GM's Cruise may face fines for 'misleading' regulator over accident
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[December 05, 2023] By
Joseph White, Hyunjoo Jin and David Shepardson
(Reuters) -General Motors' Cruise robotaxi unit could face $1.5 million
in fines and additional sanctions over its failure to disclose details
of an Oct. 2 accident in which a robotaxi dragged a pedestrian 20 feet
(6.1 meters) after being struck by another vehicle, a California agency
said.
Separately, GM Chief Executive Mary Barra said on Monday that the
automaker's external review of Cruise's safety will last into the first
quarter of 2024.
The company is also reviewing Cruise's handling of interactions with
regulators and first responders as part of a pair of external reviews.
"We will be transparent. I am not going to rush either of them," Barra
said.
The growing regulatory pressure could hamper GM and Cruise's effort to
rebuild trust and restart operations in California after coming under
fire for allegedly withholding information about the crash in San
Francisco.
Last month, Cruise paused all driverless and supervised car trips in the
United States and expanded a safety review of its robotaxis, and CEO
Kyle Vogt and chief product officer Daniel Kan both stepped down.
The California Public Utilities Commission (CPUC) in a document dated
Friday ordered Cruise to appear at a Feb. 6 hearing for "misleading the
Commission through omission regarding the extent and seriousness of the
accident" and "making misleading public comments regarding its
interactions with the commission." The order was by a CPUC
administrative law judge and a commissioner.
Forbes reported the CPUC news earlier on Monday.
On Oct. 3, Jose Alvarado, a senior manager of government affairs at
Cruise, telephoned commission analyst Ashlyn Kong and informed her of
the collision, according to the ruling. The description "omitted that
the Cruise AV had engaged in the pullover maneuver which resulted in the
pedestrian being dragged an additional 20 feet at 7 mph (11.27 km per
hour)," the documents said, using the abbreviation AV for autonomous
vehicle.
Kong said in a Nov. 8 statement that Cruise's blog posting that it
“proactively” shared information with the commission “including the full
video" is "inaccurate."
"The full video was shared only in response to a data request more than
two weeks after the incident," she said.
"Cruise is committed to rebuilding trust with our regulators and will
respond in a timely manner to the CPUC," the company said in a
statement.
LOSSES
In an appearance at the Detroit Automotive Press Association on Monday,
GM's Barra declined to say what level of losses she could accept at
Cruise going forward. Cruise, which is cutting jobs, lost more than $700
million in the third quarter and more than $8 billion since 2016.
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The San Francisco skyline is seen behind a self-driving GM Bolt EV
during a media event where Cruise, GM's autonomous car unit, showed
off its self-driving cars in San Francisco, California, U.S.
November 28, 2017. REUTERS/Elijah Nouvelage/File Photo
"I would call it an investment not a loss," Barra said. "We have to
have the right plan. We have to communicate it ... and we will do
that at the appropriate time."
But GM investors said it will take time for Cruise to turn around.
"I don't think there's any expectation from our standpoint that this
is going to be a one-, two-, three- or even six-month issue," said
portfolio manager Tim Piechowski at ACR Alpine Capital Research,
which has a $290 million in investment in GM. "It's going to be a
longer time item for them to repair."
The California commission has the authority to fine a public utility
up to $100,000 per day if there is a violation plus other penalties,
according to the judge's order. The CPUC said in its Friday ruling
that Cruise took 15 days to give a full account of the accident.
That could lead to a fine of up to $1.5 million.
CPUC commissioners in August voted in favor of a plan by Cruise and
Alphabet's Waymo to take paying passengers day or night throughout
San Francisco, despite vigorous opposition from some residents and
city agencies.
In October, California's Department of Motor Vehicles barred Cruise
self-driving vehicles from public roads following the accident.
Cruise's troubles are also a setback for an industry dependent on
public trust and the cooperation of regulators. The company had in
recent months touted ambitious plans to expand to more cities,
offering fully autonomous taxi rides. GM had told investors Cruise
and its technology could generate $50 billion a year in revenue by
2030.
GM has hired an outside law firm to conduct a review of Cruise
management's handling of the Oct. 2 incident and the response to
regulators. Cruise has also said it is planning to relaunch in one
unspecified city before expanding to others.
By Dec. 18, GM is supposed to hand-deliver a "verified statement"
which includes facts and arguments regarding CPUC's charges, all
attachments, along with a three-ringed binder containing a copy of
all authorities, to the administrative judge.
(Reporting by Hyunjoo Jin in San Francisco and David Shepardson in
Washington, Additional reporting by Abhirup Roy in San Francisco and
Joseph White in DetroitEditing by Peter Henderson, Sayantani Ghosh,
Nick Zieminski and Matthew Lewis)
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