Autonomous Vehicle Outlook
Private equity, venture capital and growth equity funds that understand the technology and legal framework of autonomous vehicles are likely to make the best investments in this emerging sector.
Self-driving vehicles have the potential to transform the U.S. transportation system for the better. From increasing public safety, to improving mobility for the elderly and expanding transportation access for the disabled community, autonomous vehicles, known as AVs, offer an array of benefits that will drive positive change for decades.
Private equity, venture capital and growth equity funds that understand these benefits, the legal framework and the technology are likely to make the best investments in this emerging sector.
Recent years have brought exciting technological advances, contributing to a robust ecosystem that has begun to flourish. Hundreds of companies are racing to develop the pieces that will make fully self-driving vehicles a reality: autonomous driving software, complex sensors that can perceive and analyze the outside world in real time, computer simulation that teaches the AV software about edge cases, precision mapping capabilities that are necessary for AV routing, connectivity devices for vehicle-to-vehicle communications, telematics applications to handle the vast quantities of data being generated, and many other technologies.
Policymakers at the state and local levels have acted in turn to address the emergence of self-driving vehicles. Some have welcomed AVs and implemented policies intended to encourage AV testing, while others have maintained a skeptical approach and have sought to restrict the ability of AVs to operate. The multiplicity of regulatory approaches has complicated the picture for AV developers, which lack a consistent, national framework to use as the basis for designing compliant vehicles. Congress has tried to craft such a law, but thus far it has not been able to complete the task.
In the absence of a federal law, the executive branch has adopted the pro-innovation posture of offering agency guidance on many key issues related to AVs—such as system safety, object detection and response, and crashworthiness— but has not sought to impose legally binding rules that would stifle the industry and potentially pick winners and losers in the technological race.
According to guidance provided by the U.S. Department of Transportation in 2017 (and updated in 2018 and 2019), manufacturers of AV technology are encouraged to submit a “voluntary safety self-assessment” to the department to “demonstrate how they address—via industry best practices, their own best practices, or other appropriate methods—the safety elements contained” in the guidance. The document also includes information related to the unique and separate federal and state roles in overseeing AV design, performance, licensing and operation.
In 2020, policymakers are continuing to focus on AVs. The scope of issues at play has increased, with growing discussion and debate surrounding the collection and use of AV data, minimum insurance requirements, liability and cybersecurity, to name a few.
The Transportation Department has announced several new initiatives, including amending existing occupant protection regulations to accommodate AVs that lack driver controls, updating the petition process for seeking an exemption from federal motor vehicle rules that inhibit AV deployment, finding a path forward for passenger-less delivery vehicles, and several others.
Philip von Mehren is a partner at Venable LLP and serves as co-chair of the firm’s Corporate Group in New York.
Ariel Wolf serves as counsel at Venable and leads the firm’s Mobility and Transportation Technology team.
