Cruise moved forward quickly and regulators were outraged. Now it’s dealing with the consequences.

Cruise moved forward quickly and regulators were outraged.  Now it's dealing with the consequences.

Two months ago, Cruise Chief Executive Kyle Vogt choked up when he described how a driver 4 year old girl murdered In a stroller at a San Francisco intersection. “It barely made the news,” he said, pausing to collect himself. “Apologize. I get emotional.”

To make roads safer, he said in an interview, cities should adopt self-driving cars designed by Cruise, a subsidiary of General Motors. They don’t become distracted, drowsy or intoxicated, he said, and being programmed to put safety first means they can significantly reduce car-related deaths.

Now Mr. Vogt’s driverless car company faces its own safety concerns as he grapples with angry regulators, worried employees and doubts about his management and the viability of the business, which he has often said is worth billions. Will save lives while generating dollars.

On October 2, a car struck a woman at a San Francisco intersection and threw her into the path of one of Cruise’s driverless taxis. The cruise car passed over him, stopped for a while and then dragged him for about 20 feet to the shore, causing serious injuries.

The California Department of Motor Vehicles last week accused Cruz of removing footage of the woman being dragged from a video of the incident that he initially provided to the agency. The DMV said the company “misrepresented” 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, and took approximately 400 driverless cars off the road. Since then, Cruise’s board 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 review of the crash, said two people who attended a companywide meeting at Cruise on Monday.

Five former and current employees and business partners said Cruise employees worry there is no easy way to fix the company’s problems, while its rivals fear Cruise’s issues could lead to stricter driverless car rules for all of them. Can happen.

Company insiders are blaming everything that went wrong on the tech industry culture led by Mr. Vogt, 38, that prioritized program speed over security. In the competition between Cruise and its top driverless car rival, Waymo, Mr. Vogt wanted to dominate the same way Uber had dominated its smaller ride-hailing rival, Lyft.

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

When Mr. Vogt spoke to the company on Monday about its suspended operations, he said he did not know when they would be able to reopen and that layoffs could be imminent, according to two employees who attended the company meeting.

The staffers said they recognized that Cruz had lost the public’s trust, and outlined a plan to win it back by being more transparent and placing a greater emphasis on security. He named Lewis Zhang, vice president of security, as the company’s interim chief security officer and said she would report directly to him.

According to attendees, Mr. Vogt said, “Trust is one of those things that takes a long time to build and just a few seconds to lose.” “We have to get to the bottom of this and start rebuilding that trust.”

Cruz declined to make Mr. Vogt available for an interview. GM said in a statement that “its commitment to Cruise remains steadfast with the goal of commercialization.” It said it believes in the company’s mission and technology and supports its steps to put safety first.

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

In 2013 they introduced cruise automation. The company equipped conventional cars with sensors and computers to operate autonomously on highways. Three years later he sold the business to GM for $1 billion.

After the deal closed, GM Chairman Dan Ammann took over as Cruise’s chief executive and Mr. Vogt became its president and chief technology officer.

As president, Mr. Vogt built Cruise’s engineering team while expanding the company from 40 to nearly 2,000 employees, former employees said. Former employees said he supported getting cars to as many markets as quickly as possible, believing that the faster the company moved, the more lives it would save.

In 2021, Mr. Vogt took over as chief executive. GM Chief Executive Mary T. Barra began including Mr. Vogt on earnings calls and presentations, where he promoted the self-driving market and predicted that Cruise would have one million cars by 2030.

Mr. Vogt pressured his company to continue aggressive expansion, learning from the problems he encountered in his cars while driving in San Francisco. The company charged an average of $10.50 per ride in the city.

after a Cruise vehicle collides with Toyota Prius Former employees said that while driving in bus lanes last summer, some people at the company proposed moving their vehicles to temporarily avoid roads with bus lanes. But Mr. Vogt vetoed that idea, saying Cruise vehicles would need to continue to operate on those roads to overcome their complexity. The company later changed 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. company later It changed the way its cars detect sirens,

But after the crash, city officials and activists pressured the state to slow Cruz’s expansion. They also asked Cruise to provide more data about collisions, including documentation of unplanned stops, traffic violations and vehicle performance, said Aaron Peskin, chairman of the San Francisco Board of Supervisors.

“Cruz’s corporate behavior has led to a decline in trust over time,” Mr. Peskin said.

With its business at a standstill, there are concerns that Cruise is becoming too much of a financial burden on GM and damaging the auto giant’s reputation. Ms. Barra told investors that California’s D.M.V. Cruz had a “tremendous opportunity to grow” just hours before. Asked Cruise to shut down its driverless operations.

Cruise has not collected fares or transported riders for more than a week. In San Francisco, Phoenix, Dallas, Houston, Miami and Austin, Texas, hundreds of Cruz’s white and orange Chevrolet Bolts sit stationary. The shutdown complicates Cruise’s ambition to hit a revenue target of $1 billion by 2025.

GM spent an average of $588 million per quarter on Cruise last year, a 42 percent increase from a year earlier. Each Cruze-powered Chevrolet Bolt costs $150,000 to $200,000, according to a person familiar with its operations.

Half of Cruise’s 400 cars were based in San Francisco when driverless operations were shut down. Those vehicles were supported by a huge operational staff, with 1.5 employees per vehicle. Crews intervene to assist company vehicles every 2.5 to five miles, according to two people familiar with the operations. In other words, after receiving a cellular signal that the car was having trouble, they often had to do something to control it remotely.

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

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