Cruise banned from California amid accusations of cover-up

State DMV finds “unreasonable risk to public safety” as well as misrepresentation of collision information

Cruise banned from California amid accusations of cover-up
Driverless Cruises will no longer be allowed on California's street

GM’s autonomous vehicle (AV) subsidiary Cruise has been banned from California roads after an investigation into recent incidents. The California department of motor vehicles (DMV) announced “the immediate suspension of Cruise LLC’s deployment and driverless testing permits” on Tuesday.

The DMV says that the suspension does not impact Cruise’s ability to test its AVs with a safety driver.

“Public safety remains the California DMV’s top priority, and the department’s autonomous vehicle regulations provide a framework to facilitate the safe testing and deployment of this technology on California public roads. When there is an unreasonable risk to public safety, the DMV can immediately suspend or revoke permits. There is no set time for a suspension,” it says.

And it maintains that GM “has misrepresented… information related to safety of the autonomous technology of its vehicles.”

This is related to a recent incident in which a pedestrian in San Francisco was hit by a human driver and subsequently knocked into the path of a Cruise robotaxi in early October.

After striking the pedestrian, “the AV detected a collision, bringing the vehicle to a stop; then attempted to pull over to avoid causing further road safety issues, pulling the individual forward approximately 20 feet,” Cruise revealed after the suspension.

Cruise had not previously disclosed that the pedestrian had been dragged by the AV after the initial contact, and an order of suspension document sent to Cruise by the DMV says that the firm hid this detail from investigators.

“The video footage presented to the department ended with the AV’s initial stop following the hard-braking manoeuvre. Footage of the subsequent movement of the AV to perform a pullover manoeuvre was not shown to the department and Cruise did not disclose that any additional movement of the vehicle had occurred after the initial stop of the vehicle,” the order says.

Value outlook

The news comes as a significant blow to GM on the very same day as the legacy OEM’s CFO Paul Jacobson spoke of the company’s optimism about its AV operations on its third quarter results call.

“When you look at our growth businesses, especially Cruise and software, we are at an inflection point right now. And [we] see tremendous upside opportunity and growth,” Jacobson says.

Jacobson has previously committed to a bullish outlook of $1bn in revenue for Cruise by 2025.

GM CEO Mary Barra also repeated the company’s frequent claim that Cruise’s safety data speaks for itself, saying “we know from the data that Cruise AVs are involved in far fewer collisions than human drivers”.

The current suspension does not prevent Cruise’s planned expansion into other US cities. Operations have been scaling to multiple cities in recent months, including Austin, TX, and Pheonix, AZ. But the news may damage Cruise’s chances of being granted further.

“Rest assured we do have funding plans that will support Cruise's expansion,” Barra said yesterday before the suspension was announced. Analyst Adam Jonas of Morgan Stanley, however, alluded to some apprehension amongst investors about Cruise, suggesting that the travails of the AV subsidiary may be negatively impacting GM’s share price.

“I think many would argue that $29 a stock might even be implying a negative value for Cruise,” Jonas suggests.

The length of the suspension is not known. But regulators in Cruise’s targeted expansion cities will surely be taking note of events.

“Cruise has lost a great deal of credibility by not being front and centre about this issue. It is surprising if they felt that the rest of the story would never get out,” says robotaxi expert Brad Templeton.

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