In a shocking turn of events, self-driving startup Cruise went from being a promising venture to a cautionary tale overnight. GM, which had invested a staggering $10 billion in the company, is now in damage control mode as they work to salvage their investment. Read on to find out the full story behind this sudden fall from grace and what the future holds for Cruise and GM.
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October 2 was a quiet night on the streets of San Francisco. It was moderately cloudy, and Fleet Week activities had just begun at Sunset Library. But in the Tenderloin neighborhood, at 9:29 p.m., a pedestrian stepped out into the street, crossing Fifth and Market, and was struck by a green Nissan Sentra sedan. What happened next would ripple all the way through one of the largest corporations on earth—GM.
Because after the woman was struck the first time, “Panini”—one of the self-driving robo-taxis in Cruise’s fleet that had been out on the streets for about a year and a half—ran over her, stopped, and then dragged the woman for 20 feet as it tried to pull over.
Within seconds of the initial impact, Cruise’s control room in Scottsdale, Ariz.—where hourly agents monitored Cruise’s fleet 24 hours a day in cubicles fitted with three computer screens—was looped in. By the time a live three-second video of the incident transmitted onto the computer screens in front of Cruise’s remote assistance agents, the car had already incorrectly labeled the incident as a side collision and begun to pull over, unaware it was dragging a human body beneath its wheels.
An exhaustive internal investigation reconstructed nearly every detail of the accident, but it couldn’t clear up exactly what Cruise’s remote assistance team saw that evening. One thing is certain: The incident was the most serious in Cruise’s history, and it immediately thrust the robo-taxi company and its 80% owner, General Motors, into a spiral of federal scrutiny and investigations as well as public outrage and condemnation.
Before the end of October 2023, regulators were alleging that Cruise had withheld important details of the incident from them. California’s Department of Motor Vehicles had rescinded Cruise’s operational permit, leading Cruise to voluntarily pull its vehicles off the streets across the U.S. GM—which had largely let the company run independently, despite its close communication with senior leadership and operations—swept in to replace nearly all of Cruise’s management, shuffle up its board, and lay off nearly a quarter of its almost 4,000 employees in a bid to salvage Cruise’s reputation and preserve the more than $10 billion that GM has plowed into the company over the last eight years.
Cruise—once a crown jewel of General Motors CEO and Cruise Chair Mary Barra’s broader strategy to rival electric competitor Tesla—suddenly had become an outsize liability, just as General Motors was simultaneously trying to manage the six-week union strike by workers of the Big Three U.S. automakers that was threatening its business. Those labor strikes were unprecedented, but the revelations around Cruise’s back-and-forth with regulators were also unnerving GM shareholders. As a financial analyst put it during GM’s first earnings call that mentioned Cruise’s permit being revoked, the company’s handling of the whole debacle was very “un-GM-like.” “I agree with you,” Barra responded. “It was uncharacteristic, and it definitely is something that we’re working to manage well.”
But unlike a startup that implodes and then closes its doors, GM is unfurling the full force of a Fortune 500 giant to resuscitate the project. Whereas GM had previously taken more of a backseat approach with Cruise, it is now intimately hands-on in its subsidiary’s day-to-day—and in the sensitive task of rolling Cruise robo-taxis back onto the streets.To report this story, Fortune spoke with 11 former Cruise employees or contract workers, in addition to Cruise investors, analysts, and San Francisco politicians. Fortune also interviewed Cruise’s newly appointed chief safety officer, Steve Kenner. What is clear? The moves GM and Cruise’s new leadership team make next will be a roadmap of how a giant corporation can rescue an innovative startup—or be driven off course trying to save it.
‘I can’t stop smiling’
Two years ago, General Motors CEO Mary Barra, sporting a black leather jacket, peered into the window of a white and orange Chevy Bolt that was pulling up to the curb to pick her up—no driver in sight.
“Oh, my gosh. This is incredible,” Barra said after sliding into the back seat of the Cruise robo-taxi, known by Cruise staffers as “Tostada.” Barra was sitting next to Kyle Vogt, cofounder of Cruise and its then president and chief technology officer. “It’s too bad that we have to wear masks, though, because I can’t stop smiling,” Barra said.
The video, which Barra posted on her LinkedIn two years ago, showed her taking her first Cruise ride, though she had already been talking up its technology for years—ever since General Motors scooped up a majority of the startup’s shares in March 2016, and two years later when she became chair of its board. The acquisition, which was for a combination of cash and GM equity, put the fledgling company at $1 billion when it was still just three years old, cemented Vogt as a two-time billion-dollar exit founder—and made him and Cruise cofounder Dan Kan the youngest-ever senior directors at General Motors.
Vogt, who had built his first self-driving car prototype at the age of 13, had a small team of just 40 engineers when GM pulled it into the fold, but it quickly became an outsize piece of GM’s strategy as it experimented with rideshare and autonomy. GM had already made a strategic investment in Lyft, and in early 2016, it had launched its own car-sharing program called Maven, though it would shut that down during the pandemic.
Importantly, Cruise would become an integral piece of GM’s broader big-vision strategy to go 100% electric by 2035. Elon Musk’s Tesla had left legacy carmakers like General Motors in the dust. While General Motors had been working on manufacturing EVs since the 1990s, GM had struggled to manufacture electric vehicles en masse, and in 2022, had to recall many of its Chevy Bolt EVs over fire risks. Even if President Biden was publicly trying to give General Motors most of the credit for the EV revolution, it was Tesla that was successfully putting millions of cars on the streets—and it was being rewarded by investors accordingly.
Cruise’s promise of self-driving vehicles was the kind of shiny new technology that could give General Motors an edge and differentiate it in the Market—and maybe even make the legacy automaker “cool.” GM plowed $592 million into the company in 2017, doubling its staff within the first year of GM’s acquisition. Within eight years, Cruise had scaled to nearly 4,000 employees (plus a host of contract workers) across San Francisco, Seattle, Phoenix, Austin, Dubai, and in Japan. In 2022, Cruise beat Tesla and Alphabet’s Waymo to commercial operation, becoming the first company to launch a fared robo-taxi service in San Francisco that February. Cruise welcomed strategic investors like Honda and Microsoft. It was building out a driverless last-mile delivery service with Walmart in Phoenix and had 70 of its robo-taxis on the road in San Francisco by the end of 2022.
“We are the first company that has actually deployed an autonomous rideshare company service in San Francisco,” Barra told Fortune of Cruise in an interview in August 2022. “We’re actually charging for rides and there is no driver… So I’m very excited about where our technology is. So that’s huge.”
About a year before Barra took that first ride, there was an executive shuffle within Cruise. GM veteran Dan Ammann, who had once rivaled Barra for the top seat at GM and had been chief executive at Cruise since 2019, was replaced by Vogt, and he left the company at the end of 2021. Ammann and Barra had sparred over when Cruise should go public, which was first reported by Bloomberg and independently confirmed by Fortune. (Ammann didn’t respond to Fortune’s request for comment.)
Within two months after Ammann left the company, Cruise was rolling its cars onto the road in San Francisco, leading to internal clashes among some of its own employees, who debated whether the technology was accurate enough to roll out en masse. These clashes would only heighten in 2023 when the company started scaling at a rapid clip.
“These vehicles were not ready. And we would say as much,” one of the former employees says, noting that they believed that the number of “unwanted public interactions”—or UPIs—on the company’s internal database, called RINO, were too high. The former employee described instances of vehicles freezing in the middle of a four-way stop or stopping when an emergency vehicle would go past, and said that the robo-taxis couldn’t see objects that were too close to the ground—recalling staffers joking about how a Cruise might run over Mayor London Breed’s cat, because the robo-taxi wouldn’t be able to detect it. “I believe that we were getting close—I just think that we tried it a little bit too early when there were things that were unsafe,” another former employee says, noting how isolated vehicle responses, such as a Cruise not stopping quickly enough at a stop sign, were akin to “if a computer had a learner’s permit.”
There was a notable shift at Cruise particularly in 2023, when Vogt became laser-focused on scale, according to people who worked there at the time. One person says that the company set an internal goal to reach $150 million in annual revenue by the end of the year. “Deployment decisions were basically being made on the fly at night by [Kyle Vogt],” that person asserts. (Vogt declined to comment for this story.)
But the subject of readiness was contested internally—particularly when Cruise was first launching service, and only had a few vehicles on the road. A former employee said the vehicles were “thoroughly tested” when they were first debuted for commercial service in 2022 in San Francisco. They described the lengthy process that led up to the rollout: running billions of miles of simulations in what was called “the matrix,” testing on private road systems, and tens of thousands of miles with human drivers—all of which preceded the rollout. After the cars were rolled out in 2022, small issues would lead to a reduction in fleet size or trigger a full fleet stoppage, they said.
But as more and more cars were introduced to the streets, Cruise was often at odds with the public in San Francisco, who didn’t seem quite ready for the new technology to be on the streets. People would mess with the cars—putting traffic cones on top of the vehicles so the robo-taxis would pull over, or throwing rocks at the windshields. One remote-assistance operator recalled a man pulling down his pants and sitting his naked bottom on the hood of the robo-taxi while she was trying to move the vehicle. “A lot of people didn’t want Cruise to exist and would make a joke out of it,” a former employee says. Another former employee recalled people slashing Cruise tires and a man who repeatedly chased the cars with a hatchet, sometimes when passengers were inside.
And Cruise’s relationship with regulators was at times contentious. The city and county of San Francisco were repeatedly laying out complaints about driverless Cruise cars sitting disabled and blocking traffic, signaling in one direction yet moving in another, or blocking transit vehicles. In summer 2023, head of the SFMTA Jeff Tumlin went on a podcast, berating companies like Cruise and Waymo and making statements about the data they shared with regulators that were inaccurate. (The podcast ultimately issued a factual correction around some of Tumlin’s statements about how AV companies were engaging with his agency.)
There was an “us versus them” mentality that ran through the fabric of the organization, according to the internal investigation after the October incident, which was made public earlier this year, and accounts from former employees. Two former employees said senior leadership was resistant to working with San Francisco law enforcement and regulators.
That attitude extended to the media. Employees expressed frustration at the frequent negative media coverage or political jabs lodged at Cruise, and said some staffers took it personally.
“Kyle was very passionate about what we do here at Cruise,” one of the former employees says. “He would talk all the time, at length, of drunk-driving accidents and the amount of people who are killed every single year. He mentioned [that in] almost every single company stand-up meeting that we had—just to try and drive the point home that we can make a safer world by what we do here.”
‘It was hard to watch’
For San Franciscans trying out the new Cruise robo-taxi service for the first time, the whole process could feel futuristic. A user pulls up the app, orders a Cruise car with a clever name—like “Poppy”—and it pulls up to the curb. After you get in, a tablet in the back instructs you to shut the doors; then Poppy takes you on your way.
Powering all of it was a lot of hidden manpower to make sure the vehicles stayed out of trouble. That’s where the staff in Scottsdale came in. When the fleet was operational, that office housed Cruise’s operations center, with a customer service team, an incident and crisis management team, and roadside dispatch.
One of the rooms is a 24/7 control room, where remote assistance workers worked 10 hours a day, four days a week, monitoring both the autonomous fleet—suggesting routes for the taxis when they got stuck or didn’t know how to proceed—and the vehicles that were being operated with drivers. If a driver took their hands off the steering wheel, or started blinking too slowly (indicating tiredness), the remote assistance workers would alert their supervisors.
The mood in the control room was generally lighthearted, two former agents say. In true Silicon Valley startup fashion, Cruise’s office offered free meals to its employees—with chips, energy drinks, oatmeal, and candy for them to snack on from two kitchens during their shifts. Managers would crack jokes. “I thought it was fun,” one of them says. “Everybody was nice. Everyone was wanting to help you.”
But the evening of Oct. 2, after the pedestrian was struck by a Cruise vehicle, the aura in the control room shifted markedly. No formal announcement about the crash was made within the control room, according to the agent present, though a longer, 14-second video of the accident was shared with some of the people present via Slack, or shown directly—alerting others to what had taken place, they said.
One of the agents working that evening, who spoke with Fortune on condition of anonymity, left the control room for a period after being shown the footage. “I just took a walk—just to get my mind off of it—because it was hard to watch,” they said. (Cruise says that all RA employees involved in the response “were given the opportunity to go home to cope with the experience.”)
That evening, Cruise team members jumped into crisis management mode, paging employees who needed to be looped in, and creating a virtual “war room” on Google Meet and a corresponding Slack channel to communicate about and deal with the incident. Meanwhile, employees went back and forth with the NHTSA, the San Francisco MTA, the San Francisco Police Department, and the San Francisco Fire Department about the incident and set up meetings for the following day. Cruise was fielding inquiries from the press and was solely focused on trying to correct the record to reflect that the pedestrian had initially been struck by a separate vehicle in a hit-and-run—not by Panini.
Employees didn’t know the extent of the robo-taxi’s responsibility in the accident—that the vehicle had subsequently dragged the pedestrian 20 feet after she was struck by the other vehicle—until the early morning of Oct. 3, when the complete footage from the car had been uploaded to Cruise servers and reviewed. At that point, employees realized the incident was much more serious than they had understood, and some 200 people at the company were pulled into the virtual war room.
But Vogt and Cruise’s vice president of communications, Aaron McLear, decided not to alter Cruise’s press statement to include that Panini had dragged the pedestrian, nor to share the full footage with reporters. “[W]e did share all the info with all of our regulators and the investigators. We have no obligation to share anything with the press,” McLear wrote in a Slack message, according to Cruise’s subsequent third-party investigation of the incident which GM made public earlier this year. (McLear declined to comment.)
In meetings with regulators on Oct. 3, Cruise employees didn’t proactively discuss how the robo-taxi had dragged the pedestrian—instead relying on playing a full video of the incident, which showed the dragging, to speak for itself. And there were internet issues in all but one of the meetings with regulators—limiting what exactly officials saw and creating a disconnect in what regulators took away from the meetings, the investigation showed.
Adding to what had already been such a difficult week for the company and many of its employees, one of Cruise’s incident analysts had suddenly passed away a few days before the pedestrian accident, leading Cruise to bring in counselors and offer time off to the employees who were close to him. Around that same time, one of Cruise’s contract drivers, who was manually driving a robo-taxi in one of the new cities, was T-boned by a speeding driver and hospitalized with significant injuries. “That was a crazy week at Cruise—I’m not going to lie,” says someone who worked in the Scottsdale operations center.
Meanwhile, Vogt was pressing for things to return to normal, according to the investigation that followed the incident. When members of the safety and engineering teams asked whether the fleet should be grounded, Vogt and Cruise COO Gil West said the data didn’t justify a shutdown, the report says. And to the concern of several Cruise staffers, Vogt and West determined to close the “war room” by 6:05 p.m. the day after the incident. Employees “expressed concern that there were no further scheduled [crisis management team] meetings for the biggest accident Cruise had faced in its history,” the report says. People were “livid,” an employee says.
On Oct. 6, an article ran in Forbes in which San Francisco Supervisor Aaron Peskin accused Cruise of “telling a half truth,” and not disclosing that the robo-taxi had dragged the pedestrian 20 feet. Four days later, the DMV asked for a complete video of the accident, and a couple days after, the NHTSA told Cruise it intended to open a “preliminary evaluation” into the accident as well as three other incidents involving pedestrians in San Francisco.
On Oct. 24, the DMV suspended Cruise’s driverless permit, noting in a release that the department believed Cruise vehicles were “not safe for the public’s operation” and that the company had “misrepresented any information related to safety of the autonomous technology of its vehicles.” The DMV rescinded Cruise’s permit the very same day that Barra had earlier underscored Cruise’s expansion plans on an earnings call with analysts. Shortly after, Cruise voluntarily pulled its entire fleet off the streets across the U.S., including its human-driven cars. Vogt resigned, and cofounder Dan Kan, the chief product officer, resigned a day later.
The company brought in Quinn Emanuel to investigate the incident; the legal firm determined that Cruise had suffered from “poor leadership, mistakes in judgment, lack of coordination, an ‘us versus them’ mentality with regulators, and a fundamental misapprehension of Cruise’s obligations of accountability and transparency to the government and the public.” After the findings, Cruise parted ways with nine employees and senior leaders, and completely cleaned house, bringing on a slew of new executives.
But even after
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1. What happened to Cruise in a single night?
GM’s self-driving startup Cruise experienced a setback that quickly turned it from a promising startup to a cautionary tale.
2. Why is GM scrambling to save its $10B bet on Cruise?
GM is working urgently to salvage its substantial investment in Cruise after the recent events that damaged its reputation.
3. What is the significance of Cruise’s sudden downfall?
Cruise’s downfall serves as a reminder of the challenges and risks associated with high-stakes investments in emerging technologies.
4. How is GM responding to the situation with Cruise?
GM is taking swift action to address the issues facing Cruise and protect its financial interests.
5. What lessons can other startups learn from Cruise’s experience?
Other startups can learn the importance of being prepared for unexpected challenges and the need for proactive crisis management strategies to safeguard their business interests.
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