quarter, up 21% from a year ago, driven by strong sales of trucks and SUVs.
But with GM stock down 15% year to date, and down a disappointing 18% over the past 5 years, the market is looking past current performance, and focused more on a future that’s a bit murky given issues with EV demand, rising worker costs, and self-driving tech that’s not quite ready for primetime.