Should New Jersey Give Self-Driving Vehicles the Green Light?

The New Jersey Legislature is Currently Debating Whether Self-Driving Vehicles Should Be Allowed on State Roadways…

The New Jersey Legislature is currently debating whether self-driving vehicles should be allowed on state roadways and, if so, what types of safeguards should be in place. While many other states have given autonomous vehicles the green light, New Jersey does not yet have any regulations in place.

Business Opportunities in Autonomous Vehicle Industry

The primary benefit touted by makers of autonomous vehicles is that they should ultimately result in greater roadway safety. There are 5.5 million traffic collisions in the United States every year, of which 81 percent are attributable to human error. Given the statistics, some proponents predict that crashes could decrease by as much as 90 percent.

Driverless cars are also big business. The global autonomous vehicle industry is expected to grow more than tenfold from 2019 to 2026, according to the latest market research. Allied Market Research predicts that the global market for self-driving vehicles will be worth $54.23 billion in 2019 and increase to $556.67 billion by 2026, with a compound annual growth rate of 39.47 percent during that time frame.

With the industry poised to take off, companies from General Motors to Google’s Waymo are seeking to capitalize on self-driving technology. In addition to automakers, the industry offers opportunities for companies providing ride-hailing freight transportation, and food delivery services (to name just a few).

Of course, self-driving cars may not be good news for all businesses. If autonomous vehicles do become the norm, they could have a significant impact on the traditional business models employed in a number of industries, including car manufacturing, transportation, and auto insurance. Like all new technology, businesses and consumers will adapt, and there are winners and losers in that process.

Regulating Self-Driving Vehicles

Some states have implemented regulations to address driverless cars, which are already on the road for testing. In California, operators of autonomous vehicles must undergo special training and be capable of taking over control in the case of an emergency. Manufacturers must report any type of accident or any situation where the autonomous technology disengages during operation to the state’s Department of Motor vehicles within 10 days. They must also maintain $5 million insurance or surety bond.

In New Jersey, lawmakers are currently whether to allow driverless cars to be tested on public roadways. On October 22, 2018, the Assembly Science, Innovation and Technology and the Transportation and Independent Authorities committees held a joint hearing to consider testimony from a wide range of experts. Below are several bills currently under consideration:

• Assembly Bill 1853: The legislation authorizes the testing of autonomous vehicles on public roads.  Under the bill, the driver must possess the proper class of license, as determined by the New Jersey Motor Vehicle Commission (Commission). The bill also imposes the following requirements: the autonomous vehicle must be operated solely by employees, contractors, or other persons designated by the manufacturer of the autonomous technology; the operator must be seated in the driver’s seat, monitoring the safe operation of the autonomous vehicle, and capable of taking over immediate manual control of the autonomous vehicle in the event of an autonomous technology failure or other emergency; and, prior to the start of testing, the manufacturer performing the testing must provide evidence of an instrument of insurance, surety bond, or proof of self-insurance in the amount of $5,000,000. The bill also requires the manufacturer of the autonomous technology to apply for and receive approval from the commission prior to operating an autonomous vehicle on public roads.
• Assembly Bill 4541: The legislation requires the New Jersey Motor Vehicle Commission to create regulations for issuing driver’s licenses to owners of autonomous vehicles. It also directs the Commission to establish regulations authorizing the operation of autonomous vehicles that must include, but are not limited to: requirements the autonomous vehicle must meet before it may be operated on highways, roads, or streets; requirements for proof of insurance to test or operate an autonomous vehicle on highways, roads, or streets in consultation with the Commissioner of Banking and Insurance; requirements for registration; minimum safety standards for autonomous vehicles and their operation; requirements for testing autonomous vehicles; restrictions for testing autonomous vehicles in specified geographic areas; and any other requirements the chief administrator determines to be necessary. 
• Assembly Bill 4573: The legislation establishes a one-year “New Jersey Fully Autonomous Vehicle Pilot Program.” The bill mandates that the Commission must enter into a written agreement with each autonomous vehicle tester participating in the pilot program that is to, at a minimum, (1) specify the locations and routes where fully autonomous vehicles may operate and is to include a provision authorizing the operation of fully autonomous vehicles on the highways within the boundaries of Fort Monmouth, as that term is defined in the bill; (2) prohibit the operation of fully autonomous vehicles outside of these locations and routes except in the case of an emergency; (3) identify each fully autonomous vehicle that will be operated by the identification number, make, year, and model of the fully autonomous vehicle; and (4) specify the hours during which fully autonomous vehicles may be operated. The bill authorizes the Chief Administrator of the New Jersey Motor Vehicle Commission (chief administrator) to prohibit an operator or autonomous vehicle tester from operating a fully autonomous vehicle if the chief administrator determines that the operation of a fully autonomous vehicle by the operator or autonomous vehicle tester poses a risk to public safety or the operator or autonomous vehicle tester fails to comply with the provisions of the bill or the requirements of the pilot program. 

Safety Concerns for Consumers

In addition to overcoming the regulatory hurdles, the autonomous vehicle industry must also convince consumers self-driving cars are safe. Consumers have yet to buy in on self-driving technology, particularly in light of several well-publicized crashes that resulted in fatalities. A recent study by the AAA revealed that 73 percent of survey respondents reported being too afraid to ride in a fully self-driving vehicle, compared to 63 percent in 2017. In addition, 63 percent of the U.S adults surveyed said “they would actually feel less safe sharing the road with a self-driving vehicle while walking or riding a bicycle.”

Key Takeaway for New Jersey Businesses

Importantly, for businesses and investors interested in autonomous vehicle technology and the resulting industry disruption, there is a wealth of opportunity potential and the question is whether New Jersey will get in on that action. Of course, legal uncertainties abound, as with any disruptive technology. At Scarinci Hollenbeck, our Business and Technology Law practice groups will be closely monitoring the technological and legal developments.

If you have any questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Jeffrey K. Cassin, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.