GM Cruise investigation finds poor leadership at center of crash response

Cultural problems, ineptitude and poor leadership in General Motors' The autonomous cruise vehicle unit was at the center of regulatory oversight and cover-up concerns that have plagued the company since October, according to the findings of a third-party investigation.

The report addresses, in part, the controversy that has swirled around Cruise since the Oct. 2 accident in which a pedestrian in San Francisco was dragged 20 feet by a Cruise robotaxi after being hit by another vehicle. The results of the investigation, which examined whether Cruise's representatives misled investigators or members of the media in discussing the incident, were released Thursday in a 105-page report.

Despite the findings, which pointed to widespread problems with the company's culture, the third-party investigation found that the evidence to date “does not establish that Cruise leaders or staff intended to mislead or mislead regulators.” ” during debriefings a day after the accident, according to a summary of the report released by Cruise.

Several Cruise leaders and employees, most of whom are no longer employed by the company, attempted to show regulators video of the incident, according to the findings, but were unable to during some meetings due to connection issues or “transmission issues.” Of video”. Although the intention to share the information had been there, according to the report, Cruise representatives subsequently failed to adequately inform some regulators or officials of everything that occurred.

“The problem is that when the video froze, literally and figuratively, Cruise employees froze in the moment, and no one thought to speak up and fill in the details,” a person close to the investigation told CNBC.

Some employees also failed to update or correct company statements that omitted such information and attempted to shift blame to the hit-and-run human driver who initially struck the pedestrian.

“This conduct has caused both regulators and the media to accuse Cruise of misleading them,” the report states. “The reasons for Cruise's failures in this case are numerous: poor leadership, errors in judgment, lack of coordination, an 'us versus them' mentality with regulators, and a fundamental misunderstanding of Cruise's accountability and transparency obligations to the government and the public.

Quinn Emanuel, the commercial litigation firm Cruise hired to conduct the three-month investigation, interviewed 88 Cruise employees and reviewed more than 200,000 documents, including emails, text messages, Slack messages and more.

The investigation was led by former federal prosecutor John Potter, a San Francisco-based partner and co-head of the corporate investigations group at the law firm Quinn Emanuel Urquhart & Sullivan. The firm is known for representing high-profile celebrities and business owners, including tesla Elon Musk, CEO.

Since the incident, Cruise's robotaxi fleet has been grounded. Local and federal governments have launched their own investigations. Cruise's leadership has been shattered: His co-founders, including former CEO Kyle Vogt, resigned and nine other leaders were ousted. And the company laid off 24% of its workforce, as well as a round of contractors.

Cruise said he “accepts” the report's conclusions. The San Francisco-based company, of which GM owns more than 80%, said it “will act on all” recommendations and is “fully cooperating” with investigations by state and federal agencies following the Oct. 2 crash.

The company said Thursday that investigations into the incident include the California DMV, the California Public Utilities Commission, the National Highway Traffic Safety Administration, the U.S. Department of Justice and the Exchange Commission. and U.S. Securities

“It was a fundamentally flawed approach for Cruise or any other company to take the position that a video of an accident causing serious injuries provides all necessary information to regulators and exempts them from the need to affirmatively and fully report to these regulators. of all relevant facts.” Quinn Emanuel's findings stated.

A separate investigation by engineering consulting firm Exponent Inc. found that the Cruise autonomous vehicle involved in the Oct. 2 incident “incorrectly classified the collision with the pedestrian as a side-impact collision, leading the autonomous vehicle to perform a rear stop maneuver (to the outside lane) instead of an emergency stop,” according to the report.

Exponent's results, which also found a semantic mapping error, were consistent with Cruise's analysis of the incident, according to the company.

Cruise said it updated the software to address the underlying problems and filed a voluntary recall with NHTSA in November.

Cruise vehicles remain grounded in the US. A source familiar with operations told CNBC that the company is “committed” to relaunching operations, however, the company is currently focused on rebuilding trust with regulators. and address other issues outlined in the report.

Before the accident, Cruise was planning an aggressive expansion of robotaxis outside its home market, where most of its vehicles operated.

Cruise, which GM acquired in 2016, was considered one of the leaders in autonomous vehicles along with Alphabet-backed by Waymo, surpassing many other companies that have abandoned the segment.

After purchasing Cruise, GM attracted investors such as Honda Motor, SoftBank Vision Fund and, more recently, Walmart and Microsoft. However, in 2022, GM acquired SoftBank's equity stake for $2.1 billion.

GM CEO and Chairman Mary Barra, who heads Cruise's board, said last month that the Detroit automaker is “very focused on righting the ship” at Cruise.

GM said in a statement that Quinn Emanuel's report “confirms that Cruise's actions after the Oct. 2 incident were inconsistent with the company's values ​​and fell far short of the justifiable expectations of regulators and the public.” .

“We know that to move forward successfully, Cruise must do so in full partnership with regulators and the communities it serves. We remain committed to Cruise's vision and know that this transformative technology will ultimately save lives,” the company said Thursday.