GM’s Cruise’s valuation was cut by more than half, adding to the company’s existing difficulties.
This drastic reduction in the internal share price of Cruise came as a result of an accident in October that continues to weigh on the self-driving car company. This is what the news service writes Reuters. In the wake of this incident, in which a woman was struck and dragged by one of Cruise’s vehicles, the company has suspended its testing activities on public roads in the United States. Which followed Suspension of operating license in California and the associated consequences have further exacerbated Cruise’s problems.
Craig Glidden, Cruise’s chief administrative officer, informed employees of the new assessment via email. This was estimated by a third party at $11.80 per share, a significant decrease from the previous estimate of $24.27 per share just a quarter ago. Glidden highlighted the impact of this reduction on employees and the need to recognize the challenges it presents.
Cruise once had ambitious plans to introduce self-driving taxis in nearly a dozen U.S. cities. However, the company had to lay off some of its workforce and saw the resignation of the CEO and co-founder, as well as other key people. Recent developments have severely impacted Cruise’s future and shaken investor confidence.
The situation has been made worse by the recent decision of General Motors tightened to cut around $1 billion from Cruise’s annual budget. The company also released a damning safety analysis of the October accident that revealed key data was withheld by executives from regulators, the press and the public.
Cruise is currently under intense scrutiny from various government agencies, including the Securities and Exchange Commission (SEC), the Department of Justice and the National Highway Traffic Safety Administration (NHTSA). Despite the challenges, Cruise plans a limited return to the roads with human drivers later this year, likely in Houston or Dallas. The new rating reflects current market conditions as the company continues to strive to regain the trust of regulators and the public before relaunching. Cruise’s rating cut follows the Apple’s discontinuation long-term efforts to develop an electric car, which has further increased uncertainty in the industry.