Chevrolet Cruise autonomous vehicles sit parked in rather a lot in San Francisco, June 8, 2023.
Justin Sullivan | Getty Images News | Getty Images
Culture issues, ineptitude and poor leadership at General Motors’ Cruise autonomous vehicle unit were at the middle of regulatory oversights and coverup concerns which have plagued the corporate since October, in keeping with the findings of a third-party probe.
The report addresses, partly, controversy that has swirled around Cruise since an Oct. 2 accident by which a pedestrian in San Francisco was dragged 20 feet by a Cruise robotaxi after being struck by a separate vehicle. Results of the investigation, which reviewed whether Cruise representatives misled investigators or members of the media in discussing the incident, were published Thursday in a 105-page report.
Despite the findings, which pointed to widespread issues with company culture, the third-party probe found that the evidence up to now “doesn’t establish that Cruise leadership or personnel intended to deceive or mislead regulators” during briefings a day after the accident, in keeping with a summary of the report released by Cruise.
Cruise stays under investigation by several entities, including the U.S. Department of Justice and the U.S. Securities and Exchange Commission.
Several Cruise leaders and employees — most of whom are not any longer employed by the corporate — attempted to point out regulators a video of the incident, in keeping with the findings, but were only capable of accomplish that in considered one of several initial meetings resulting from connection or “video transmission issues.” Although the intent to share the data had been there, the report found, the Cruise representatives subsequently did not properly inform some regulators or officials of every little thing that occurred.
“The issue is that when the video froze, literally and figuratively, the Cruise employees froze within the moment, and no one thought to talk up and fill within the detail,” an individual near the investigation told CNBC.Â
Some employees also did not update or correct company statements that omitted such information and attempted to deflect blame on the human hit-and-run driver who initially struck the pedestrian.
The report outlines multiple instances by which then-CEO and co-founder Kyle Vogt, who resigned in late November, made the ultimate calls to withhold information, specifically regarding media.
Cruise co-founder Kyle Vogt shows off the push-button opening of the laterally opening doors on the brand new Cruise Origin, a completely autonomous passenger vehicle, in San Francisco, Jan. 21, 2020.
Carlos Avila Gonzalez | Hearst Newspapers | Getty Images
“This conduct has caused each regulators and the media to accuse Cruise of misleading them,” the report said. “The explanations for Cruise’s failings on this instance are quite a few: poor leadership, mistakes in judgment, lack of coordination, an ‘us versus them’ mentality with regulators, and a fundamental misapprehension of Cruise’s obligations of accountability and transparency to the federal government and the general public.”
Quinn Emanuel Urquhart & Sullivan, the business law firm that GM and Cruise retained to conduct the three-month investigation, interviewed 88 Cruise employees and reviewed greater than 200,000 documents, including emails, texts, Slack messages and more.
The investigation was led by former federal prosecutor John Potter, a San Francisco-based partner and co-lead of Quinn Emanuel’s corporate investigations group. The firm is understood for representing high-profile celebrities and business owners, including Tesla CEO Elon Musk.
Cruise ‘accepts’ report
Because the incident, Cruise’s robotaxi fleet has been grounded. Local and federal governments have launched their very own investigations. Cruise leadership has been gutted: Its cofounders, including Vogt, resigned and nine other leaders were ousted. And the enterprise laid off 24% of its workforce, in addition to a round of contractors.
Cruise said it “accepts” the conclusions present in the report. The San Francisco-based company, of which GM owns about 80%, said it’s going to “act on all” recommendations and is “fully cooperating” with investigations by state and federal agencies following the Oct. 2 accident.
The corporate said Thursday that investigations or inquiries into the incident include those by the California DMV, California Public Utilities Commission, National Highway Traffic Safety Administration, U.S. Department of Justice and U.S. Securities and Exchange Commission.
“It was a fundamentally flawed approach for Cruise or every other business to take the position that a video of an accident causing serious injury provides all obligatory information to regulators and otherwise relieves them of the necessity to affirmatively and fully inform these regulators of all relevant facts,” the Quinn Emanuel findings said.
A separate investigation by engineering consulting firm Exponent Inc. found the Cruise autonomous vehicle involved within the Oct. 2 incident “incorrectly classified the collision with the pedestrian as a side-impact collision, which led the AV to perform a subsequent pullover maneuver (to the outermost lane) as an alternative of an emergency stop,” in keeping with the report.
Exponent’s results, which also found a semantic mapping error, were consistent with Cruise’s evaluation of the incident, in keeping with the corporate.
Cruise said it updated the software to handle the underlying issues and filed a voluntary recall with the NHTSA in November.
Way forward for Cruise?
Cruise vehicles remain grounded within the U.S. A source acquainted with the operations told CNBC the corporate is “committed” to relaunching operations but is currently focused on rebuilding trust with regulators and addressing other issues outlined within the report.
Prior to the accident, Cruise was planning aggressive expansion of robotaxis outside its home market, where the vast majority of its vehicles operated.
Cruise, which GM acquired in 2016, was considered to be among the many leaders in autonomous vehicles alongside Alphabet-backed Waymo, outlasting many other corporations which have abandoned the segment.
After purchasing Cruise, GM brought on investors corresponding to Honda Motor, SoftBank Vision Fund and, more recently, Walmart and Microsoft. Nevertheless, in 2022, GM acquired SoftBank’s equity ownership stake for $2.1 billion.
GM CEO and Chair Mary Barra, who leads Cruise’s board, said in December that the Detroit automaker is “very focused on righting the ship” at Cruise. The Quinn Emanuel report does circuitously reference Barra. GM is mentioned several times.
GM said in a press release the Quinn Emanuel report “confirms Cruise’s actions following the incident on October 2 weren’t consistent with the corporate’s values and fell far in need of the justifiable expectations of regulators and the general public.”
“We all know that with the intention to successfully move forward, Cruise must accomplish that in full partnership with regulators and the communities it serves. We remain committed to Cruise’s vision and know this transformative technology will ultimately save lives,” the corporate said Thursday.
