IMO that attitude never makes sense - it can make sense to avoid certain mistakes at all costs (self-driving car), but it never makes sense to try to avoid blame for them (company refuses to admit their car isn't good enough).
This is a problem of culture, not individuals.
Does the culture at a company openly admit mistakes, try to learn from them, and put systemic fixes in place to address them, or do they punish people for mistakes?
If the latter, you end up with nobody admitting to mistakes and a terrible culture, it's not about the people, it's about the situation you have put them in and the incentives given to them.