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GM's driverless car company Cruise is under investigation by SEC and other agencies

edited January 25 in Other Investing
Following are edited excerpts from a current NPR report:

The GM-owned driverless car company Cruise is under investigation by several federal agencies for an October crash that seriously injured a pedestrian.

The company on Thursday said it is being investigated by the National Highway Traffic Safety Administration, the U.S. Department of Justice, and the U.S. Securities and Exchange Commission, in addition to California agencies. Cruise said it is "fully cooperating" with the regulatory and enforcement agencies that have opened the investigations.

In the Oct. 2 crash, a vehicle struck a pedestrian and sent her flying into the path of the self-driving Cruise car. The Cruise vehicle then dragged the pedestrian for another 20 feet, causing serious injuries.

Cruise, which owns a fleet of robotaxis in San Francisco, then failed to adequately inform regulators of the self-driving vehicle's full role in the incident. Since then, Cruise's driverless ride-hailing services have been paused in all markets. The CEO resigned, along with other senior executives.

Cruise also hired outside law firm Quinn Emanuel Urquhart & Sullivan to investigate the incident. In a scathing report, released Thursday, the law firm said Cruise's interactions with regulators revealed "a fundamental misapprehension" of the company's obligations to the public.

The company says it accepts the law firm's conclusions and is focused on "earning back public trust."

"Poor leadership" cited as one reason for the Cruise's failing

In its initial explanations of the crash to the public and to regulators, Cruise did not acknowledge that the robotaxi dragged the pedestrian. Instead, it focused on the fact that the collision was originally caused by another vehicle.

The law firm did not conclude that Cruise intentionally misled regulators. The report states that Cruise did attempt to play a full video for regulators that showed the pedestrian being dragged, but "internet connectivity issues" repeatedly caused the video to freeze. And instead of pointing out the video's significance, "Cruise employees remained silent, failing to ensure that the regulators understood what they likely could not see."

Letting a video "speak for itself" when the video couldn't even play didn't quite rise to the level of concealing the truth, the law firm concluded. But the report said it revealed a lot about Cruise's corporate culture.

"The reasons for Cruise's failings in this instance are numerous: 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 government and the public," the law firm wrote.


Personal Comment: Despite obvious similarities in failure to accept responsibility for basic safety requirements, the Cruise company is not believed to have any connection with the Boeing Corporation. However, it would seem that there is a high degree of potential interchangeability in upper management between the two companies.

Note: Text emphasis in the NPR report was added.

Comments

  • Following are edited excerpts from a current report in The New York Times:

    Cruise Says Hostility to Regulators Led to Grounding of Its Autonomous Cars

    A law firm’s review found that executives had failed to fully explain an October crash, which the Justice Department is also investigating.

    Cruise, the driverless car subsidiary of General Motors, said in a report on Thursday that an adversarial approach taken by its top executives toward regulators had led to a cascade of events that ended with a nationwide suspension of Cruise’s fleet and investigations by California and federal authorities, including the Justice Department.

    The roughly 100-page report was compiled by a law firm that Cruise and G.M. hired to look into whether Cruise’s executives had misled California regulators about an October crash in San Francisco in which one of its vehicles dragged a woman 20 feet. The review found that while the executives had not intentionally misled state officials, they had failed to explain key details about the incident.

    Cruise also said the Justice Department and the Securities and Exchange Commission, as well as state agencies and the National Highway Traffic Safety Administration, were investigating how it had handled the incident.

    The report is central to Cruise’s efforts to regain the public’s trust and eventually restart its business. Cruise has been largely shut down since October, when the California Department of Motor Vehicles suspended its license to operate because its vehicles were unsafe and the company misrepresented the incident. It responded by pulling its driverless cars off the road across the country, laying off a quarter of its staff and replacing Kyle Vogt, its co-founder and chief executive, who resigned in November, with new leaders.

    Cruise hopes that the investigation will help repair its reputation and clear a path for it to restart its self-driving business. It believes that its problem was the outgrowth of a leadership team that made quickly building out a business a priority over the safety of its operations.

    In Cruise’s absence, Waymo, which was started by Google, has become the only self-driving car operation offering taxi rides in San Francisco. Though Waymo’s fleet of roughly 250 cars has had few major incidents, the City of San Francisco sued the State of California last month for allowing Waymo and Cruise vehicles to operate without tighter regulations.

    The report described Cruise as a disorganized company embroiled in disagreement and confusion over what had happened and how to handle it. Though engineers and dozens of people inside the company knew that its car had dragged the woman, key senior executives, including the chief legal officer, said they hadn’t known before meeting with the D.M.V.

    G.M., which bought Cruise in 2016 for $1 billion, has stepped in to steer the company. It installed its general counsel, Craig Glidden, as president of Cruise and made him responsible for overseeing the investigation and helping to evaluate how the business should proceed. Mr. Glidden is trying to change the culture of the company to put more emphasis on safety and transparency with regulators and the public.

    Even before the Oct. 2 accident, Cruise’s cars were generating headlines for other issues, including a collision with a fire truck and an incident in which one of its cars drove into wet concrete and got stuck.

    Note: Text emphasis in this report was added.
  • What happens when machines are in charge. Heinous.
  • Can't swing a cat in The Valley of the Sun without hitting a Waymo. I've seen as many as three at a time early in the morning.

    This has always seemed like a solution in search of a problem. When the kids take my keys away I'm not going to waste money on the upkeep and insurance of any kind of vehicle when I can hail a ride for doctor's appointments or have Ensure, pet food, and Depends delivered.

    And as long as I can drive, why would I spend the money to turn that over to a machine-- even if we had the money? If it's a sports car, I want to drive it. If it's a chauffeured buggy, I'ld like a human to say "Of course sir."

    I'm wondering if I'll even be alive by the time one of these machines hits the used market. Thinking of riding around in a used Waymo makes me think of Max Headroom.

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