This article first appeared in Law360, on December 8, 2015.
As Jaguar, Porsche, BMW Group and other manufacturers at this year’s LA Auto Show unveiled their latest dream drives, several key speakers offered a very different vision for our highways, one dominated by Ubers, Lyfts and driverless cars.
Speaker Eric Spiegelman, president of the Los Angeles Taxicab Commission, predicted that in 20 years LA will be filled with driverless taxis.
Keynote speaker John Zimmer, the co-founder of Lyft Inc., upped the ante, declaring that, by the time his baby daughter turns 16, she won’t want to drive and she won’t need to. Zimmer offered a sentiment not likely heard from the car makers at the auto show. "Simply put, owning a car today is not enjoyable," Zimmer said. "Roads and parking lots have paved 60 percent of Los Angeles and this is the same pattern happening all over the world, where we are literally paving paradise. ... Our cities don't need to and shouldn't be this way."
Bold predictions — considering that we’re in the very early stages of what will be years of testing and development by automakers, as well as years of discussion and debate between insurers, automakers and government agencies over how to roll out what is arguably the biggest change in the automobile since there was a horse in front of it. Some of the issues include whether to create a national, no-fault insurance policy for autonomous cars, whether insurers or car manufacturers should foot the bill when an accident is caused by a malfunction in the driverless technology and how to sell the whole concept to a society that’s so used to driving and that embraces the freedom to “zoom-zoom” down the open road.
That said — and this might come as a surprise from an attorney who specializes in cars and in product liability — I’ll up the ante even further. I’m already telling my 10-year-old son, Finn, that he’s probably not getting a car when he’s old enough.
Don’t get me wrong — I want my son to be happy. It’s just, despite all the work ahead, I see the change happening almost as quickly as the way we all moved over to smartphones.
The revolution has already begun on many levels. For example, young people are already driving less, focused more on immediate means of connectedness, like their smartphones and the Internet. As the New Republic found last year, “Today’s American teenagers and 20-somethings aren’t loving — or driving — cars nearly as much as their predecessors did. They’re getting their freedom from smartphones, which can travel distances and reach speeds that make cars seem quaint. They’re increasingly interested in commuting by bike or public transit. And growing numbers of them say they see cars more as nuisances and less as toys.”
I anticipate that this anti-driving sentiment will only become more pervasive, especially as the gridlock on our streets and highways worsens. Would the 20-something of the year 2030 rather navigate heavy traffic, or participate through video chat or even virtual reality goggles in a family trip to Rome while his car safely drives him where he needs to go?
The answer is obvious. A recent study from IHS predicted 54 million self-driving cars will be in use globally by 2035. By 2050, the report predicts, nearly all cars in use will be self-driving. In other words, Finn’s children will look at a steering wheel the way someone of Finn’s generation might look at a rotary phone.
The rising popularity of rideshare business models points to robocabs and other platoon platforms, such as fleets of driverless cars owned and managed by employers or municipalities, as the first wave of consumer access to fully autonomous vehicles. These measured rollouts of the technology will give automated cars an increased visibility that will ease acceptance by those who are wary of the technology, while at the same time providing hard data of risk reduction that will incentivize insurance companies to push the technology to more widespread use.
Although this is going to take a few years of work between the insurance companies, legislators and car manufacturers, I predict that the issues will be carefully considered and worked out, because the end product will be the easing of so many bigger societal problems, especially the high cost we pay, in dollars and in human lives, for the kinds of car accidents that can only become more commonplace as we increasingly divert our attention from the road to all of the distractions on smartphones and other devices. And think about the relief fewer accidents would have on our hospitals and the health care system.
So where are we on this journey?
Many automakers are developing self-driving features, including Audi AG, Mercedes-Benz, Ford Motor Co., Toyota Motor Corp., Tesla Motors Inc., General Motors and Volvo AB.
States have started legalizing the testing of autonomous cars, including California, Nevada, Florida and Michigan — although they require “operators” of such vehicles to remain in the driver’s seat with the ability take over if the technology fails or there is an emergency.
In the case of California, the legislature has largely delegated regulation of autonomous cars to the Department of Motor Vehicles, which is charged with adopting and administering licensing requirements as well as safety and performance standards and is required to hold public hearings on the adoption of any regulation applicable to the operation of an autonomous vehicle without the presence of a driver inside.
At a meeting on Dec. 3 of the California New Car Dealers Association, it was revealed that the DMV and the state Department of Insurance are already developing regulations.
The first step by California’s insurers in response to the new legislation has been to advocate through the Association of California Insurance Companies, “for changes clarifying that the autonomous vehicle’s manufacturer retain all liability for damage, losses or injuries caused by the operation of these vehicles,” according to Property Casualty Insurer’s Association of America, which reports that insurance companies are considering similar positions in other states.
Hakan Samuelsson, CEO of Volvo — a car company that built its reputation on safety — recently took the bait, saying in October that the company will accept full liability whenever one of its cars is in autonomous mode (so far, other car companies seem hesitant to go out on that limb).
Samuelsson also urged that the U.S. government do its part to hasten the revolution by developing federal guidelines for the testing and certification of autonomous vehicles to avoid a “patchwork of rules and regulations” that will lead to differing tests and standards from state to state.
A 2014 study by the Rand Corp. also called for national guidelines. “If 50 states have 50 different regulations, it would be difficult for manufacturers to match them all,” the report says. “Likewise, vehicle owners might not be able to travel outside their state of residence.”
The Rand Corp. report also suggests that insurance companies establish no-fault policies across the country. This could follow the model of the National Childhood Vaccine Injury Act of 1996, which created a compensation fund that eased the liability concerns of vaccine manufacturers.
Once all of these issues are worked out and the insurance companies see a huge drop in claims because of autonomous cars, the insurers may charge car owners far more to operate traditional (as opposed to driverless) cars and that will create a huge consumer push for driverless cars.
If, at the same time, automakers start fearing that they’re vulnerable to lawsuits if their driverless technology isn’t on par with the competition’s, cars with a driverless option could become as ubiquitous as seat belts.
We could see a further boost from the government if it provides subsidies much like those that helped fuel the popularity of hybrid and electric cars. The Rand Corp. study suggests such subsidies might be worthwhile because the benefits of driverless technology outweigh the disadvantages. “This technology offers the possibility of significant benefits to social welfare — saving lives; reducing crashes, congestion, fuel consumption and pollution; increasing mobility for the disabled; and ultimately improving land use,” says the Rand Corp. report.
That’s the kind of future I want for Finn, and I think he’ll be okay with it. When I told him he wouldn’t get a car when he was 18, he seemed disappointed for a few seconds, but then quickly shrugged it off. “Maybe I’ll get a pilot’s license instead,” he said.