Monday, January 17th, 2022

Why GM’s Mary Barra dismissed Cruise CEO Daniel Ammann

It’s an ignominious end for Ammann’s decade of work at GM. He was part of Morgan Stanley’s restructuring and IPO team and later joined the automaker as treasurer.

He climbed to CFO before being named president on the same day Barra was promoted to CEO. He played a big role in downsizing GM’s money-losing overseas operations, including Opel in Europe. That global restructuring has been a hallmark of Barra’s tenure and a big reason the company has grown profits.

Ammann was central in buying Cruise, and Barra sent him to run it two years ago. The self-driving taxi startup has applied for permission from the California Public Utilities Commission to start charging for rides in autonomous vehicles that have no safety driver. Cruise also plans to launch a service in Dubai in 2023.

Under Ammann, Cruise raised more than $6 billion from partners Microsoft Corp., T. Rowe Price Associates Inc., Honda and SoftBank Vision Fund. Those cash-raising rounds brought Cruise a valuation of more than $30 billion.

When Barra sent Ammann to Cruise, the company gave him a compensation package that provided incentive to sell the company or execute an IPO. Ammann stood to get an estimated $25.6 million in restricted stock if Cruise was sold or went public, and he’d get 101,000 warrants in the self-driving startup.

That showed that GM’s board wanted an IPO at some point, but nothing very soon. When asked about taking Cruise public on the company’s third-quarter earnings call, Barra was non-committal and said the close relationship was an advantage.

With Cruise, “the vertical integration with GM is a key differentiator,” Barra said. “The message on Cruise is we’re well-funded and we have rapid commercialization plans in front of us, and that’s the play we’re executing. And over the longer term, the board will look at what best enhances the overall value creation and shareholder value for the GM shareholder.”