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General Motors' Cruise to Pay $500K Penalty Over False Crash Report
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General Motors Company’s (GM - Free Report) autonomous vehicle division, Cruise, has acknowledged submitting a false report in an attempt to sway a federal investigation into a safety incident last year. Per the Department of Justice (DOJ), the company will pay a $500,000 criminal fine under a deferred prosecution agreement to resolve the matter.
This is just one of several penalties Cruise has faced at both state and federal levels for failing to disclose critical details about an October incident where one of its robotaxis ran over a pedestrian. The individual had been thrown into the robotaxi's path after being struck by a human-driven car. The autonomous vehicle subsequently dragged the pedestrian about 20 feet while attempting to pull over. Cruise initially withheld this information from regulators.
In June, Cruise agreed to pay $112,500 to the California Public Utilities Commission to settle the dispute. Three months later, the National Highway Traffic Safety Administration (NHTSA) fined the company $1.5 million. The state Department of Motor Vehicles also criticized Cruise’s response to the accident. The Securities and Exchange Commission is conducting its own investigation into the matter. Under the DOJ agreement, Cruise must cooperate with government investigations, establish a safety compliance program and submit annual progress reports to the U.S. Attorney’s Office.
Per Craig Glidden, Cruise's president and chief administrative officer, the company will comply with the agreement while working to rebuild trust under new leadership. If Cruise fails to meet the agreement’s terms over the next three years, the government could proceed with prosecution. The incident has had significant repercussions for Cruise. The company lost its commercial operating permits in California and grounded its fleets nationwide. It faced sharp budget cuts from parent company GM, which included laying off 24% of its workforce and replacing key executives, including co-founder and CEO Kyle Vogt.
While Cruise has resolved its NHTSA investigation related to the incident, the agency continues to evaluate whether its robotaxis operates safely around pedestrians. In August, Cruise recalled nearly 1,200 vehicles to address issues with unexpected braking. Despite these challenges, Cruise is working to recover. The company has resumed supervised autonomous driving in cities like Bay Area, Dallas and Phoenix and is planning to bring its robotaxis to Uber's ride-hailing platform in 2025.
The Zacks Consensus Estimate for DORM’s 2024 sales and earnings suggests year-over-year growth of 3.66% and 51.98%, respectively. EPS estimates for 2024 and 2025 have improved 75 cents and 84 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for TSLA’s 2024 sales suggests year-over-year growth of 2.97%. EPS estimates for 2024 and 2025 have improved by 22 cents and 18 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for BYDDY’s 2024 sales and earnings suggests year-over-year growth of 25.07% and 31.51%, respectively. EPS estimates for 2024 and 2025 have improved by 35 cents and 39 cents, respectively, in the past 30 days.
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General Motors' Cruise to Pay $500K Penalty Over False Crash Report
General Motors Company’s (GM - Free Report) autonomous vehicle division, Cruise, has acknowledged submitting a false report in an attempt to sway a federal investigation into a safety incident last year. Per the Department of Justice (DOJ), the company will pay a $500,000 criminal fine under a deferred prosecution agreement to resolve the matter.
This is just one of several penalties Cruise has faced at both state and federal levels for failing to disclose critical details about an October incident where one of its robotaxis ran over a pedestrian. The individual had been thrown into the robotaxi's path after being struck by a human-driven car. The autonomous vehicle subsequently dragged the pedestrian about 20 feet while attempting to pull over. Cruise initially withheld this information from regulators.
In June, Cruise agreed to pay $112,500 to the California Public Utilities Commission to settle the dispute. Three months later, the National Highway Traffic Safety Administration (NHTSA) fined the company $1.5 million. The state Department of Motor Vehicles also criticized Cruise’s response to the accident. The Securities and Exchange Commission is conducting its own investigation into the matter. Under the DOJ agreement, Cruise must cooperate with government investigations, establish a safety compliance program and submit annual progress reports to the U.S. Attorney’s Office.
Per Craig Glidden, Cruise's president and chief administrative officer, the company will comply with the agreement while working to rebuild trust under new leadership. If Cruise fails to meet the agreement’s terms over the next three years, the government could proceed with prosecution. The incident has had significant repercussions for Cruise. The company lost its commercial operating permits in California and grounded its fleets nationwide. It faced sharp budget cuts from parent company GM, which included laying off 24% of its workforce and replacing key executives, including co-founder and CEO Kyle Vogt.
While Cruise has resolved its NHTSA investigation related to the incident, the agency continues to evaluate whether its robotaxis operates safely around pedestrians. In August, Cruise recalled nearly 1,200 vehicles to address issues with unexpected braking. Despite these challenges, Cruise is working to recover. The company has resumed supervised autonomous driving in cities like Bay Area, Dallas and Phoenix and is planning to bring its robotaxis to Uber's ride-hailing platform in 2025.
Zacks Rank & Other Key Picks
GM currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the auto space are Dorman Products, Inc. (DORM - Free Report) , Tesla, Inc. (TSLA - Free Report) and BYD Company Limited (BYDDY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for DORM’s 2024 sales and earnings suggests year-over-year growth of 3.66% and 51.98%, respectively. EPS estimates for 2024 and 2025 have improved 75 cents and 84 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for TSLA’s 2024 sales suggests year-over-year growth of 2.97%. EPS estimates for 2024 and 2025 have improved by 22 cents and 18 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for BYDDY’s 2024 sales and earnings suggests year-over-year growth of 25.07% and 31.51%, respectively. EPS estimates for 2024 and 2025 have improved by 35 cents and 39 cents, respectively, in the past 30 days.