• Law Office Sung

The Effect of Regulatory Changes on the Self-Driving Automotive Industry (ENG)

2020. 11. 1.

From the standpoint of car manufacturers, self-driving (autonomous driving) technologies have been developed to some extent. Adaptive Cruise Control (ACC), Emergency Braking, and Collison Avoidance Systems using ultrasound and LiDAR (Light Detection and Ranging) technologies have already been introduced to new cars at reasonable prices, as a result, they achieve a significant level of self-driving. Of course, the cost of hardware and software is not yet quite affordable to most ordinary customers, but the commercialization of fully autonomous vehicles is no longer a distant future. Existing car manufacturers, as well as giant IT companies and numerous startups with technological prowess, are spending enormous time and development costs to bring the technology closer to perfection in order to lead the self-driving market.

Today, in this article, we discuss changes in regulations that are likely to have a significant impact on the expansion of the self-driving car industry. Although regulations may vary fundamentally from country to country or from state to state, this article looks at the overall regulations. Changes in regulations that will have the greatest impact on the self-driving car industry in the future include 1) whether or not to allow public transportation carriers to receive transportation fees, and 2) the clarification of the scope of responsibility between car manufacturers, passengers (including drivers), and insurance companies.

As mentioned earlier, even if self-driving cars are generally commercialized, it is highly likely that the cost of self-driving cars will be burdensome for the majority of customers in the beginning. Considering that only three or four decades ago, the concept of privately owned cars meant considerable wealth in Korea, it is highly likely that self-driving cars will connote a similar meaning at first. Therefore, there is a high possibility that self-driving cars will be mostly used by public transportation companies (taxi or Uber) in the early stages of commercialization. In the United States, many states do not yet allow companies to receive transportation fees for transporting the public by self-driving vehicles. As a result, it is difficult for companies that want to operate self-driving transportations to invest largely in research and development as it is a risky project until the above regulations change. The governments will attempt to ease regulations in the future in terms of tax revenue expansion, but how long it will take and how much stability the technology will have in the meantime will act as a big variable.

Another essential change necessary in regulations is to present clear rules on the responsibility part of accidents. The topic is constantly being discussed, but clear rules are not established yet. Individuals or corporations that own self-driving cars will want to have liability insurance that will completely exempt them from accidents that occur during autonomous driving. On the other hand, insurance companies will carefully exam whether the cause of the accident was due to the vehicle (hardware or software) malfunction or due to the driver’s inadequate maintenance, and whether the other party's (driver or pedestrian) behavior provided an unavoidable cause of the accident with a state-of-the-art technology. After much examination in the case, the insurance company will then decide whether to pay the insurance and how much. During the process, a number of lawsuits are also expected between each party’s insurance company and manufacturers to determine who is ultimately responsible. If the current state law gradually changes from the current method of calculating the driver's fault ratio to the method of strict liability of manufacturers and suppliers for autonomous vehicles, the consumers will eventually experience the cost of the above liability being passed on to them when sellers price the vehicles. Relevant authority, such as FTC, needs to properly monitor this situation, and also pay close attention to consumer protection.

In conclusion, it is necessary to discuss and prepare for changes in regulations that balance 1) the development of innovative self-driving technologies and the promotion of the expansion of the automobile industry, and 2) the guarantee of sufficient safety as it is directly related to public safety. The discussion should be careful, but it should not take too long.

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