There has been a tremendous amount of attention and media hype involving “Driverless Cars” or “Autonomous Vehicles” (AVs) over the last year or so, generating excitement, concern and misunderstandings as to how, what and when such technology will be commonplace on our roads. I have been very involved in studying Autonomous and Connected Vehicle (CV) transportation technology and policy, and most recently co-chaired an emerging technology forum of government and private sector transportation lawyers at the 56th Annual Transportation Law Workshop organized by the Transportation Research Board of the National Academy of the Sciences. Also, I have been very involved in annual AV/CV symposia organized by the U.S. Department of Transportation’s Research Center at the City University of New York, and moderated a high-level policy discussion with NY State and local elected and appointed transportation officials for this 5th annual event focusing on impacts to the taxicab and for-hire vehicle industries, as well as identifying principles for testing in urban centers. I have also partnered with the International Association of Public Transit (UITP) to train RTA (Roads and Transport Authority) government employees in Dubai about AV/CVs, organized sessions with top experts at the International Association of Transportation Regulators’ conferences starting back in 2015.

Driverless vehicles are motor vehicles in which internal vehicle systems operate all driving functions, without human input. People have imagined driverless cars since the 1920s. At the time, driverless cars were more commonly known as “phantom autos,” and were remotely controlled by radio waves. The first actual autonomous vehicle was created in the 1980s, and used a Light Detection and Ranging (LIDAR) system. There exist various degrees of vehicle automation, ranging from light automation (i.e., “cruise control”) to full automation – a state where the vehicle is in complete control of all driving functions at all times. In 2013, the National Highway Traffic Safety Administration (NHTSA) announced a policy concerning vehicle automation wherein the agency defined five automation levels, which was amended and adopted in September 2016.

Level 0 is completely driver-dependent. The driver controls steering, brakes, throttle, and power. With Level 1, most functions are still controlled by the driver, but specific functions (like steering or accelerating) can be done by the car.

In Level 2, at least one driver assistance system (such as cruise control) is automated. The driver is disengaged, with their hands off the steering wheel and foot off the pedal.

Drivers are still necessary in Level 3, but safety-critical functions are shifted to the vehicle under certain traffic or environmental conditions. The driver is still available to intervene if necessary.

Level 4 reaches the “fully autonomous” category of vehicles designed to perform all safety-critical driving functions and monitor roadway conditions for the duration of a trip. However, they are limited to the “operational design domain” of the vehicle-and not all driving scenarios.

Lastly, a fully autonomous Level 5 vehicle meets the performance of a human driver in every scenario. This includes being able to navigate difficult terrain such as dirt roads. Much like AVs, CVs are able to communicate with other “smart” vehicles on the road, but they are not necessarily fully autonomous. CVs use wireless communication that is supported by dedicated short-range communications (DSRC). By gathering data from other vehicles, CVs anonymously transmit traffic and road condition information to other CVs and connected transportation networks, with applications that include crash warning or avoidance functions. Currently, the connected vehicle environment includes three major approaches to communication: (1) Vehicle to vehicle (V2V); (2) Vehicle to infrastructure (V2I); and (3) Vehicle to pedestrian (V2P).

Nevada was the first state to authorize the operation of AVs in 2011. Since then, 19 other states and the District of Columbia have passed legislation related to AVs. Google first began testing self-driving car technology in 2009. The Google self-driving car project became Waymo in 2016, a stand-alone company under the Alphabet corporate umbrella. Tesla Inc. started testing four self-driving cars on California’s public roads in October 2016, a month after Uber began testing self-driving cars in Pittsburgh. Uber then expanded to Arizona after it was banned from operating AVs in San Francisco in December 2016. By January 2017, driverless cars or buses were being tested on public roads in the cities of Las Vegas, Boston, and Chandler, Arizona.

That same month, the U.S. Department of Transportation designated 10 proving ground pilot sites to encourage testing and information sharing around automated vehicle technologies. In February 2017, Waymo sued Uber over the alleged theft of its intellectual property covering driverless car technology by an employee who created a start-up that was later acquired by Uber. In June 2017, it was announced that Audi of America Inc. would be the first to test AVs in New York State, as part of a pilot program initiated by Governor Cuomo. Reported accidents involving vehicles using self-driving technology have raised concerns about the safety of AVs. A Tesla driver was killed in May 2016 while using the semi-autonomous Autopilot mode on his Model S in the first fatality involving a self-driving car. Similarly, a collision involving one of Uber’s self-driving vehicles was reported in Arizona.

Transportation Network Companies (TNCs, like Uber and Lyft) and their smartphone app competitors (i.e., Gett), vehicle manufacturers, and technology companies, are now partnering in the hope to create new for-hire vehicle fleets, as the auto industry prepares for less car owners and more shared rides. It seems that most every smartphone transportation app has an automobile and technology partner or partners at the AV dance. While Uber has partnered with Volvo, Daimler and Didi Chuxing, Lyft is working with General Motors Co., Jaguar Land Rover and Alphabet Inc.’s Waymo in a bid to develop its own fully autonomous vehicles.

On July 5, 2017, Chinese search giant Baidu announced that more than 50 companies, including big names in the auto and tech industries such as Ford, Daimler, Nvidia, Intel, and Microsoft, have joined its Apollo self-driving car platform. Other examples of reported partnerships include: Toyota working with Microsoft and Nvidia; Waymo partnering with Lyft, Avis and Fiat Chrysler Automobiles. Hertz announced a collaboration with Apple, RideScout with GlobeSherpa, while Volkswagon and Gett and Bosh created an alliance with Nvidia, Daimler and Baidu. Sharing data, integrating hardware and software, and collaborating on open-source platforms, are all incentives for these companies to work together to win the AV race.

Meanwhile, many legal, regulatory and policy issues and concerns will need to be addressed before AVs become part of our daily lives, including the taxicab and for-hire transportation industries. Here is a sampling of some of the issues:

  • Regulation & Governance: Many regulations must be changed that apply to traditional automobiles and vehicle and traffic laws (e.g., involving steering wheels), and it remains to be seen whether regulation will be federal, state and/or local. There are a multitude of federal agencies, state transportation and local traffic agencies and the path for governance is not clear, and jurisdictions turf wars are likely to emerge and slow down policy, approvals and progress.
  • Safety: The ethical “trolley problem” often surfaces when discussing AVs: in a potential crash, does a car “decide” to swerve out of the way to avoid hitting a person on the street, or does it default to keeping the passenger(s) inside safe? Also, there is the “hand-off” issue – the split second when a driver is prompted to take back control of the vehicle from the computer, during which a new safety risk appears.
  • Privacy and Cybersecurity: AVs generate massive amounts of personal data and the immediate concern involving the privacy and access to this data by third parties, is coupled with cyber-security concerns on the ability to hack into an AV remotely to control the vehicle, which could facilitate terrorist attacks.
  • Insurance: As car accidents are expecting to decrease and the legal responsibility for accidents may shift away from drivers to automobile manufacturers. Cyber insurance policies might also develop to cover the risks associated with cyber interference with AVs.
  • Impact on Labor: In 2016, it was reported that 5 million people make their living driving taxis, buses, vans, trucks and e-hailing vehicles – that’s 3% of the overall workforce in the United States.
  • Sustainability: The impact of AVs on environmental resources and transportation infrastructures still need to be determined, and will depend in part on the regulation of AVs. While AVs are expected to contribute to air pollution reduction, it is not certain whether they will add to or reduce overall vehicle roadway use.
  • Equity & Accessibility: Autonomous vehicles can offer mobility to people who cannot drive and/or people who do not have ready access to a car. AVs could potentially help people who are visually impaired or have certain physical disabilities. However, fully autonomous vehicles may turn out to be inaccessible for wheelchair passengers. Once you remove the driver, who is there to assist passengers in wheelchairs?

So, what does it all mean for the taxicab and for-hire ground transportation industry? In my view, not much right now in terms of labor displacement or other major changes. However, the business relationships, underlying economics/financing and lawsuits involving AV players could have a profound impact on the viability of the smartphone app transportation companies in the market. In the short-term (next few years), the race to develop and patent AV designs/inventions has more to do with securing intellectual property rights now than with actually mass manufacturing or using AVs right away. For example, the lawsuit against Uber by Waymo, if it halts Uber’s AV program, could be a huge blow to Uber’s ability to compete against incumbent and new ground transportation players. Uber is likely counting on increasing or justifying its company valuation by landing the patent rights to its prototype vehicle (as well as ensuing manufacturing and related business deals). This would help Uber to raise more private capital or pave the way to an Initial Public Offering, by continuing to subsidize driver earnings and fares to increase market share. The failure to do so, with billions in losses mounting, could lead to Uber losing market share, and may fuel the rise of other TNCs or a comeback of the incumbent taxi and for-hire industries.

In the mid-term (between 3 and 5 years from now), more AV testing may lead to partnerships where certain select players, like TNCs and car sharing companies, may begin deploying AVs before the widespread sale of personal AVs to the general public. However, for-hire or car-sharing (i.e. Car2Go) AV deployment would probably be limited to restricted lanes or geographic areas, and not likely in dense urban environments where taxis and FHVs thrive. We are more likely to first see AV buses and freight vehicles platooning on special highway lanes, and at confined areas such as airport premises, Disney, universities and retirement communities.

AV technology will be here very quickly, with safe vehicles that work well, but the ability for the multitude of federal, state and local agencies to get on the same page to deploy them right away, will be challenging. We may get to levels 3 or 4 in less than 10 years for all vehicles on the road, but getting to that last level of removing the driver, will be a long stretch. So, taxicab, TNC and for-hire drivers losing their jobs will not happen for a very long time. When AVs hit the road at level 5, it is likely that all manufacturers will have them, so there will be a level playing field (TNCs, taxis and FHVs will all have the option to increase their profit margins by not having drivers).

On the issue of insurance, CVs and higher levels of automation are likely to prompt significant reduction in insurance premiums and new insurance products that may benefit the independent contractor driver, with product liability for AV defects and other new forms of insurance being purchased potentially by transportation companies or auto manufacturers. The increased safety options will minimize risks and lead to benefits on insurance sooner rather than later.

Only time will tell when, where and how, but these are exciting times indeed, and AV/CV technology issues will eventually work themselves out – but not as quickly as the media and private tech companies say or would like. So, mothers everywhere need not worry about their children driving with “no hands” anytime soon, and for-hire drivers can breathe a sigh of relief that their jobs will be there for a long time to come.

Professor Matthew W. Daus, Esq. is President, International Association of Transportation Regulators; Distinguished Lecturer, University Transportation Research Center, Region 2; and Partner and Chairman, Windels Marx Transportation Practice Group.

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Article by Matthew W. Daus, Esq.
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