GM's Cruise valuation slashed by more than half, adding to woes

General Motors’ Cruise saw its internal employee share price cut by more than half from a quarter ago as the fallout from an October accident continues to weigh on the self-driving car company.

Cruise employees were told the share price had been estimated by a third party at $11.80, according to an email viewed by Reuters. That’s down from a prior estimate of $24.27 just one quarter ago. Cruise is not publicly traded, but employees hold shares.

“We cannot ignore that this estimate is significantly lower than we’ve seen before and that there are real life impacts for each of us,” wrote Craig Glidden, chief administrative officer for Cruise, in the email.

Cruise has been working to recover from an October accident in which a woman was dragged by one of its vehicles after being struck by a human-driven car. The company’s permit to operate in California was suspended and Cruise has stopped all testing on public roads in the United States.

Glidden said Cruise has a “longer pathway towards scaled commercialization.” The company last year had plans to roll out self-driving taxis in nearly a dozen U.S. cities but has since cut a quarter of jobs and seen its CEO, co-founder and others leave.

It has been a difficult few months for the once-promising Cruise. GM last month said it slashed about $1 billion from Cruise’s annual budget and the firm released a withering safety analysis of the October crash in which evidence was shown that executives withheld important data from regulators, the press and the public.

It is being probed by a variety of government agencies including the Securities and Exchange Commission, Department of Justice and the National Highway Traffic Safety Administration.

Cruise is targeting a limited return to city streets with human drivers later this year, likely in Houston or Dallas, according to people familiar with the matter.

However, Cruise executives told some engineering and operations staff in internal meetings in recent weeks that they should not expect to see its robotaxis on city streets again until the fourth quarter, Reuters reported last month. The sources declined to be identified because they were not authorized to speak on Cruise’s behalf. Cruise has denied this characterization.

A Cruise spokesman told Reuters that the new valuation reflects “current market conditions and our operating reality,” adding that the company is focused on “earning the trust of regulators and the public before relaunching.” The cut to Cruise’s valuation follows Apple’s cancellation this week of its decade-long attempt to develop an electric car, a source told Reuters.