The wheels are wobbling at Cruise LLC, the Silicon Valley self-driving car unit owned by General Motors Co.
As the Detroit automaker’s $8 billion in losses on the autonomous car company mount, its CEO is out, a Detroit heavyweight is in and fresh questions by investors loom after regulators in California suspended testing for the self-driving car company following a crash on a San Francisco street.
Still, GM says it still believes in the “positive impact” autonomous vehicle technology like that under development at Cruise can have on society. But the automaker faces fresh challenges to prove that after weeks of scrutiny over safety standards at Cruise and renewed skepticism, GM can earn any return on its investment.
After spending billions on an AV future, GM and others invested in autonomous tech are recalculating how quickly self-driving vehicles can make their way to roads across the country when the public remains uncertain about lower levels of autonomy and battery-powered products. A first step, experts say, will be recognizing the need to slow down and ensure safety — not scale — is the first and foremost priority.
Amid the safety issues and management changes, Cruise CEO Kyle Vogt resigned on Sunday without explaining why. In a tweet on X, the platform formerly known as Twitter, Vogt said: “Cruise is still just getting started, and I believe it has a great future ahead. The folks at Cruise are brilliant, driven, and resilient. They’re executing on a solid, multi-year roadmap and an exciting product vision. I’m thrilled to see what Cruise has in store next!”
Vogt’s departure comes as the company has been under scrutiny after a self-driving vehicle hit and dragged a pedestrian on a San Francisco street. The mishap led California to suspend permits for Cruise’s self-driving ride-hail operation, prompted a National Highway Traffic Safety Administration investigation and sparked a mass recall of Cruise vehicles.
“The consequences of making mistakes here are substantially different from the tech industry,” said Sam Abuelsamid, principal e-mobility analyst at market research firm Guidehouse Inc. “It needs a different approach. Yes, it needs some degree of risk-taking, but that needs to be balanced with an eye on safety, that I don’t think has been there to a sufficient degree with a lot of these companies.”
Cruise late Sunday said the board of directors accepted Vogt’s resignation, and Daniel Kan, Cruise co-founder and chief product officer, also quit Monday morning, a Cruise spokesperson confirmed. Among announced leadership changes: Mo Elshenawy, executive vice president of engineering at Cruise, will serve as president and chief technology officer for Cruise. Craig Glidden, GM’s executive vice president for legal, global public policy and cybersecurity and strategic technology initiatives, will serve as president and continue as chief administrative officer for Cruise.
And Jon McNeill, a member of GM’s board since 2022 and a member of the Cruise board since earlier this month, has been appointed vice chairman of the Cruise board, serving alongside Cruise Board Chair and GM CEO Mary Barra. McNeil previously served as chief operating officer at Lyft and as president of Tesla Inc.
“Cruise has paused operations while we take time to engage third-party experts and strengthen public trust,” the company said in a statement. “The results of our ongoing reviews will inform additional next steps as we work to build a better Cruise centered around safety, transparency and trust. We will continue to advance AV technology in service of our mission to make transportation safer, cleaner and more accessible.”
Cruise has lost more than $8 billion since 2017, according to GM’s earnings reports reviewed by The Detroit News. But the automaker has remained dedicated to the company, even when crosstown rival Ford Motor Co. unwound its interest in Argo AI, the shuttered AV company Ford and partner Volkswagen AG absorbed last year. Meanwhile, GM bought out a co-investor in Cruise for $2.1 billion last year and said it would invest another $1.35 billion in the startup. The automaker invested about $8 billion in Cruise overall.
GM has said its Cruise unit will deliver $50 billion in revenue by 2030. In a statement Monday, GM said it “has made a bold commitment to autonomous vehicle technology because we believe in the profound, positive impact it will have on societies, including saving countless lives. We believe strongly in Cruise’s mission and the transformative technology it is developing.
“Safety has to be our top priority, and we fully support the actions that Cruise leadership is taking to ensure that it is putting safety first and building trust and credibility with government partners, regulators, and the broader community. Our commitment to Cruise with the goal of commercialization remains steadfast.”
Safety issues at Cruise
Vogt, 38, founded Cruise in 2013. GM acquired Cruise in 2016 and in late 2018 named GM executive Dan Ammann to the CEO position at Cruise; Vogt became the president and chief technology officer. In December 2021, GM announced that Ammann, the former president of the Detroit automaker, was leaving Cruise after leading the company since January 2019.
Dan Ives, managing director and senior equity analyst at Wedbush Securities, said in a statement Vogt’s resignation is “another major black eye for the Cruise franchise and GM. He was the turnaround CEO and instead it’s another debacle.”
Since Vogt, who reclaimed the Cruise CEO position in early 2022, has been steering the company, “there’s definitely been more of a bias to moving fast and growing fast,” Abuelsamid said.
With Vogt at the reins, Cruise in June 2022 received approval from the California Public Utilities Commission to charge fares for driverless rides in San Francisco. The approval made Cruise the first and only company with a commercial, driverless ride-hail service in a major U.S. city.
In the last year, Cruise launched driverless ride-hailing service in Austin, Houston and Phoenix. Cruise also operated employee, friends and family services in Dallas and recently opened that up in Miami.
Before the recent pedestrian crash, there were some incidents with Cruise vehicles. For example, a group of the robotaxis blocked traffic on San Francisco streets in July 2022.
On Oct. 2, a Cruise robotaxi hit a pedestrian after the person was hit by another car driven by a human while crossing the street and thrown into the pathway of the Cruise AV. The pedestrian was pinned under a tire on the Cruise vehicle and was pulled for about 20 feet as the car attempted to move off the road, AP reported.
Later that month, the California Department of Motor Vehicles suspended Cruise’s deployment and driverless testing permit after determining “the manufacturer’s vehicles are not safe for the public’s operation” and the manufacturer “misrepresented any information related to safety of the autonomous technology of its vehicles.”
NHTSA’s Office of Defects Investigation opened a case on Cruise in mid-October after it “received reports of incidents in which Automated Driving System (ADS) equipped vehicles operated by Cruise LLC (Cruise) may not have exercised appropriate caution around pedestrians in the roadway.” The investigation into two incidents where pedestrians were hit by a Cruise vehicle remains open.
In late October, Cruise suspended all of its driverless operations nationwide writing on X : “We think it’s the right thing to do during a period when we need to be extra vigilant when it comes to risk, relentlessly focused on safety, & taking steps to rebuild public trust.”
In early November, Cruise recalled all 950 of its cars to update software on them after the pedestrian incident in early October. Cruise also has halted production of the Cruise Origin robotaxis at its Factory Zero Detroit-Hamtramck Assembly Center.
The company is trying to move forward with the technology globally. In mid-October, Cruise, GM and Honda announced they plan to bring a ride-hail AV service to Japan starting in early 2026.
“Cruise’s future is in flux until it can get back to operating in the U.S. where it’s done most of its work and was even running a service to customers,” David Whiston, an autos equity strategist at Morningstar Research, said in a statement. “GM needs to convince regulators Cruise is safe and find a CEO that’s a good balance of knowing how to talk to investors while also running a tech company. For now, rebuilding public trust is the top priority and will take time.”
What’s next
Just last week, Cruise took more steps to regain public trust.
Following a board meeting on Nov. 13, Cruise announced Glidden as chief administrative officer, said that it will retain a third-party safety expert “to perform a full assessment of Cruise’s safety operations and culture,” and expanded the scope of a third-party engineering consult firm’s review of the Oct. 2 incident. Cruise also suspended all supervised or manual AV operations in the country, affecting about 70 vehicles.
Cruise is looking for a chief safety officer and while the search is on, Louise Zhang, vice president of safety & systems, will assume the role of interim chief safety officer. The Cruise board also retained the law firm Quinn Emanuel Urquhart & Sullivan LLP “to examine and better understand Cruise’s response to the October 2 incident.” The review is still underway.
The issues facing Cruise are reasons why the industry has pumped the brakes on moving aggressively with AV tech, experts say Mark Barrott, partner and leader of Plante Moran’s automotive practice, recalls in 2018 when autonomous tech was the priority of the industry at the time, but that’s not the case now. Electric vehicles have taken front stage with a heightened need to make them affordable and accessible to more people. Autonomy is now at the bottom of the priority list.
“I just don’t think the consumer is ready for EVs and AVs at the same time, even if it were technically possible,” Barrott said.
GM still has Super Cruise, a self-driving technology available on some vehicles. It works on compatible roads and requires the driver to stay alert while the vehicle drives itself. This technology is “analogous to going to a full AV,” Barrott said. “I do think that the OEMs need to get smarter around the sort of gateway to autonomy.”
khall@detroitnews.com
X: @bykaleahall
