GM chairman hints at strategic disagreement with departed Cruise CEO

Cruise Automation CEO Dan Kan (l to r), Cruise Automation CEO Kyle Vogt and General Motors President Dan Ammann Tuesday, November 20, 2018 at the Cruise Automation office in San Francisco, California.

Source: Noah Berger | Synthetic engine

DIGEST – Synthetic engine was informed by her mother on Thursday of the sudden departure of Dan Ammann, the CEO of the company’s majority-owned self-driving Cruise subsidiary.

However, GM Chairman Mark Reuss hinted Friday at a possible disagreement over strategy, saying the company and subsidiary are “a perfect fit” under the company’s new interim leadership. Cruise with founder Kyle Vogt.

Reuss declined to comment much on the outside of the company Thursday’s release statement afternoon about Ammann’s departure from Cruise, but his remarks on Friday hinted at a potential strategic disagreement with GM executives.

“We believe Cruise has a great partnership with Kyle Vogt, Cruise’s co-founder, chairman, and CTO. He’s taking on the role of interim CEO,” Reuss told CNBC’s Phil LeBeau in an interview on “Squawk on the Street. “ “Cruise and GM, we’re really a perfect fit in accelerating the shared autonomous vehicle strategy we outlined at the recent investor day.”

Those growth plans, detailed by Ammann in early October, include commercializing robotaxi early next year in San Francisco, followed by ramping up operations. 1 million such vehicles by 2030.

It is currently unclear what led to Ammann’s sudden departure. It follows some new speculation from Wall Street analysts that Cruise could be more valuable separate from the car manufacturer.

After speaking with GM, Citi analyst Itay Michaeli told investors in a Friday note that he believes Ammann’s departure is related to “strategic decisions around Cruise ( i.e. IPO time)” as GM increasingly sees Cruise as an integral part of its Consumer AV strategy. “

Shares of GM fell as much as 7% Friday morning, to $54.51 a share. Shares closed Friday at $55.16 per share, down 5.5%.

Ammann, a former investment banker, is highly respected by Wall Street analysts. He began leading Cruise in 2019 after serving as GM chairman as well as chief financial officer before. He is credited with the 2016 acquisition of Cruise.

But Cruise, under Ammann, missed out on a number of major milestones, most notably its plan to roll out a ride-hailing service to the public in San Francisco in 2019. The company postpone those plans that year to conduct further testing and obtain the necessary regulatory approvals.

A GM spokesman declined to elaborate on Reuss’ comments in the company’s previously published statement, saying: “By continuing to work together, GM and Cruise bring production scale and big technology to autonomy, which will quickly reduce costs.The integration strategy will also maximize GM and Cruise’s Total Solveable Market by leveraging synergy, resulting in greater, more sustainable value for both GM and Cruise shareholders.”

Since acquiring Cruise, GM has invested billions of dollars in operations and attracted investors such as Honda Motor, Softbank Vision Fund and more recently, Walmart and Microsoft.

– by CNBC Michael Bloom contributed to this report. GM chairman hints at strategic disagreement with departed Cruise CEO

Sarah Ridley

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