The State of Autonomous Vehicles
The autonomous vehicle (AV) space is heating up as corporate and financial investors have shown renewed interest in the space and the technology and regulatory environment have advanced.
AV is not a technology as much as it is a capability comprised of a combination of technologies. Those technologies include imaging, LIDAR, RADAR, GPS, monitors, beacons, and AI. Technology requires legal protection, such as patent, trade secret and data and raise additional issues around liability, regulation, data ownership, privacy and security.
The data issues depend on the data gathered and how it is used. Federal privacy law includes the Drivers Privacy Protection Act, which limits disclosure of motor vehicle records. 18 U.S.C. § 2721. The Electronic Communications Privacy Act may protect against interception of a vehicle’s stored electronic communications. 18 U.S.C. § 2701. And the Federal Communications Act requires telecommunications carriers to protect the confidentiality of proprietary information of customers. 47 U.S.C. § 222. Each manufacturer must also consider the laws of all 50 states and the local laws of each political subdivision.
US export control laws are designed to protect national security, promote US industry and permit international trade through Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR). 15 C.F.R. § 736.2; 22 C.F.R. §126.1. Export controls are enforced through an item based classification system and end user controls. For example, the US strictly controls the export of geospatial imagery technology, obviously an important part of AV. The controls vary not only based on the tech, but also based on the destination countries.
AV companies must be aware of the Foreign Risk Review Modernization Act of 2018 (FIRRMA), which expanded the scope of inbound foreign investments subject to review by CFIUS, the Committee on Foreign Investment in the US. FIRRMA, Pub. L. №115–232, § 1703(a)(4), 132 Stat. 2173, 2177–78 (2018). FIRRMA also gave the President (through the Department of Commerce) additional ability to restrict the outbound transfer of technology.
One of the most obvious challenges to implementing AV technology is manufacturers liability laws. US manufacturers may be subject to liability for faulty design. In addition, because of the high tech aspect of AV, there is the possibility of hacks and malware. Imagine a ransomware demand to let you out of your car.
It is unclear how the law will apply to the artificial intelligence that controls AV. AI might make better decisions but if an AI program gets it wrong, will the law impose liability on the individual programmers? There is precedent for individual and corporate responsibility (recall the exploding Ford Pinto cases) especially if an actor knew that an act was the natural and probable consequence of using a system. See McKinney v. Revlon, Inc., 2 Cal. App. 4th 602, 3 Cal. Raptor. 2d 72 (1992) (manufacturer strictly liable for consumer’s injuries caused by its product due to manufacturer’s inadequate warning of the product’s known dangers).
Despite the potential size and impact of the industry, the federal regulatory agencies have not caught up with the technology. In 2020, the US Department of Transportation (DOT) laid out The Autonomous Vehicles Comprehensive Plan (the “Plan”). U.S. Department of Transportation, Automated Vehicles Comprehensive Plan, Transportation.gov (Jan. 11, 2021), www.transportation.gov/av/avcp. The Plan defined three goals to achieve the DOT’s vision for automated driving systems: (1) promote collaboration and transparency, (2) modernize the regulatory environment and (3) prepare the transportation system. Major industry players are at work self-policing the industry by creating pre-regulatory standards. See Safety, Waymo, http://www.waymo.com/safety (Waymo’s pre-regulatory safety standard set in its Safety Report and Safety Whitepapers); Lora Kolodny, Tesla Starts Using Cabin Cameras to Make Sure Drivers are Paying Attention, CNBC.com (May 28, 2021), https://www.cnbc.com/2021/05/28/tesla-starts-using-cabin-cameras-for-driver-monitoring.html (Tesla switched on driver-facing cameras to make sure drivers are paying attention when using Autopilot).
Increasing amounts of money have been going into AV technology, mostly at later stages and at higher median amounts, suggesting that valuations are high, driven by autonomous driving, connected cars, electric vehicles and smart mobility. The AV industry is in flux but growing. VCs view AV as a high cash-burning business. In 2020, many AV companies laid off of employees or shut down completely. But AV companies are actively raising large rounds and, after a drop in 2019, and funding has picked up and is expected to grow. Funded companies have also consolidated as the market matures.
After some slow years, AV promises to be a growth industry and developing capability.