GM Stock Jumped More Than 6%: Here's Why

Takeaways

GM's autonomous driving unit Cruise is cutting 24% of its workforce as it redirects spending following an accident that led regulators to suspend operations.
The layoffs will affect around 900 workers. , which will remain until February 12.
Cruise Chief Mo Elshenawy said the cuts were necessary to support the unit in the long term.

GM (GM) shares jumped more than 6% on Thursday after announcing it would cut jobs at its autonomous vehicle division, Cruise, following an accident that led regulators to shut down the robo-taxi service.

In a memo, Chairman Mo Elshenawy said the automaker was cutting 900 employees, or 24 percent of its workforce, to cut costs and focus on other projects. Co-founder and former CEO Kyle Vogt and chief product officer Dan Kan resigned last month. Instead of a new CEO, Elshenawy and GM general counsel Craig Glidden were chosen to lead the unit and report to the board.

Elshenawy explained that Cruise was “simplifying and focusing our efforts to come back with exceptional service in a single city to start. He added that the company would look at its EV Bolt platform as a first step “before scaling up.” .

Cruise has been struggling since its accident in San Francisco, California that led the state Department of Motor Vehicles to suspend Cruise's driverless deployment and testing permits.

Elshenawy noted that he and Glidden I think the layoffs were a necessary step “to establish Cruise for the long term.” He said those who are laid off will remain on the payroll until February 12.

GM shares rose by 6.7% on Thursday to $36.25, its highest close since early August. The stock is up 7.2% over the year.