This week, Cruise leadership tried to rally their employees and regroup after numerous obstacles and setbacks in recent weeks.
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During a somber all-hands meeting, Cruise executives discussed new damage control measures in the aftermath of accidents and a voluntary shutdown of its driverless fleet.
By Cyrus Farivar, Forbes Staff
The once hard-charging autonomous vehicle company Cruise is facing an existential crisis, and is now scrambling to appease investors, regulators and the public — just weeks after the California DMV revoked its license to operate — according to audio of a Monday all-hands meeting obtained by Forbes.
During the hour-long meeting, executives outlined damage control operations ranging from internal “listening sessions” to proposed public-facing websites that would detail collisions involving Cruise cars or allow people to post comments describing their interactions with the vehicles. And a humbled CEO Kyle Vogt confirmed to employees that the company will need to do layoffs.
“We are still working through what that means for the company and who’s going to be affected by that and we don’t have all the answers yet,” he said. “But what I can do is commit to providing more details within the next three weeks. So, importantly that’s not when layoffs would occur for full time employees, that’s when we’re going to give you an update on what that timeline might be.”
For Cruise, a General Motors subsidiary, which rushed to scale its operations on an aggressive timeline that seemed to prioritize growth over safety, the sudden turn of events is a sign that a more considered rollout might have been wiser. On October 2, a Cruise car hit and dragged a San Francisco pedestrian who had been struck earlier by another car. The incident led to the California DMV yanking Cruise’s operating permit in its home state and largest market, stating that its vehicles are “not safe for the public’s operation” and pose “an unreasonable risk to the public.” Days later, the company voluntarily shut down its entire fleet nationwide, halting deployments in Arizona and Texas.
Just months earlier, Vogt had laid out an ambitious plan for the company, declaring it would “continue 10X growth every year for the foreseeable future.” But during the all-hands meeting, the now somber-sounding CEO conceded the company is now facing a “challenging moment.” Other executives on the call said that the company must shift its focus toward building trust rather than rapidly scaling up operations.
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In a blog post published on Wednesday, the company also outlined some of the measures it plans to take, including hiring a Chief Safety Officer who will report to Vogt, and bringing in both a law firm and a third-party engineer firm to investigate the October 2 incident and its aftermath.
“As we build a better Cruise, we’re evaluating a variety of potential actions to ensure we operate at the highest standards of safety, transparency and accountability,” Cruise spokesperson Navideh Forghani said in a statement. “We are committed to keeping our customers, regulators, and the public informed throughout this process,” she added. Cruise declined to comment on layoffs.
Cruise leadership’s comments paint a picture of a company struggling to convince passengers, city governments and its employees that its robotaxis are not a public danger in the aftermath of a parade of high profile setbacks that now includes the recall of 950 of its cars and parent company GM halting production of an exclusively autonomous multi-passenger vehicle. Inside the company, employees say morale is flagging amid withering public scrutiny and now executive warnings about job cuts.
During the November 6 call, Vogt acknowledged that his suggestion that layoffs might be coming in the previous week’s all-hands had been “extremely stressful” for employees.
“Let me say this — I didn’t come across any L6+ who is not trying to sell their shares now,” one told Forbes, referring to a Level 6, or a staff software engineer. “The smarter ones are already interviewing.” They compared the company’s situation to the Titanic sinking and described it as “a death by 1,000 cuts.”
During the November 6 call, Vogt acknowledged that his suggestion that layoffs might be coming in the previous week’s all-hands had been “extremely stressful” for employees. “I’m sorry for that,” he said.
Cruise had not replied to a request for comment at the time of publication.
On Tuesday, the company recalled 950 vehicles, according to a formal notice posted on the website of the National Highway Traffic Safety Administration. The notice cites the October 2 incident, stating that the Cruise vehicle’s self-driving system made the wrong decision “to pull over out of traffic, pulling the individual forward, rather than remaining stationary.” The company said in the notice that it has already issued a software update, which would have kept the AV “stationary” during the October 2 case, to its “supervised test fleet.”
John Krafcik, the former CEO of Waymo, Cruise’s primary rival, who stepped down from that position two years ago, told Forbes in an email that Cruise and GM should have undertaken a more measured approach to public safety during its rollout to get it right the first time.
“GM and Cruise should have a solitary focus on getting one market up and running, 24/7, with delighted riders within a supportive community,” he wrote. “Once they’ve achieved that, they will have built some trust (the currency that matters most in the AV space), and can then start sharing more aspects of their forward business plan.”
The company’s next few weeks will be critical in determining if and how the General Motors subsidiary will move forward in a developing market with rivals like Waymo, a subsidiary of Alphabet. Over the past four years, Cruise has brought in a modicum of revenue, leading to collective losses of about $6 billion.
Corporate analysts have predicted that if successful, the industry as a whole could generate “hundreds of billions of dollars before the end of the decade.”
During the all-hands call, Jeff Bleich, the company’s top lawyer who once served as special counsel to President Barack Obama, described a now humbled company that faces a “trust deficit with most people.”
“We now know that safer than human in aggregate is not enough, but safer than human in every scenario is a very high bar.”
“We’ve learned recently in a very public and painful way just how fragile that trust is and how quickly it can be depleted,” he said. “The key to restoring trust is going to be two things: first, articulating and then meeting the expectations that we set with our partners, with community members, with Cruisers, with road users, with regulators, with investors, with everybody.”
Bleich outlined a new internal strategy, also laid out in Wednesday’s blog, centered around “four pillars,” each of which will be headed by a company executive: “internal and external transparency,” which he will oversee; “safety and engineering processes”; “safety governance”; and “community engagement.”
Along with the strategy shift, the company is now considering “inviting external safety reviewers including the strongest AV safety critics to review our safety strategy and practices,” said Louise Zhang, Cruise’s vice president for safety and systems, who spoke during the meeting. She did not elaborate on who these reviewers might be, or the sort of access they would be given to Cruise’s internal processes.
“We now know that safer than human in aggregate is not enough, but safer than human in every scenario is a very high bar,” Zhang said. “This bar is not well defined. We need to align with regulators on what this means.”
Proposed initiatives to address this include a website that would allow people to easily report unexpected behavior by Cruise cars to the company.
“Let’s say you’re a law enforcement official, who has just had an interaction with one of our cars: ‘How did that go? How could we make that better?’” Megan Prichard, vice president of ridehail at Cruise who previously worked at Uber, said during the call.
Prichard did not speak to a more forthcoming incident disclosure process. Historically, those have been closely held by the company. In Cruise’s hometown and largest operating location, the San Francisco Police Department, the San Francisco Municipal Transportation Agency, and the San Francisco Fire Department have all previously submitted formal documentation to state regulators noting that Cruise and Waymo “do not disclose counts of unexpected stops or other incidents that impeded first responders.”
Wrapping up the meeting, Vogt and other executives tried to exude confidence that the company would bounce back.
“There are going to be tough weeks ahead,” Vogt said, noting that GM’s board of directors would be meeting next week. “There’s probably still going to be negative press and scrutiny and it’s going to take awhile for people to see that we’re serious.”
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Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
