1. Defending Innovation Against Attacks from All Sides
  2. Elon Musk and the Coming Federal Showdown Over Driverless Vehicles
  3. Goodbye Lemons: How the Internet Revolutionized the Used-Car Market
  4. How to Get the Future We Were Promised

A funny thing happened on the way to the world of driverless vehicles: No one created any formal rules of the road to govern them. Many industry insiders predicted that Congress would implement a federal framework by now, but years of wrangling have led to nothing.

Instead, a patchwork of state policies and industry best practices, guided by informal pronouncements from federal regulators, have filled the vacuum. Autonomous-vehicle innovation and experimentation have continued despite the lack of national rules. For instance, on Nov. 1 a driverless robotaxi made by General Motors subsidiary Cruise completed the first ride of any self-driving vehicle on the streets of San Francisco.

But now reliance on soft law might be on the way out as federal regulators appear poised to rein in the industry. Biden administration officials seem especially rankled by America’s most notable autonomous-vehicle innovator, Elon Musk. In August the National Highway Traffic Safety Administration launched an investigation into Tesla’s autopilot mode; it’s examining accidents that occurred when some Tesla owners were using the feature.

Then last month Jennifer Homendy, the new head of the National Transportation Safety Board, criticized Tesla in a Wall Street Journal interview. “Basic safety issues have to be addressed before [Tesla is] then expanding [driver-assistance features] to other city streets and other areas,” she said, claiming that Tesla was being “misleading and irresponsible” when using the term “full self-driving” to describe its latest generation of driverless tech. The regulator suggested that Tesla “has clearly misled numerous people to misuse and abuse technology.” Transportation Secretary Pete Buttigieg echoed similar points in a Yahoo Finance interview last week.

Not Quite Autopilot 

In one sense, Homendy and Buttigieg have a point. Musk is sometimes his own worst enemy because for many years he’s promised more self-driving capabilities but failed to fully deliver. It’s called autopilot mode but it still needs drivers to take control in many instances, and “full self-driving” still isn’t completely self-driving.

This same vaporware problem plagues many tech companies that try to “fake it till you make it.” Musk, however, has not paid a price for failing to live up to the hype. That is probably because he has delivered many amazing innovations with Tesla and his other ventures. Even if Tesla’s current autonomous-vehicle features fall short of full autonomy, they represent an important advance for innovation, and Musk deserves even more credit for helping to jump-start the market for electric cars. For these reasons his enormous fan base regularly rallies around him and defends the company against criticism.

The ferocity of that fan base was on display in mid-October when longtime Tesla critic Missy Cummings was named as the highway traffic administration’s senior adviser for safety. Cummings, an engineering and computer science professor at Duke University, had hammered Musk and Tesla for years on Twitter for deploying new autonomous-vehicle innovations without getting formal approval. In one 2018 tweet she said, “The only killer robot out there is @ElonMusk’s Tesla.” She and other Tesla critics used Twitter to air a variety of grievances about the company and its technology, which may be how she caught the eye of the Biden administration.

Going on Offense 

Musk is also adept at using Twitter to make a point, and he often takes advantage of the platform to engage in “reverse jawboning” and to push back against critics. Administrative law experts have documented how regulators often use jawboning or administrative arm-twisting to force companies to make concessions or change their behavior without any formal rulemaking. In the past, the Federal Communications Commission so effectively leaned on media companies to alter programming that this came to be referred to as “regulation by raised eyebrow.” Sometimes, the regulator’s bark can be almost as bad as its bite.

But in the age of more decentralized and democratized media platforms, some innovators have flipped the script and use new communications channels to jawbone regulators and urge customers to become citizen-lobbyists. In 2015 Uber was in a heated battle with New York Mayor Bill de Blasio, who was pushing legislation to restrict ride-sharing services. Using its own smartphone app, Uber mobilized its customers, encouraging them to directly contact the mayor’s office or city council members.

Uber even recoded its app so that it included “DE BLASIO” on the list of ride-sharing options. When users clicked on it, they were shown a map of the city containing no available cars and told that they would be deprived of choices if the legislation passed. The mayor backed off and Uber’s gambit worked, at least in the short term.

Musk is using a similar tactic, not only to regularly push back against policymakers but also to get fans of both Tesla and SpaceX to rally to his causes. When Cummings was appointed, Musk responded to inquiries by noting on Twitter: “Objectively, her track record is extremely biased against Tesla.”

Tesla Fans Take the Cue

This set off Tesla defenders, who vociferously—and in some cases viciously—protested the selection. Much of the criticism was legitimately focused on Cummings’ past tweets about Tesla, as well as her membership on the board of a Tesla rival called Veoneer, which is based in Sweden. But other responses included misogynist and harassing commentary from some of the more ornery Tesla fans. In the wake of these attacks, she deleted her Twitter account and has gone silent. While this was going on last month, Tesla’s market valuation topped $1 trillion, putting it in the same rarified air as Apple, Microsoft, Alphabet and Amazon, but also putting the company under even more scrutiny as the “techlash” intensifies.

Rather than clubbing Tesla into submission, regulators should look to improve auto safety by helping to accelerate the transition to driverless tech. They need to be supporting it, not obstructing it with cumbersome rules. But if Musk and Tesla want to gain more trust from the public and regulators, they’ll need to be more transparent about the shortcomings of their technologies. Certainly, Tesla and other self-driving vehicle innovators shouldn’t conceal system failures, because if they do, lawsuits will eventually fly and regulatory pressure will grow.

In the meantime, autonomous-vehicle policy remains in flux as the race for global leadership gets more heated. Optimally, a federal policy would largely preempt state and local barriers to deploying driverless vehicles while setting safety standards and recall requirements to address any defects. That would pave the way for a big expansion of the industry and, as autonomous systems for cars and trucks improve, could help reduce the death and injury toll on our streets and highways.

Special Interests Stand in the Way

Unfortunately, opposition from unions and trial lawyers, as well as safety and cybersecurity concerns raised by other groups, have stymied progress on a federal bill. Indeed, most technology issues fail to gain traction in Congress as lawmakers struggle with a fast-moving sector. The so-called pacing problem—technology evolving at a much more rapid clip than the legislative sausage-making can proceed—is the primary culprit, but congressional dysfunction and hyper partisanship don’t help.

That is why state laws and informal regulatory efforts have become so important. The National Conference of State Legislatures’ database lists more than 50 driverless vehicle bills now pending in state capitols, though many deal with narrow issues such as cybersecurity standards and insurance requirements. Some of the friendliest states for autonomous vehicles are Arizona, Texas, Nebraska and Florida, which allow them to operate or be tested as long as they are insured and follow state traffic laws. Pennsylvania, Connecticut, Maryland, Michigan and many other states permit testing with a few strings attached.

Others are much less welcoming. While California allows testing as long as companies make regular reports to the state regulator, it has banned internal combustion engines after 2030, and just for autonomous vehicles. New York passed a law in 2017 requiring police escorts to accompany autonomous vehicles, with the company footing the bill. And Mayor de Blasio proposed a testing moratorium for New York City until the vehicles could be proved safer than those with human drivers, something that is hard to do without testing. As of August, only one car had been approved for testing on New York state roads.

Switching to a Lighter Touch

While state policy experiments continue, federal regulators have increasingly used informal guidance reports. The Transportation Department’s first autonomous vehicle report came out in 2016, and it did not bode well for the industry. It hinted that regulators might consider heavy-handed, preemptive restraints, including requirements that companies get approval before changing algorithms and updating software in the vehicles.

But after the change in administrations, the department backed off that idea in its second report, “Automated Driving Systems: A Vision for Safety 2.0,” which it released in 2017. In this report and 2018’s “Automated Vehicles 3.0” guidance, the administration made a hard turn away from preemptive regulatory efforts and toward more flexible soft-law approaches. This included an array of recommended—but not required—industry best practices. Where the old playbook was filled with “shall” and “must,” the new playbook focused on “should consider” and other suggestions instead of mandates. 

Taking this a step further, the department’s new Non-Traditional and Emerging Transportation Technology Council last year published “Pathways to the Future of Transportation,” which was “intended to serve as a road map for innovators of new cross-modal technologies.” The report stressed that the council “will engage with innovators and entrepreneurs” to strike a balance between safety and greater innovation.

Republican Pressure for Innovation

Now, 10 months into the Biden administration, autonomous-vehicle governance promises to be more contentious and unpredictable as the department reaches a policy crossroads. In an Oct. 22 letter to Secretary Buttigieg, Republican Sens. Roger Wicker and John Thune argued that the department “has not made any noticeable progress or provided additional guidance” since it floated a notice of proposed rulemaking last November. The senators urged the department to make autonomous-vehicle and automated-driving-system development and deployment a priority “to encourage American competitiveness in the global economy” and to do so in a way that “allows for innovation and avoids prescriptive requirements and mandates.”

We’ll see whether a federal crackdown is coming for Tesla and driverless tech, but as the Biden administration ponders its next steps, it’s worth remembering the high stakes in the debate over driverless car technology. There were 38,680 motor vehicle deaths last year, a staggering amount of carnage that means more than 100 people died in crashes every day in the U.S., according to the highway safety administration. And this year is shaping up to be the worst since 2006: Traffic fatalities soared 18.4% in the first half, compared with the same period last year. Accidents also result in 2.7 million injuries each year, or roughly 7,400 a day. Reckless driving and human error are the leading causes.

A Misguided Democratic Priority

Thus, getting the governance right for self-driving cars and trucks carries massive public health benefits. We need a safety revolution built on outside-the-box thinking about both auto technology and its regulation. But not only does Congress show no sign of getting driverless car legislation back on track, it’s spending time worrying about the alleged danger to the workforce of automation. On Nov. 3 the House Select Committee on Economic Disparity and Fairness in Growth held a hearing on “The Economic Effects of Technological Innovation, Automation and the Future of Work.”

Many Democratic lawmakers are feeling pressure from unions to slow the pace of vehicle automation, especially in trucking. In May, the president of the transportation trades department of the AFL-CIO told Congress that driverless trucks place “millions of jobs at risk” and demanded that it exempt trucks from any legislation to boost self-driving vehicles. This is an astonishing demand considering the nationwide shortage of truck drivers—the industry estimates that it is 80,000 drivers short of what is needs—and the continuing need to improve long-haul truck safety.

Washington’s framework for governing autonomous vehicles cannot be built on a fear of automation or rigid, top-down regulations. Only a flexible regime and trial-and-error experiments with new technologies can give us better cars and safer roads.

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