Cruise, the autonomous vehicle subsidiary of General Motors (GM), is currently under investigation by federal prosecutors and securities regulators following a notable incident on October 2. In this incident, a pedestrian was struck by a human-driven car and subsequently dragged by a Cruise robotaxi in San Francisco.
Cruise releases its internal incident report
The Department of Justice and the Securities and Exchange Commission have launched investigations, adding to the ongoing inquiries by various government agencies, including the California Department of Motor Vehicles (DMV), the California Public Utilities Commission, and the National Highway Traffic Safety Administration. The aftermath of the October 2 incident has cast a shadow over Cruise’s future, prompting GM to implement cost-cutting measures and assume greater control over the beleaguered subsidiary. The company not only lost its permits to operate commercially in California but also grounded its fleet in other locations.
The resignation of co-founder and CEO Kyle Vogt and the layoff of nearly 24% of the workforce underscore the severity of the situation. Challenges for Cruise began to surface soon after securing the final required permit for commercial robotaxi service in San Francisco. However, it was the October 2 incident and subsequent decisions that exacerbated the existing issues. The pedestrian was initially hit by a human-driven car, landed in the path of a Cruise robotaxi, and was subsequently dragged 20 feet. The delayed disclosure, coupled with the robotaxi’s risky maneuver, strained Cruise’s relationship with regulators.
Regulatory fallout and leadership challenges
The California DMV accused Cruise of withholding crucial video footage from its investigation, resulting in the suspension of permits. Quinn Emanuel Urquhart & Sullivan, a law firm hired by GM, conducted an internal report on the incident. The report concluded that Cruise did not intentionally mislead regulators but highlighted a lack of judgment, missteps by leadership, strained relations with regulators, and a fixation on correcting a misleading media narrative. The report underscored Cruise’s failure to effectively communicate essential information to regulators, attributing it to a “proverbial self-inflicted wound” caused by senior leadership.
Over 100 Cruise employees were informed before meetings with regulators that the robotaxi had moved forward after the initial impact, dragging the pedestrian. Instead of explicitly describing the events, employees opted to play the full video during meetings, potentially hampered by internet connectivity issues. Quinn Emanuel’s report focused less on the technology causing the incident and more on Cruise’s actions post-October 2. It labeled the loss of DMV permits as a self-inflicted wound by certain senior leaders who failed to fully appreciate how a regulated business should interact with regulators.
The report also highlighted the lack of engagement by critical leaders, including Vogt, Chief Legal Officer Jeff Bleich, and COO Gil West, in the regulatory response. Slack messages revealed their attempts to piece together events after the DMV suspended permits, indicating a reactive approach rather than proactive involvement. The October 2 incident has triggered extensive investigations and significant consequences for Cruise. The lack of transparency, communication missteps, and strained relations with regulators have raised serious challenges for the self-driving subsidiary, putting its future in jeopardy.
