Freeing the Road – Shaping the future for autonomous vehicles (Part I)
At WEF, the World Economic Forum in Davos, Switzerland the following extensive paper was presented and discussed. TextileFuture would like to present the essentials to you to show how much it will take to make autonomous vehicles a common thing on our streets. We would like to thank Honda Switzerland for allowing us the exclusive access to these papers. The full report of Policy Network entails 64 pages. One of the next TextileFuture Newsletters will give you Part II with a more consumer and business analysis of the future for autonomous vehicles. TextileFuture is convinced that autonomous vehicles will allow new textile interiors and other relevant products, thus a prosperous market for textile machinery and textiles of all kind, but mostly based on innovation
Executive Summary
This Policy Network report, prepared with support from Nissan Europe, analyses both the social and economic opportunities offered by the transformation to autonomous driving (AD) on Europe’s roads. It also deals with the potential barriers faced and provides answers as to how governments and regulators should respond.
Focusing on three key countries – Germany, Spain and the UK – it highlights crucial features of the policy debate around autonomous vehicles (AVs) and assesses the likely economic impact for the continent as a whole.
The principle finding is that if – and this report outlines the reasons why this remains a big if – policymakers get the big picture right and put in place rules that properly promote the change, the economic benefits of AV for Europe will be overwhelming.
Our original economic analysis shows that, in such a scenario, autonomous vehicles will start adding 1.15 % of Europe’s annual growth rate in the decades to come. As a result, the European (EU-28) gross domestic product will, cumulatively, be 5.3 % higher in the year 2050 than currently, by which time autonomous vehicles will have contributed a total of EUR 17 trillion to GDP.
Yet, the speed at which autonomous driving becomes a reality on Europe’s roads depends at least as much on the regulatory framework as it does on technology itself. The main task for policymakers is to continue their efforts in shaping the necessary environment for the introduction of AVs – moving from the current support for research and testing to the concrete legal rules that keep pace with the continuing move towards ever more autonomous capability.
So far policymakers have not yet resolved the issues thrown up by full autonomy despite it being clear that we are within touching distance of manufacturers being able to produce vehicles with just such ‘driverless’ technology. Unless the pace of regulatory change rapidly picks up, Europe’s policymakers risk falling behind the pace being set by the automotive industry. An initial priority must be a renewed push for the harmonisation of national and international regulation, in order to ensure a seamless move towards AD in Europe.
The main barrier expressed in the political and public discourse on AV is around safety and security; particularly how to achieve social acceptance from consumers. From our conversations with experts and policymakers it became clear that each country has adapted a distinct policy strategy.
German legislators have put safety and legal certainty first and might lead the way on settling these vital questions if they pass a bill that will require highly automated vehicles to install a ‘black box’. The device would work as a data recorder that collects information on who is driving the vehicle at a certain time, removing the uncertainties over whether a person or machine is responsible in the case of an accident.
The UK, meanwhile, has adopted a ‘rolling programme’ approach to try and gain first-mover advantage by reforming policies step-by-step in line with technological progress.
During a prolonged period without a confirmed national government, Spain’s policy leaders have sought to champion strong regional clusters that can set the pace for a nationwide adoption of AV technology.
As our economic cost-benefit analysis suggests, the implications of AV introduction for Europe’s economies will be substantial. This change will be most heavily felt in urban centres. These lie at the core of economic productivity, but are also heavily affected by road congestion, land scarcity and environmental constraints. Municipal and city officials must understand that AD has the potential to offer significant solutions to each of these hitherto intractable problems, but this is contingent on decisive and consistent policy action. The public good is also set to benefit: rather than looking at the road, ambulance staff can look after their patients; and parents can engage with their kids’ homework, rather than traffic lights on the school run.
As with other such significant technological revolutions, AV offers vast economic opportunities. But these do not come without any risks for society as a whole. The transition to a driverless future will require policymakers to properly embrace and understand the seismic impact not only on the automotive economy and the future transport, but also the much wider implications for research, work, and businesses, beyond those most obviously involved. Without concerted policy efforts, AV might play into the hands of populists preying on fears arising from globalisation, which would in turn stall the rollout of the new technology. It is essential, if we are to prevent populists focusing their fire on fears arising from digitalisation, that governments bring their populations with them on the AD journey by preparing for, rather than reacting to, the initial disruption to the labour market which is inevitable. Our research shows that, ultimately, the impact of AD on productivity and job growth will be positive, but the transition will need to be smoothed for those affected, or those who worry they will be affected.
AD is not just about economic change, it will also be a social revolution. The report shows how AD will play a key role in tackling social exclusion, by giving more people access to the freedom of vehicle transport and consequently access to educational and work opportunities. Crucially, if planning begins now, AD presents the opportunity for a genuinely integrated and localised public transport system that connects right to the front doors of homes and workplaces, even in areas which at present are cut off from such networks. And, perhaps most vitally of all, AD will be a huge tool in tackling the consequences of Europe’s ageing society – ensuring that members of our increasingly ageing populations do not lose their mobility and connections to vital services.
Freeing the Road offers 12 concrete policy innovations that, if implemented, would not just aid a successful transition to automation but would also ensure that the benefits that arise will be spread as widely as possible.
Europe’s policymakers should be under no illusion: a future of autonomous driving is upon us. It cannot be dismissed, and is not going to go away. There is a real chance for the continent to seize the chance to maximise the economic and social good. But it will require urgent, concerted and coordinated action. This report aims to show how.
Introduction
Autonomous vehicles (AV) have longed seemed like something from Tomorrow’s World – a technological development that politicians, regulators and policymakers could put off thinking of about until long into the future. Now, with the first manufactured AVs set to roll off the production line, Europe’s policymakers must fast catch up with technological and commercial reality. AVs not only have the potential to fundamentally reshape Europe’s strategically vital automotive industry; they will change how citizens interact with motor vehicles, transform patterns of connectivity, and offer social and environmental benefits to the whole of society. This future vision is of a driverless, safer and more efficient transport system that will connect individuals and businesses throughout Europe.
European countries are beginning to engage with the changes that AVs will bring. However, to reap the benefits of the new transport technology, leadership will be needed at all levels to maximise the potential of AVs in the 21st century. A number of countries – notably Germany, Spain and the UK – have ‘dipped their toes in the water’ by allowing test driving of AVs on their roads. But the measures needed for the widespread adoption of driverless technology will require a more rigorous response from European policymaking institutions at the EU, national, regional and city level. At all those levels of government, there is an imperative to act now.
Making progress on AVs, like other new technologies, means acknowledging that there are always winners and losers from change; pro-active public policies are needed to ensure that everyone is equipped to cope with change, and that, ideally, no one is left behind. AVs can become a crucial tool in improving the connectivity of individuals and communities. In a 21st century economy and society, connectivity is crucial for success in linking people with employment, public services, social networks and cultural capital. AVs have the capacity to help integrate‘left behind’ places and regions into the growth economy, ensuring that all our citizens have a better chance of joining the winner’s circle of growth and prosperity.
The adoption of autonomous drive (AD) will take place in the context of major structural shifts in Europe that are already impacting on the lives of consumers and citizens. First, demographic change will transform the consumer landscape. The increase in the number of older drivers will bring a heightened concern about how those increasingly elderly road users can safely maintain their independence and freedom. Ageing societies will increase the demand for new types of motor vehicle, including assisted driving technologies. Older people will also need more specialist services and support, including better connections with public services and public transport. There is a clear role for AD in meeting all of these challenges, with the potential to provide genuinely empowering solutions.
The second major structural shift is the growth of urban spaces and the emergence of ‘megacities’ which have the potential to transform how we travel and connect. Strategic planning will be needed to maintain quality of life and promote sustainability, including the development of high quality public transportation infrastructure. Autonomous vehicles promise to be great enablers in this transition.
Yet for this to happen, for the full social good of AD to be unlocked, policymakers must ensure that citizens and communities embrace and do not fear this technological change. To do this, they will need to rewrite the rules for AVs and invent flexible and responsive regulations around them. The major challenges will be to fashion regulations that allow enough flexibility for the introduction of AV technology but that simultaneously recognise and meet the safety and security concerns of the public. At the same time, industries and SMEs need greater certainty about the impact of future legislation in order for the move to AV to be commercially viable.
Therefore, this report recommends the following priorities:
• Raise awareness of AV technology in politics, and bring it to the forefront of the modern economic policy agenda centred on higher productivity and growth.
• Guarantee that regulations are in place to create a safe environment for citizens and businesses.
• Create new partnerships between industry, businesses and the public sector to reap the benefits of AVs: car manufacturers, insurance companies, tech companies, higher education, but also SMEs and start-ups that specialise in AV technology, datatransfer, smart engineering, and advanced manufacturing
• Engage with policymakers at all levels, especially cities where mayors are set to be major decision-makers.
• Continue to make smart investments in infrastructure, skills and the human capital of the future.
In developing this agenda we examine the economic benefits of AV technology in Europe, and develop a detailed set of policy recommendations for local and national policymakers. The findings of this study are based on a comprehensive cost-benefit analysis using the latest economic models, as well as interviews with leading policymakers, politicians, officials and experts on AV technology in Germany, Spain, the UK and Brussels.
The above timeline plots the policy actions that will be needed and the consequent economic benefits that will follow as AVs are progressively introduced into the market.
Working on the assumption that the first commercially produced AV come to the market in 2020s we expect most of the benefits, such as accident reduction, majority of GDP gains and efficiency gains, to kick in almost immediately as they are directly related to traffic and the economic environment as a whole. A substantial reduction in road congestion starts somewhat later as this coincides with a more widespread use of AD and connectivity between cars and infrastructure.
On the policy side national and local decision-makers must take immediate actions on skills demand in labour markets as AV are likely to have a substantial impact on employment in transport sector, accounting for roughly 4.5 per cent of total employment in the EU. Also urgent and relevant should be a policy discourse on renewable energy transition for AV vehicles, such as vehicle-to-grid solutions, because a driverless future is very likely to be an electronic or hybrid, rather than a combustion engine one.
Policy Network is grateful to Nissan Europe for supporting the development and dissemination of this work, but the study itself is firmly independent and Policy Network remains responsible for its findings.
The potential economic benefits are enormous
If – and this study outlines the reasons why this remains a big if – policymakers get the big picture right and put in place rules that properly promote the change, the economic benefits of autonomous drive (AD) for Europe will be very significant indeed.
Our original economic analysis shows that, in such a scenario, autonomous vehicles will start adding 0.15 per cent to Europe’s annual growth rate in the decades to come. As a result, the European (EU-28) gross domestic product will, cumulatively, be 5.3 per cent higher in the year 2050 than currently, by which time autonomous vehicles will have contributed a total of EUR 17tn to GDP.
The benefits of autonomous vehicles will be enormous, but they remain to a degree uncertain. The three sources of uncertainty originate from consumers, car manufacturers and policymakers – each with different, but interlocking, perspectives. Car manufacturers aim to best harness technology to satisfy consumer preference and thereby maximise sales, but all the time are necessarily guided by public policy. Consumers choose products that they believe best fit their needs and which they feel comfortable and secure with. Whereas policymakers have a substantial range of alternative strategies to choose between the need to balance consumer interests, the public good and the need for economic innovation.
How the demands and wishes of these three different groups come to mesh and exactly how they manifest themselves will be the key to determining the speed and penetration of the take-up of AD and the consequent economic impact.
For the purpose of our economic analysis we have categorised into specific scenarios three possible ways in which the commercial, consumer and policy variables over AD could play out.
A) PROACTIVE: In this scenario autonomous vehicles are swiftly introduced and accompanied by benevolent policy with foresight that aims at maximising benefits. The public sector offers R&D support, supplies necessary infrastructure, and engages spatial and labour market opportunities proactively. Consumers rapidly feel comfortable with AD and manufacturers are able to deliver mass market models that satisfy emerging public appetite.
B) GRADUAL: Autonomous vehicles are introduced at pace forecast by the industry; consumer scepticism is overcome, but slowly. Public policy only reacts to market failures meaning the accrual of autonomous vehicle benefits are permitted but not aided.
C) REACTIVE: Autonomous vehicle technology development is delayed by unforeseen developments. Policy aims to promote status quo in the industry by subsidising current incumbents and stringent regulation for the labour market in the transport sector.
The progress of autonomous vehicle development and which policy decisions are taken will determine which costs and benefits translate to society.
In looking at the economic impact of AD, assessing the productivity potential of automated vehicle technology is central.
What is striking is that the largest productivity gains stem from the built environment in cities and the labour market. These gains are in addition to the traditional and more obviously anticipated benefits – the decrease in road accidents, the ‘in-vehicle ’time gains, and road congestion reduction. Although not as large as the employment and built environment gains they remain significant; for example, in the year 2030 reduced road congestion and accident prevention produce an annual gain GDP gain of around EUR 100 billion.
Advertisement:
It remains a big if
We have demonstrated that in numerical terms the economic consequences and benefits of AD will be huge. Autonomous vehicle technology will affect the entire population and thereby its consequences will be felt at all levels of government: from the mayor to the ministry.
Therefore, our strong message to policymakers is to get ready and prepare for what is, literally, just down the road. Government at all levels needs to be aware of the, ultimately positive but significant and potentially temporarily destabilising, economic consequences of such a significant economic revolution. Strong policy positions will be needed to adequately prepared to ensure Europe takes full advantage of the opportunities opening up and minimises the level of disruption, especially to the labour market.
The dangers of getting it wrong
The transition to a driverless future will require policymakers to properly embrace and understand the seismic impact on the economy and the future of not just transport but research, work, and businesses beyond those most obviously involved. They will need to focus their policy changes on making the transition as beneficial as possible for the population as a whole, not just early adopters. Put simply, this means that the transformation of transport from conventional to autonomous vehicles must be understood in a wider context of societal and political change, making sure that reforms are supported by the public. This is a pre- condition for the transition to AD to itself be a success, not only a necessity for the pubic good to be achieved. One will not happen without the other. The dangers of getting it wrong are real and present. The first industrial revolution saw the ‘luddites’ literally try to smash the new technology; the danger if AD is not introduced in an inclusive way is that rejection of it becomes part of a spreading anti-tech, anti-growth sentiment among the electorate. In getting the policy right one size won’t fit all; solutions will need to be tailored to the demands of specific cities and regions.
Boosting connectivity, not excluding the ‘left behind’
A key factor in maintaining public support will be ensuring public transport provision works in successful combination with autonomous vehicles. These can serve as a substitute or complement to public transit. For large- and medium-sized cities that offer high-quality public transit, autonomous vehicles will complement existing transit systems. In this scenario it will allow large welfare benefits, eg greater provision for those who, for whatever reason, cannot use currently designed public transport, but who would find an autonomous vehicle easier (e.g. making current door-to-school disabled transport easier and cheaper). In small cities and rural areas, autonomous vehicles will enable cost-realistic, demand-responsive public transport to be provided, where currently the costs of drivers make such provision unrealistic.
Letting citizens decide
The coming of AD will entail a very serious review of the way we use space, road and otherwise, especially in urban areas. The process of that review offers great opportunities to not only accommodate the needs of AD but to utilise the very process, and the space liberated, to make a wider impact on improving the urban experience for all. Citizens are the ones with the most in-depth and intimate knowledge of the particularities of private and public transport within their own communities. As such, and because urban planning has the greatest potential to impact their day-to-day lives, those citizens are best placed to offer solutions or innovative ways to both integrate autonomous vehicles into their communities and how to alter urban space in light of the opportunities that autonomous vehicles usher in.
AD will ultimately benefit the labour market – but only with the right planning
One of the popular ‘fears’ about AD is that this form of automation will automatically damage levels of employment as driving jobs are rendered obsolete. In headline terms there is indeed obvious initial displacement of jobs in the transport sector, but our study finds that the boost to overall economic growth will outweigh these over time. It will be up to national governments to provide adequate social safety measures to avoid unnecessary upheaval and stress to workers during the transition process and reduce market barriers to job creation in the new emerging areas. They will need to ensure the provision of high-quality education and training to unlock opportunities in jobs that are undergoing a transformation. Politicians will need to make sure that they embrace technology and innovation, but not at all costs and regardless of the social consequences.
Expanding connectivity
The report finds that there must be jointly agreed connectivity standards in order to ensure seamless cross-border operation of AVs. An automated, connected car should not stop working just because it crosses over from one European region to another.
When connected autonomous vehicles process their surroundings, they can generate up to 1 gigabyte of data per second. This vast quantity of information can be utilised to help all other autonomous cars learn to drive. Since it will be crucial for fully autonomous cars to be able communicate with each other, the rolling out of 5G connectivity across Europe will be imperative.
Similarly, satellite systems will play a vital role in securing reliable mapping tools for autonomous vehicles. These may need to be used in tandem with 5G to ensure reliability, meaning the European commission might use the Galileo satellite network to improve driverless technology.
Intelligent and connected vehicle-to-grid solutions
Connectivity can also be a key driver of air pollution control and intelligent energy management systems, absorbing information from the environment and feeding it back to the driver, network or energy grid. In this process intelligent vehicle-to-grid technology would be capable of charging AVs and permitting them to transmit stored energy from their batteries back to the electricity grid. A connected AV fleet could be crucial in meeting local energy demands at peak consumption times, acting not only as a consumer but also as a supplier of green energy
Protection of drivers and passengers
The cybersecurity of autonomous vehicle technology will have to be subject to rigorous standards. The security consequences of a malicious breach could be immediately life threatening. These standards will need to be decided, and policed, at the European level.
There are also privacy concerns, both to users and for the protection of agents external to the autonomous vehicle is also pivotal. For example, how should the external video and audio be stored? In order to address these concerns, the EU should host a roundtable with the appropriate directorate-general groups and industry and concerned civil society, so as to draft policies that are coherent with current European privacy laws.
Fostering research and development
The implementation of autonomous vehicle technology will require the formation of broader alliances for research and development (in the short term) and manufacturing (in the medium/long term). These alliances should seek to bring together the traditionally dominating OEMs with technology companies, platforms, academics, insurance companies, and SMEs. It is essential that research and development related to autonomous cars is supported by governments, and that the positive and disruptive impact that including SMEs in these research consortiums is appreciated. Doing so will positively influence the adoption rates of autonomous vehicle technology in each country.
Two very different commercial forces, OEMs and technology companies, today dominate research into and implementation of AV technology. But the wall between tech and manufacturing (software and hardware) is set to crumble rapidly.
The most innovative technology breakthroughs stem often from publicly-funded research projects which are applied by SMEs, who have the flexibility and capacity to take bigger risks than corporate entities. The big OEMs have understood this trend. For instance, startup Autobahn is a spin-off from Daimler, which gives up to 10 innovative tech entrepreneurs access to a global network, expertise and venture capital. Government needs to appreciate this new way of working as much as industry already is.
From our conversations it is evident that we can expect significant shifts in the shape automobile industry, caused by two developments which will change the way how we understand mobility. First, it will emerge that over time individual owners feel they are buying a service rather than a vehicle. Second, as car-sharing and ride-sharing offer greater economic benefits to some users than traditional ownership models, we can expect to see younger ‘early adopters’ use these methods to fulfil their transport needs. The same is true for rapidly expanding metropolitan areas in emerging markets, such as in China or India, with huge traffic problems where car-sharing offers a more efficient and cleaner way of transport.
Such a significant change in the nature of the automotive industry makes it far from certain whether traditional OEMs or tech companies will win the race for the driverless future – if the OEMs are to thrive they will need to evolve into new tech/manufacturing hybrids.
The regulatory setting: debates and reforms in key countries
Having conducted extensive research on the current political and regulatory landscape across key European markets, the report makes three key findings.
The first is that all four of the countries examined have laid the foundations for the testing of highly automated and autonomous vehicles on both test sites and public roads, but have not yet resolved the issue of full autonomy for public use. For full ‘driverless’ autonomy to be introduced considerable further legislative and regulatory change will be needed.
The second key point is that the industrial policy behind AV technology reflects, to a considerable extent, individual national and cultural circumstances – both the particular patterns of domestic manufacturers, research clusters and business landscape but also political culture.
Third, it is clear from our analysis that arguably the biggest task for policymakers is the harmonisation of international and national legislation. It was a recurring theme throughout our conversations with policymakers, regardless of country, that whatever initiatives were taken on the national level only international coordination will allow full adoption of AD.
Germany
German policymakers have taken a pragmatic approach to getting rules in place that allow AV test drives and regulating commercial use of highly automated and autonomous driving systems. In what could serve as a blueprint for other countries, a new bill proposes the installation of black box recorders into vehicles to determine whether person or machine was in charge at the moment when an accident happened.
Those laws that need to reflect the ethical, moral and consumer protection issues of full autonomy will be subject to the recommendations of an expert commission and dealt with at a later stage, most likely after the general election in autumn 2017.
United Kingdom
The British government has been explicit that, despite a hitherto more ‘hands off’ industrial policy compared to most other European countries, it is aiming for the UK to be at the forefront of the development of autonomous vehicles.
The government is adopting a non-regulatory or light-touch approach to the testing and impl