Cruise grew quickly and angered regulators. Now it’s a matter of managing the fallout.

Cruise grew quickly and angered regulators.  Now it’s a matter of managing the fallout.

Two months ago, Kyle Vogt, Cruise’s chief executive, choked up while recounting how a driver killed a 4 year old girl in a stroller at a San Francisco intersection. “It barely made the news,” he said, pausing to compose himself. “Sorry. I’m getting emotional.

To make streets safer, he said in an interview, cities should adopt self-driving cars like those designed by Cruise, a subsidiary of General Motors. They’re not distracted, sleepy or drunk, he said, and being programmed to prioritize safety means they could significantly reduce car-related deaths.

Today, Mr. Vogt’s driverless car company faces its own safety problems as he faces angry regulators, anxious employees and skepticism about his management and viability of a business that he said would save lives while generating billions of dollars.

On October 2, a car hit a woman at a San Francisco intersection and threw her into the path of one of Cruise’s driverless taxis. The cruiser ran over her, stopped briefly, then dragged her about 20 feet before heading toward the sidewalk, causing serious injuries.

The California Department of Motor Vehicles last week accused Cruise of omitting the woman being dragged from a video of the incident that he initially provided to the agency. THE DMV said company ‘made false statements’ its technology and asked Cruise to shut down its driverless car operations in the state.

Two days later, Cruise went further and voluntarily suspended all of its driverless operations nationwide, removing approximately 400 driverless cars from the road. Since then, Cruise’s board of directors has hired the law firm Quinn Emanuel to investigate the company’s response to the incident, including its interactions with regulators, law enforcement and the media .

The board plans to evaluate the findings and any recommended changes. Exponent, a consulting firm that evaluates complex software systems, is conducting a separate study into the accident, two people at a company meeting in Cruise said Monday.

Cruise employees fear there is no easy way to fix the company’s problems, five former and current employees and business partners said, while their rivals fear Cruise’s problems could lead to stricter rules on driverless cars for everyone.

Company executives blame what went wrong on a culture in the technology industry — led by Mr. Vogt, 38 years old — that prioritized speed over security. In the competition between Cruise and its main driverless car rival, Waymo, Mr. Vogt wanted to dominate the same way Uber dominated its smaller competitor, Lyft.

“Kyle is a guy who is willing to take risks and he is willing to act quickly. It’s very Silicon Valley,” said Matthew Wansley, a professor at New York’s Cardozo School of Law who specializes in emerging automotive technologies. “This explains both Cruise’s success and his mistakes.”

When Mr. Vogt spoke to the company Monday about suspending operations, he said he did not know when they might resume and that layoffs could occur, according to two employees at the company meeting. .

He acknowledged that Cruise had lost public trust, employees said, and laid out a plan to win it back by being more transparent and placing greater emphasis on safety. He named Louise Zhang, vice president of security, as the company’s interim chief security officer and said she would report directly to him.

“Trust is one of those things that takes a long time to build and only takes seconds to lose,” Vogt said, according to attendees. “We need to get to the bottom of this and start rebuilding that trust. »

Cruise declined to make Mr. Vogt available for an interview. GM said in a statement that its “commitment to Cruise for commercialization purposes remains constant.” He said he believes in the company’s mission and technology and supports its moves to prioritize safety.

Mr. Vogt began working on self-driving cars when he was a teenager. When he was 13, he programmed a Power Wheels toy car to follow the yellow line in a parking lot. He then participated in a government-sponsored self-driving car competition while studying at the Massachusetts Institute of Technology.

In 2013, I launched Cruise Automation. The company has equipped conventional cars with sensors and computers to operate autonomously on highways. He sold the company three years later to GM for $1 billion.

After the deal closed, Dan Ammann, GM’s chairman, took over as CEO of Cruise and Mr. Vogt became president and chief technology officer.

As president, Mr. Vogt built Cruise’s engineering team as the company grew from 40 to about 2,000 employees, former employees said. He championed introducing cars to as many markets as quickly as possible, believing that the faster the company moved, the more lives it would save, former employees said.

In 2021, Mr. Vogt took over as CEO of the company. Mary T. Barra, GM’s chief executive, began including Mr. Vogt on conference calls and earnings presentations, during which he praised the autonomous driving market and predicted that Cruise would have a million cars by 2030.

Mr. Vogt urged his company to continue its aggressive expansion, learning from the problems his cars encountered while traveling in San Francisco. The company charged an average of $10.50 per trip within the city.

After a Cruiser collided with Toyota Prius traveling in a bus lane last summer, some people at the company suggested that their vehicles temporarily avoid streets with bus lanes, former employees said. But Mr. Vogt vetoed the idea, saying Cruise vehicles needed to keep plying those streets to master their complexity. The company later modified its software to reduce the risk of similar accidents.

In August, a Cruise driverless car collided with a San Francisco fire truck that was responding to an emergency. The company later changed the way its cars detect sirens.

But after the accident, city officials and activists pressured the state to slow Cruise’s expansion. They also asked Cruise to provide more data than details about crashes, including documentation of unscheduled stops, traffic violations and vehicle performance, said Aaron Peskin, chairman of the oversight board. from San Francisco.

“Cruise’s corporate behavior over time led to a growing lack of trust,” Mr. Peskin said.

With its operations frozen, some fear Cruise will become too big a financial burden for GM and damage the auto giant’s reputation. Ms. Barra told investors that Cruise had “a tremendous growth opportunity” just hours before the California D.MV. asked Cruise to end its driverless operations.

Cruise has not collected fares or carried passengers in over a week. In San Francisco, Phoenix, Dallas, Houston, Miami and Austin, Texas, hundreds of Cruise’s white and orange Chevrolet Bolts sit idle. The closure complicates Cruise’s ambition to reach its $1 billion revenue goal in 2025.

GM spent an average of $588 million per quarter on Cruise over the past year, a 42% increase from last year. Each Chevrolet Bolt operated by Cruise costs between $150,000 and $200,000, according to a person familiar with its operations.

Half of Cruise’s 400 cars were in San Francisco when driverless operations were shut down. These vehicles were supported by a large operating staff, with 1.5 workers per vehicle. Workers stepped in to assist the company’s vehicles every 2.5 to 5 miles, according to two people familiar with the company’s operations. In other words, they often had to do something to remotely control a car after receiving a cellular signal that it was having problems.

To cover its rising costs, GM will need to inject or raise more cash for the company, said Chris McNally, a financial analyst at Evercore ISI. On a call with analysts in late October, Ms. Barra said GM would share its financing plans before the end of the year.

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David B.Otero

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