The Fuse

Regulation and Disruption: What’s at Stake for the Future of Autonomous Vehicles

by Amitai Bin-nun | August 10, 2016

China recently released a set of rules governing ridesharing transportation network companies (TNC) such as Uber and local favorite Didi, finally making ride sharing and hailing legal in China. Given that these services fill over four million rides a day, there was a clear need for a regulatory framework that removed fear of arrest and offered certainty to drivers. The new policy had an almost immediate impact: Just three days later, Uber announced that they were shutting their independent Chinese subsidiary, partially because the rules prohibited the subsidized rides which were key for Uber’s strategy to gain market share.

Both national policies that impede free market competition and the proliferation of incompatible local regulation reduce the ability of TNCs to innovate.

This contrasts strongly with the city-by-city battles that Uber and Lyft are fighting in the U.S., where each city has an entirely different regulatory process. In recent months, Uber and Lyft have pulled out of Austin, Texas because of a local ballot initiative to strengthen regulation of driver qualifications, and are threatening to leave Chicago if the City Council requires certain background checks on drivers. Abroad, Uber executives have been convicted of illegal operations in France, and the service faces obstruction in Germany, amongst other challenges. The form and substance of each challenge varies widely from city to city, leaving these companies to play a regulatory version of “whack-a-mole”.

Both national policies that impede free market competition and the proliferation of incompatible local regulation reduce the ability of TNCs to innovate. While the U.S. seems unlikely to regulate transportation network companies at the national level in the near future, the rapid development of autonomous vehicle technology will force the issue of national harmonization of regulations for-hire transportation services. At stake is allowing society to realize the full scope of benefits offered by autonomous vehicles.

Nearly every day brings news of breakthroughs in autonomous vehicle technology and business development. A large number of automakers, software companies, and startups are testing autonomous vehicles on public roads, and fully autonomous but limited functionality pods are on the road in several sites across Europe and will expand soon into the U.S. Autonomous vehicles offer enormous potential for social benefits. Last year, over 35,000 Americans died in motor vehicle accidents, with human error contributing to well over 90 percent of accidents; it is uncontroversial that autonomous vehicles have the potential to significantly reduce vehicle accidents.

Last year, over 35,000 Americans died in motor vehicle accidents, with human error contributing to well over 90 percent of accidents; it is uncontroversial that autonomous vehicles have the potential to significantly reduce vehicle accidents.

One of the most exciting applications of autonomous vehicles in the potential for a driverless fleet of shared cars. This will allow for efficiency in transportation, reduce the total number of cars on the road, and encourage the adoption of electric vehicles. Shared autonomous vehicles will also bring affordable and convenient mobility to millions of Americans with disabilities, those unable to drive because of age-related ailments, as well as those without the resources to purchase cars. Additionally, today’s transportation system is incredibly inefficient, with cars lying idle over 96 percent of the time. Shared, autonomous vehicles will be highly utilized and, according to a recent report by the Energy Security Leadership Council, will be almost entirely electric.

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With all of these benefits and the technology rapidly evolving, regulators and legislators play a crucial role in allowing the technology to be available to consumers as soon as it is ready. However, it appears that regulatory obstacles are the greatest roadblock to the adoption of autonomous vehicle technology. In particular, many in the industry have commented on the dangers of regulations varying from state to state—a troublesome regulatory patchwork that impairs industry but fails to add benefits for consumers.

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To avoid a morass of conflicting local codes, the federal government, in conjunction with stakeholders and other organizations, should offer model regulations for autonomous vehicles, including for on-demand ride services.

By calling attention to this issue, we can begin the process of coming to a solution. The ESLC suggests that federal and local governments should support deployment communities that will allow the public to experience the benefits of shared, autonomous vehicles and give regulators crucial real-world data. To avoid a morass of conflicting local codes, the federal government, in conjunction with stakeholders and other organizations, should offer model regulations for autonomous vehicles, including for on-demand ride services. The federal government should incentivize local communities to adopt autonomous vehicle regulations that offer mobility to their underserved citizens—one option could be through tying a designated portion of Federal highway funding to adoption. Let us begin to move decisively to lay the groundwork for the autonomous future.

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