The Fuse

Michigan Autonomous Vehicle Law Shows Why Federal Leadership Is Needed

by Matt Piotrowski | September 15, 2016

One of the biggest questions marks surrounding autonomous vehicles is how policy makers establish a regulatory framework that doesn’t impede private industry’s innovation and also allows consumers to become comfortable with rapid changes in technology. So far, 35 states have considered legislation, while only six have passed. Meanwhile, the federal government’s National Highway Transportation Safety Board (NHTSA) will soon provide guidance on best practices for rolling out autonomous vehicles, providing more clarity at the national level. But given that we are in uncharted territory, regulators, automakers, tech companies, and consumers are not all necessarily on the same page. Last week’s bill that passed the Senate in Michigan to allow autonomous cars on the roads without anyone in the driver’s seat shows how laws are differing among states, bringing about a patchwork of regulations across the country. States, even with the best intentions, are not geared to lead on this issue, reinforcing the argument that direction is needed from federal regulators.

States, even with the best intentions, are not geared to lead on the autonomy issue, reinforcing the argument that direction is needed from federal regulators.

Last week, the Michigan Senate voted to no longer require that a person is behind the wheel in an autonomous vehicle while it is being tested on a public road. The laws are expected to be signed by Governor Rick Snyder and to go into effect in 2017.

It should come as no surprise that Michigan, home to the big three U.S. automakers, would want to lead on this issue. With the race to be in the front on autonomy and deployment of self-driving technology occurring faster than anticipated, the legislation is beneficial to auto companies in the state. “This law is saying to the industry at large that Michigan is embracing this technology,” Rebecca Lindland of Kelly Blue Book told The Fuse.

“For this technology to fully happen, it will need on-road market testing,” Scott Corwin of Deloitte Consulting and leader of the Future of Mobility practice told The Fuse.

“For this technology to fully happen, it will need on-road market testing.”

The traditional U.S. automakers have lagged tech companies in this space, such as Google and Tesla, but they are now playing catch-up. A friendly regulatory environment would no doubt help them. Ford has been aggressive as of late, saying that it will have fleets of autonomous cars on the road by 2021 and plans to sell them to the public by 2025. GM has partnered with Lyft and invested heavily to acquire Cruise Automation to position itself for a take-off in autonomy, while Fiat Chrysler is working with Google to develop autonomous minivans.

The legislation, on the surface, appears as though it is a positive step forward—it is clearly in favor of autonomous vehicles, paving the way for public testing without a human driver. It also helps establish a proving grounds and allows companies that want to begin deploying driverless vehicles—such as Uber—a space for them to operate.

On the other hand, some of the elements of the Michigan legislation might restrict companies that are not part of the big three automakers to offer driverless services. Even though the state is ahead of the curve with its regulation, special interests have brought about policies that distort the playing field in their favor. According to Bryant Walker Smith, a professor at the University of South Carolina who specializes in autonomous driving, in a recent blog post, it’s difficult to fully comprehend the ramifications of the legislation. The laws in Michigan “may or may not give recognized manufacturers of motor vehicles a special driverless taxi privilege, and they may or may not disadvantage companies that cannot partner with such a manufacturer—but they definitely do add unnecessary confusion,” he wrote.

Google’s protest of the new Michigan law exemplifies how heated the rivalry has become between traditional automakers and tech companies in the race to develop autonomous vehicles.

Google is not pleased with the Michigan law. As noted, some of the language in the legislation excludes companies like the tech giant. This has prompted Google to ask lawmakers to amend the bill. The head of Google’s Self-Driving Car Project, John Krafcik, wrote in a letter to members of the legislature that the law would unfairly inhibit companies like Google. One provision, for instance, defines a “motor vehicle manufacturer” as a company that has distributed motor vehicles in the state. “One interpretation of that definition would exclude companies, like Google, that manufactures autonomous vehicles but do not currently sell them,” Krafcik wrote. Google also took issue with a provision that autonomous vehicles being tested in Michigan need to be “supplied or controlled by a motor vehicle manufacturer.”

Google’s protest of the new Michigan law exemplifies how heated the rivalry has become between traditional automakers and tech companies in the race to develop autonomous vehicles. “We urge you to consider these small but crucial amendments to the bills to ensure that investment and deployment of autonomous vehicle technology is not inadvertently discouraged in the state,” Krafcik said.

The need for national guidance

The best approach for autonomy is a robust national framework in which all sides are represented.

The best approach is a robust national framework in which all sides are represented. This is why NHTSA’s announcement on autonomy will be scrutinized. If you look at state laws on autonomous vehicles now, only a handful have put any into place, and they are mostly different. California, for instance, took the opposite approach of Michigan. The Golden State, home to both Google and Tesla, has proposed requiring every autonomous vehicle to be occupied by a licensed driver, who would be responsible for any traffic violations even if he or she is not actively driving. Drivers also would have to obtain a special certificate, after going through proper training, in order to operate an autonomous vehicle. The California regulation is designed to deliver an extra layer of safety before driverless cars are widely deployed. However, such a law can actually be less safe—drivers have difficulty transitioning in and out of control of a vehicle. Furthermore, heavy regulations can hinder the rollout of autonomy and set back companies, many of which understand technological advances in autonomy better than legislators. Nevada has a law similar to California, requiring a person to be in the driver’s seat, but it may nix that condition, while Florida, like Michigan, does not require human to be in the car for testing purposes.

For Michigan, one major risk is if there are any accidents with the driverless cars being tested. But should testing go smoothly in the state, others may follow its example. “Autonomy can be either seen as a threat or an opportunity,” said KBB’s Lindland. “The legislation in Michigan could be the first of many similar laws. Others will want to utilize opportunities in this area as driverless cars are integrated on their streets.”

“The implications are that the states are looking to be at the forefront for economic innovation, but that brings up the challenge of navigating a patchwork of laws at multiple levels—federal, state and local,” said Deloitte’s Corwin.

“The implications are that the states are looking to be at the forefront for economic innovation, but that brings up the challenge of navigating a patchwork of laws at multiple levels—federal, state and local.”

Cities and states with no specific laws are also accommodating driverless technology. In Pittsburgh, for instance, Uber is using roads there to test vehicles. The ride-hailing service is able to operate in the city because the state of Pennsylvania does not currently have any driverless laws on the books. Pittsburgh took advantage of this vacuum.

The dreaded ‘patchwork’ could emerge

A state-by-state approach would mean radically different outcomes, reinforcing the need for leadership at the national level. Proponents of autonomous vehicles have spoken out about how a “patchwork” of regulations would hinder deployment and cause confusion among consumers, a majority of whom remain skeptical of the benefits of autonomy. Technology and auto companies are moving faster than regulators can keep pace with, while the general public will likely become more accommodating once driverless cars are more mainstream. Although some states like Michigan have adopted policies to advance autonomous vehicles, it’s clear that this dreaded patchwork could emerge. That’s why federal leadership is needed in this space. NHTSA’s announcement will be crucial in this regard.

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