GM’s Cruise valuation cut in half, compounding troubles

General Motors’ Cruise has seen a significant decline in its internal employee share price, dropping by more than half from the previous quarter due to lingering effects from an October incident. The current estimated share price, as determined by a third party, stands at $11.80, down from $24.27 just three months ago. While Cruise is not publicly traded, its employees hold shares in the company.

According to Craig Glidden, chief administrative officer for Cruise, the lowered valuation has real implications for employees. This change comes as Cruise works to recover from the fallout of an October accident that led to a suspension of its operating permit in California and a halt to all testing on public roads in the United States.

Plans for the commercialization of self-driving taxis in multiple U.S. cities have been delayed as Cruise navigates a challenging period. Recent actions include a reduction in workforce, departures of key personnel, and budget cuts of approximately $1 billion initiated by GM.

Various government agencies such as the Securities and Exchange Commission, Department of Justice, and the National Highway Traffic Safety Administration are investigating Cruise in light of the October incident and subsequent revelations. Despite these challenges, Cruise is aiming for a gradual return to city streets with human drivers later this year, possibly starting in Houston or Dallas.

Cruise has emphasized the importance of rebuilding trust with regulators and the public before resuming operations. The recent valuation adjustment reflects current market conditions and operational realities. Following Apple’s decision to end its electric car development efforts, the automotive industry continues to face shifting dynamics and challenges that require a strategic and cautious approach.