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Cornell Student Articles on Topical Affairs

Demand and Supply for Autonomous Cars Increases Despite Uber Accident Earlier this Year

Cries for a United States national policy on self- driving cars continue after the House passed legislation regulating them but the Senate is still out. The calls for national policy focus on federal framework that gives companies guidance as to how they can innovate these types of automobiles while also maintaining traffic safety and consumer protection rules. Countries in Europe and Asia have recently enacted legislation recently to support self- drivable vehicles.

The SELF DRIVE Act was passed through the Energy and Commerce Committee last year unanimously. It was then sent to the House with a passing vote. The SELF DRIVE Act establishes a national policy that encourages the innovation, testing, and sale of self- driving roads. It includes requirements for safety assessment certification for autonomous vehicle manufactures and allows the National Highway Traffic Safety Administration (NHTSA) to recall the vehicles if it sees them as unsafe. The bill also includes a council to study the effects of these vehicles on labor and employment, environmental impacts, and access for those who are disabled or elderly.

Enterprise Holdings, which owns the largest fleet management company in terms of revenue, Enterprise Rent-A-Car, signed an agreement with the self-driving technology startup Voyage in an attempt to begin managing their own autonomous cars. The partnership gives the company responsibilities for maintaining all of the vehicles, which includes only 12 autonomous cars. Voyage plans to introduce a commercial self-driving ride service around the Orlando, Florida area by the end of 2018, which could become Enterprise’s.

Enterprise’s interest in self-driving cars comes at a time when the new technology threatens rental car companies, like Enterprise. The rental vehicle business is worth $25 billion in the Americas alone, figures from 2017 show. If Enterprise chooses to introduce these vehicles into their business model, they could lower car rental prices, increasing their revenue. Enterprise currently has no plans to create their own self-driving vehicle which means the vehicles would have to come from a company that does. This would be a win-win situation for both companies, as Enterprise has over 9,900 locations in over 90 countries throughout the world.

Currently, though, self- driving cars aren’t seeing high traffic in sales. AlixPartners, a global consulting firm, says, “The automotive industry faces the possibility of a monumental capital drain in the near term as hundreds of players, including non-traditional ones, are all pouring unprecedented sums into electric and autonomous vehicles years before those technologies are fully cost-competitive in the market, when consumers are questioning the cost and safety of some of the technologies, and just as the market itself is set to continue a cyclical downturn.”

A study done by AlixPartners found that by 2023, $255 billion will be spent in developing electric vehicles globally, with 207 models set to be released by 2022. An addition $61 billion has been saved for autonomous car technologies, even though consumers are agreeing to pay just $2,300 extra for an autonomous vehicle. The current industry price of $22,900 is ten times that willingness. The global auto market is expected to grow only 2.4% from now until 2025.

Volkswagen has estimated that 25% of its sales will come from electric cars by 2025. BMW’s figures are between 15 and 25% for both electric (BEV) and hybrid electric vehicles (PHEV) and Mercedes’ showed similar figures. Brands like Audi and Porsche have already allocated more than €33 billion for BEVs, autonomous cars and mobility services by 2022 with Mercedes currently investing in a €9 billion BEV research program.

However, combined BEV and PHEV sales aren’t expected to reach but 15% of North American, European, and Chinese markets by 2025. Currently, the sales stagger under 2%, will jump to 7% by 2020, 15% by 2025, and 25% by 2030.

Still, Boston has become the most recent city to allow self-driving car companies to test their vehicles on the city streets. NuTonomy is the first company to be granted that permission. NuTonomy began testing their vehicles in the Seaport District of Boston last year, but is now able to expand that testing throughout the city. The Boston-based company was created out of a lab at the Massachusetts Institute of Technology but is now a subsidiary of Aprtiv, an auto parts maker based in Dublin, Ireland.

A vehicle that was undergoing testing as a self-driving car in March through Uber struck and killed a pedestrian in Tempe, Arizona. According to the police report, the driver of that autonomous vehicle was watching Hulu on her cell phone during the time of impact, according to the viewing history of the driver. The driver of that vehicle could now face manslaughter, leading many to question whether autonomous vehicles are safe to test on public streets.

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