In today’s world of ever-expanding technology, the evolution
of autonomous vehicles from theory, to concept, to testing, to the
start of actual implementation will come as no surprise.
From Tesla’s now-standard autopilot mode to
an Intel subsidiary launching test fleets of
autonomous vehicles, the evolution of advanced
driver-assistance and driver-less features will likely make
manual-drive vehicles a thing of our past. Soon, the use of
autonomous vehicles will be a common everyday occurrence, from
fleets of autonomous vehicles providing ridesharing opportunities,
to companies shipping items across the country with the use of
driverless trucks. This technological advancement provides
opportunities for both new revenue streams and areas of potential
risk.
Autonomous Vehicle Evolution
The Society of Automotive Engineers and the National Highway
Traffic Safety Administration recognize six separate tiers of
autonomous driving capabilities in vehicles. This begins at Level
0, which has no autonomy, and proceeds to Level 5—full
automation with no manual interaction. Currently, the U.S. has
vehicles operating from levels 0-2. A Chinese carmaker has recently
stated that it will soon be offering the first-ever Level 3
autonomous vehicle. This will allow drivers to fully take their
attention off the road and only be prepared to intervene when the
vehicle is unable to execute certain tasks.
As industry innovators push towards greater levels of
automation, successful market operators must be able to create new
opportunities under the current lower automation levels. If danger
appears on the road, is the driver required to override the
autopilot and attempt to take back control? Does the owner/driver
need to still maintain insurance for driver failure, or can the
owner/driver look to the automated vehicle OEM and suppliers,
including technology/software companies, as to liability?
Alternatively, if the driver takes control and an accident still
occurs, what liability does the automated vehicle OEM and supply
chain retain? Stakeholders across the automotive industry will each
need to have clear risk management strategies to handle such
issues.
Changes to the Existing Framework
In the next five to ten years, when vehicles move into the range
of full autonomy, there will be an even greater necessity to review
how new technology may impact a company’s risk assessment. To
recognize any potential future impacts, we must first understand
the current system used in today’s automotive world. Under the
current model, state laws typically require drivers to maintain
certain minimum auto insurance policies to legally drive on their
roads. This protects individuals from suffering substantial
liability in the event of a vehicle accident and provides victims
of vehicle crashes with adequate compensation. In any lawsuit
regarding liability, traditional concepts of negligence will apply,
such as whether the driver maintained a safe speed, whether a
traffic violation was involved, or if the other driver contributed
to the accident in some way. Now, in the world of autonomous
vehicles, this liability cannot be so easily determined.
Until new theories of liability can be developed, it is likely
that all related parties will be dragged into court when causation
is not readily apparent. Each party will then be required to
demonstrate that they were not the cause of the accident, a process
that can be expensive and time-consuming. Groups are working hard
to find alternative solutions to this potential problem, such as a
global no-fault insurance system or the use of game theory to determine liability. While
these theories are being further developed and tested, companies
involved in the autonomous vehicle space will likely need to
prepare for litigation regarding any potential liability.
Software companies, data providers, OEMs, suppliers, and vehicle
manufacturers will likely struggle to establish that their
technology was not the cause of an autonomous vehicle accident. In
2018, the National Transportation Safety Board found
that the autonomous vehicle company owner and developer (Uber), the
victim, the safety driver in the vehicle, and the state of Arizona
were all to blame for the fatal crash between an autonomous vehicle
and another vehicle. This demonstrates that companies who need
to conduct a risk assessment will not only be typical automotive
industry players, such as vehicle manufacturers and OEMs, but will
represent a whole new segment of the industry.
In addition to liability in the event of autonomous car
accidents, companies will now need to provide additional business
risk strategies. Current general corporate liability policies will
not adequately cover the new risks which will arise in the
autonomous vehicle industry. As the automotive industry advances
into the world of driver-less vehicles, new types of cybersecurity
and product liabilities policies will be commonplace for the
automotive industry. It will be important that new companies in
this industry adequately protect themselves to ensure that they
remain in the marketplace.
New Players in the Industry
Companies that program driving algorithms, software developers,
companies that build components used in the autonomous vehicle, and
data providers will now need to have insurance and risk allocation
plans and business protections for autonomous vehicle accidents.
Some companies develop their autonomous vehicle technology
themselves, like Tesla. While technically automotive manufacturers,
companies like Tesla have redefined the sector and themselves as
part of the broader tech industry. They will utilize their
knowledge in both the automotive industry and the tech industry to
provide value-adding services to both business-to-business and
direct-to-consumer customers.
Housing both the technology and auto manufacturing in the same
company will double the company’s risk. Some vehicle
manufacturers such as
Volvo or Mercedes have already indicated that they
will accept full liability in the event of a crash caused by a flaw
in the vehicle’s design. If the company is also the software
manufacturer, this removes another party with which the liability
can rest. Companies who utilize both software development and
automotive manufacturing will need to ensure that they recognize
this risk and take the necessary steps to complete appropriate risk
allocation strategies.
Other manufactures are working with outside vendors to create
and maintain the necessary software to run the vehicle. Outsourcing
this work to typical software companies will capture a significant
amount of new companies into the automotive space, forcing them to
quickly adapt to the new business landscape in order to ensure that
business opportunities are maximized and potential risks are
minimized. Even in the event a manufacturer maintains the software
development in-house, autonomous vehicles providers will still need
to work hand-in-hand with third-party data providers to ensure that
their vehicles run smoothly on the road. Data providers will need
to input GPS positions and ensure that proper traffic laws are
followed. While the provision of mapping services is nothing new
for data providers like Google, this service will create a
significant amount of liability. If a data provider gets any one of
the required inputs wrong or fails to timely reflect changes to
traffic laws or other considerations, then the data providers could
also bear liability in the event of an accident.
Software Considerations
When developing software for an autonomous vehicle program, it
will be extremely important to review the language that is included
in the end-user license agreement (EULA). EULAs are commonplace in
today’s world of cellphones and laptops, and many consumers
simply click their way through without fully reading. But what if
the liability of an autonomous driving vehicle dispute is tied into
the disclosures used in the EULA? It will be particularly important
that each party involved in the creation of the EULA has intimate
knowledge of what risk is being shifted and who will ultimately
bear that risk in the event of an accident.
On top of monitoring disclosures utilized in EULAs provided to
consumers upon the initial purchase of an autonomous vehicle,
software developers will also likely bear an ongoing responsibility
to provide continued software updates to the vehicle. These updates
will be critical for ensuring the smooth operation of the
autonomous vehicle and will be made hand-in-hand with the data
providers who are inputting the necessary mapping and regulatory
data to the vehicle. This responsibility opens the door for another
area of potential risk, as the failure to provide a critical update
which causes improper data to be received could lead to possible
crashes.
Software companies will also need to evaluate strategies on how
previous software is supported and maintained. As companies begin
to “sunset” older software systems, these systems become
more vulnerable to failures or potential hacking. While software
sunsets may not be critical for inexpensive laptops or tablets, the
maintenance of older software will be crucial for safe operation of
autonomous vehicles. Any failure to ensure compatibility with older
software could lead to significant consumer issues, provided that
new vehicles are not purchased as often as an obsolete laptop or
cell phone.
Conclusion
The rise in use of autonomous vehicles will bring a substantial
amount of new considerations for companies who were typically not
involved in the automotive industry. While autonomous vehicles
provide for new business opportunities and revenue streams, they
also bring new obligations and potential risks. If these risks are
managed correctly, traditional “tech” companies will
thrive in this market.
Originally Published 18 May 2021
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