Cruise, the self-driving arm of General Motors, revealed that it is under investigation by the U.S. Department of Justice and the Securities and Exchange Commission.
News of the probe was first reported by TechCrunch and was disclosed by Cruise itself as part of a nearly 200-page report by Quinn Emanuel, a law firm hired by Cruise to assess how the company handled its response to an accident that occurred on October 2nd, 2023 involving a Cruise-branded Chevy Bolt and a jaywalking pedestrian. While Cruise disclosed separate probes from both federal agencies, it does not outline the scope or any further details surrounding them.
The probes are the latest development with potential consequences for Cruise since the October crash. Since the accident, the company has lost its permit to conduct driverless operations in the state of California and faced numerous counts of backlash from national media for its response to the accident.
Quinn Emanuel's report solidifies the poor response from Cruise. It specifically points the finger at Cruise's top officials, citing disjointed, "deficient leadership" as well as their failure to comprehend the importance of public transparency. The report also calls out the lack of accountability across the company.
It mentions the possibility that the company intentionally misled the media, the California DMV, and the California Highway Patrol by failing to disclose key details of the accident and initially withholding portions of a video showing the crash, the vehicle's pullover maneuver, and the pedestrian being dragged as a result of the maneuver.
In meetings with the San Francisco Mayor’s Office, NHTSA, DMV, and other government officials, Cruise leadership let a video of the accident "speak for itself." Cruise would then answer specific questions rather than explain how the accident may have further injured the pedestrian.
However, the meetings with regulatory and government bodies (including NHTSA) were often remote and were reportedly plagued with "internet connectivity issues" that caused the video to freeze, skip frames, and black-out in key places like after the initial impact.
"[I]n all of the initial meetings on October 3 except one, the video transmissions were hampered by internet connectivity issues that prevented or may have prevented regulators from seeing the entire accident fully and clearly," notes the report from Quinn Emanuel.
Regulators, therefore, may not have gotten a full picture. Meanwhile, Cruise contractors noticed "patches" of skin and "a trail of blood" on the road. The company also knew that the pedestrian had been dragged at speeds of up to 7.7 mph for 20 feet, as a result of the vehicle failing to detect the person trapped underneath.
The report further slams Cruise for allowing executives to attempt to protect the company's reputation when speaking with the media rather than providing a full, transparent account of the incident.
The California Public Utilities Commission, which authorizes driverless permits in California, issued Cruise an "Order to Show Cause" in December 2023 to determine why certain information was left out of the original accident report to the agency. The OSC, which ordered an upcoming February court appearance for Cruise, claimed that the company originally withheld that the pedestrian was drug underneath the car during the pullover maneuver and that the CPUC was not provided with any video footage of the collision.
In a blog post, Cruise says that it "failed to live up to the justifiable expectations of regulators" and intends to act on "all of the recommendations" in Quinn Emanuel's report. This includes revamping leadership to ensure accountability and transparency—something it has already started by dismissing nine executives since the accident occurred.
The recommendations also include creating a cross-disciplinary regulatory team to ensure reporting to reporting and government interactions are transparent, training leadership on regulatory requirements, revising its incident response protocol, improving cross-team functions, and implementing reporting approvals through an appointed internal team and solicitor.
But the big question here is surrounding Cruise's future. The company has turned into a $8 billion cash sinkhole for General Motors, and its CEO, Mary Barra, has continued to justify the costs to battle competitors like Waymo to market. To be fair, whatever company makes it there first will have a significant advantage, but one must question how much money is too much before the automaker pulls the plug. GM is expected to release its year-end earnings on January 30th.
