Two months ago, Cruise CEO Kyle Vogt choked up as he recounted how a driver killed a four-year-old girl in a stroller at a San Francisco intersection. “It barely made any headlines,” he said, pausing to compose himself. “Sorry. I’m getting emotional.”
To make roads safer, he said in an interview, cities should introduce self-driving cars like those developed by Cruise, a subsidiary of General Motors. They are not distracted, sleepy or drunk, he said, and because they are programmed to put safety first, they can significantly reduce the number of car fatalities.
Now Mr. Vogt’s self-driving car company faces its own safety concerns as he contends with angry regulators, worried employees and skepticism about his management and the profitability of a company that he has often said will save lives while saving billions of dollars will generate.
On October 2, a car hit a woman at a San Francisco intersection, throwing her into the path of one of Cruise’s driverless taxis. The cruise car ran over her, stopped briefly and then dragged her about 20 feet before hitting the curb, causing serious injuries.
The California Department of Motor Vehicles last week accused Cruise of failing to drag the woman out of a video of the incident that it originally provided to the agency. The DMV said the company had “misrepresented” its technology and asked Cruise to stop operating self-driving cars in the state.
Two days later, Cruise went one step further and voluntarily suspended all driverless operations across the country, taking approximately 400 driverless cars off the road. Cruise’s board has since hired 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 results and any recommended changes. Exponent, a consulting firm that evaluates complex software systems, is conducting a separate investigation into the crash, said two people who attended a companywide meeting at Cruise on Monday.
Cruise employees fear there is no easy way to solve the company’s problems, five former and current employees and business partners said, while rivals fear Cruise’s problems could lead to stricter self-driving car rules for everyone.
Company insiders blame what went wrong on the technology industry’s culture — led by 38-year-old Mr. Vogt — for prioritizing program speed over security. In the competition between Cruise and its biggest self-driving car competitor, Waymo, Mr. Vogt wanted to dominate in the same way Uber dominated its smaller competitor, Lyft.
“Kyle is a guy who is willing to take risks and he is willing to act quickly. It’s a real Silicon Valley,” said Matthew Wansley, a professor at the Cardozo School of Law in New York who specializes in new automotive technologies. “That explains both Cruise’s success and his mistakes.”
When Mr. Vogt spoke to the company Monday about the suspended operations, he said he did not know when operations could resume and that layoffs could occur, according to two employees who attended the companywide meeting.
He acknowledged that Cruise had lost the public’s trust, employees said, and outlined a plan to regain it through greater transparency and an emphasis on safety. He named Louise Zhang, vice president of security, as the company’s interim security chief and said she would report directly to him.
“Trust is one of those things that takes a long time to build and only seconds to lose,” Mr. Vogt said, according to attendees. “We need to get to the bottom of this and start rebuilding that trust.”
Cruise declined to make Mr. Vogt available for an interview. GM said in a statement that its “commitment to Cruise with the goal of commercialization remains unwavering.” It said it believes in the company’s mission and technology and supports its moves to put safety first.
Mr. Vogt began working on self-driving cars as 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 entered a government-sponsored self-driving car competition while studying at the Massachusetts Institute of Technology.
In 2013 he founded Cruise Automation. The company retrofitted conventional cars with sensors and computers to enable them to drive autonomously on highways. Three years later, he sold the company to GM for $1 billion.
After the deal closed, Dan Ammann, GM’s president, took over as Cruise’s CEO, and Mr. Vogt became its president and chief technology officer.
As president, Mr. Vogt expanded Cruise’s engineering team as the company grew from 40 to about 2,000 employees, former employees said. He was committed to getting cars to as many markets as quickly as possible and believed that the faster the company moved, the more lives it would save, former employees said.
In 2021, Mr. Vogt took over the management. GM CEO Mary T. Barra began including Mr. Vogt in earnings calls and presentations in which he hyped the self-driving car market and predicted that Cruise would have a million cars by 2030.
Mr. Vogt pushed his company to continue its aggressive expansion, learning from the problems his cars encountered while driving in San Francisco. The company charged an average of $10.50 per ride in the city.
After a Cruise vehicle collided with a Toyota Prius traveling in a bus lane last summer, some of the company’s employees suggested temporarily avoiding its vehicles on roads with bus lanes, former employees said. But Mr Vogt vetoed the idea, saying Cruise’s vehicles would need to continue to operate on those roads to cope with their complexities. The company later changed its software to reduce the risk of similar accidents.
In August, a self-driving cruise car collided with a San Francisco fire truck that was heading to an emergency. The company later changed the way its cars detect sirens.
But after the crash, city officials and activists pressured the state to slow Cruise’s expansion. They also asked Cruise to provide more data on collisions, including documentation of unplanned stops, traffic violations and vehicle performance, said Aaron Peskin, president of the San Francisco Board of Supervisors.
“Cruise’s corporate conduct has increasingly resulted in a lack of trust over time,” Mr. Peskin said.
With business frozen, there are concerns that Cruise is placing too much of a financial burden on GM and damaging the auto giant’s reputation. Ms Barra told investors that Cruise had “tremendous growth opportunities” just hours before the California D.MV. called on Cruise to stop its driverless operation.
Cruise has not collected fares or transported passengers in more than a week. Hundreds of Cruise’s white and orange Chevrolet Bolts sit idle in San Francisco, Phoenix, Dallas, Houston, Miami and Austin, Texas. The closure complicates Cruise’s goal of reaching its $1 billion revenue target in 2025.
GM spent an average of $588 million per quarter on Cruise last year, a 42 percent increase from the previous year. Each Chevrolet Bolt Cruise operates costs $150,000 to $200,000, according to a person familiar with the operation.
Half of Cruise’s 400 cars were in San Francisco when driverless operations ended. These vehicles were supported by a huge operational staff of 1.5 workers per vehicle. Workers intervened every 2.5 to 5 miles to help the company’s vehicles, according to two people familiar with the operation. In other words, they often had to take action to remotely control a car after they received a cell signal that there were problems.
To cover rising costs, GM will need to inject or raise more money into the company, said Chris McNally, financial analyst at Evercore ISI. During a call with analysts in late October, Ms. Barra said GM would announce its financing plans before the end of the year.