its 1993 level of 18.4 cents per gallon—have led to shortfalls in federal money available from the federal Highway Trust Fund (Langer, Maheshri, and Winston 2017).4 Both major political parties agree that the United States has been experiencing an infrastructure crisis for years. However, they have yet to take any major steps to address it.
The Emergence and Potential of Autonomous Vehicles
Notwithstanding those bleak conditions, there is still hope for the highway transportation system. Self-driving or autonomous vehi cles, a long-awaited catalyst for change, are quickly emerging from the private sector. As this book argues, autonomous vehicles represent a watershed moment in the development of transportation. If properly encouraged, this innovation promises not only to vastly improve road travel and generate huge benefits to travelers, shippers, and delivery companies but also to benefit the entire economy by reducing congestion and virtually eliminating vehicle accidents. In addition, although autonomous vehicles’ effects on land use, employment, other modes of travel, and public finance are likely to be mixed, the negative effects are generally overstated, because they ignore plausible adjustments by the public and policymakers that could ameliorate them.
As Bowler (2017) notes in the case of air transportation, as late as the 1920s skeptics still scoffed at the whole idea of a commercially viable aviation industry. Rapid technical developments soon allowed their arguments to be discounted. Still, as late as 1937, Sir Harold Harley told a BBC audience that no major innovations could be foreseen in aviation technology (Bowler 2017).
Similarly, autonomous vehicles have attracted vocal naysayers, who assert that the technology may never work effectively enough to improve highway transportation significantly or that it will take a long time before those vehicles are in regular use and that even then, they are likely to increase road travel and to worsen congestion. Litman (2019) summarizes various doubts about autonomous vehicles. The popular press also feeds negative views with pieces titled “Cars Are Death Machines. Self-Driving Tech Won’t Change That” (Arieff 2019) and “Silicon Valley Pioneered Self-Driving Cars. But Some of Its Tech Savvy Residents Don’t Want Them Tested in Their Neighborhoods” (Siddiqui 2019).
We and others are optimistic about the likely success of autonomous vehicles in the long run for a number of reasons. The competition and cooperation that is evolving in the autonomous-vehicle industry is unprecedented in its global scope. The technology has greatly progressed and continues to advance at a rapid rate. The incentives for industry participants to succeed and the cost of failure are enormous. And it is plausible that competition among cities, states, and even countries will develop and provide incentives for policymakers to enact policies that expedite the adoption and efficient operations of autonomous vehicles.
Nonetheless, doubters are likely to modify their views only if and when autonomous vehicles are widely adopted and are operating safely and efficiently. In the meantime, policy analysts can play an important and constructive role by identifying and analyzing some important policy issues that must be addressed effectively to ensure that autonomous vehicles will be safe and efficient when the public begins to adopt them to replace nonautonomous vehicles.
A Global Effort
In 2011 two top engineers for Google traveled to Detroit in the hope of working with a car company to build and sell a fleet of self-driving cars (Burns and Shulgan 2018). But when no one in Detroit was interested, Google (and subsequently Waymo, its self-driving car project) took the lead in introducing autonomous vehicles to the world. A few years later, U.S. and foreign automakers, other technology firms, and various start-up ventures were in hot pursuit, either by themselves or in a partnership.5 Now, nearly all major car companies in the world, as well as technology, cargo, and startup companies, are engaged in developing autonomous vehicles.6 Hundreds more companies have emerged to develop various components of the technology.
Various partnerships between foreign firms, governments and firms, and universities and firms abound. Waymo has struck a deal with Renault-Nissan to bring driverless cars to Japan and France; Ford and Argo.ai are in talks with Volkswagen about building self-driving car fleets; GM Cruise is partnering with Honda; Uber is growing closer with Toyota; and Fiat-Chrysler and Amazon are partnering with Aurora. China and South Korea have indicated their intention to support the efforts of their companies to become world leaders in autonomous-vehicle technology and adoption. Other countries are likely to follow suit. And America’s leading technology universities, including but not limited to MIT and Carnegie Mellon, are aiding the autonomous-vehicle industry by researching ways to improve the vehicles’ performance in complex driving environments and by training the computer-science talent that the industry is employing.7
Today, total global investment in autonomous-vehicle technology exceeds $100 billion, and that figure is increasing rapidly as competition intensifies (Kerry and Karsten 2017). For example, Hyundai announced that it is planning to invest some $35 billion in autonomous-vehicle technology by 2025.8 Atkinson and Foote (2018) notes that global growth in autonomous vehicles is expected to be fastest in North America. Foreign automakers and technology companies have been investing in U.S.-based R&D and are locating in the United States, underscoring U.S. leadership in this emerging field.
At the same time, countries throughout the world are investing in infrastructure to facilitate autonomous vehicles production and adoption. China is building a new highway with dedicated lanes for autonomous vehicles that will be used by their leading autonomous-vehicle companies, Baidu, Pony.ai, and WeRide. The highway connects Beijing and the Xiong’an New Area in Hebei Province, some sixty miles away. In addition, China’s leading telecommunications equipment manufacturer, Huawei, is building technology that could take on a large part of the processing required to run an autonomous vehicle.
Although firms are partnering with one another, they are also competing intensely to offer a reliable autonomous vehicle to the public because their very existence is at stake. In the United States, General Motors survived even though the Chevrolet Bolt was not the successful electric vehicle it had hoped for, while Tesla developed an electric vehicle that is selling nearly 200,000 units annually. However, General Motors and Ford will face much more competition in the market for autonomous vehicles, with far greater implications for their market shares. These companies are transforming themselves by closing plants that produce passenger cars, slashing their workforce to save billions of dollars annually, and using these savings to invest in new technologies that they hope will propel them to the forefront of the autonomous-vehicle industry of the future.9 Although the U.S. government has helped domestic automakers in the past by providing them with bailouts and protection from foreign competition, financial assistance will not transform a U.S. firm that falls behind in the highly competitive global autonomous-vehicle industry into an industry leader, and it is therefore unlikely to be provided by the government.10
As a result of industry competition and cooperation, vehicle technology is progressing at such a rapid rate that the relevant question in America is no longer whether its surface-transportation system will be made up entirely of autonomous vehicles in the foreseeable future. The question is when will the transformation occur. And that question cannot be addressed without understanding the pervasive role of government in the adoption process.
In any case, recent testing has moved beyond operating the vehicle in good weather and in a low-risk environment to identifying and overcoming atypical but challenging conditions that could arise in practice, such as driving in blinding snow and combating terrorists’ efforts to cause a vehicle to crash into other vehicles or to run over pedestrians. In addition, automobile and technology companies are developing the capacity to promptly fix any technical problems in their autonomous-vehicle fleets, and they are increasingly aware of the liability issues that surround autonomous vehicles.
The Role of Government
Government policymakers do not simply need to stay out of the way to facilitate autonomous vehicle transportation. They must take a number of important steps, which include establishing a framework for vehicle testing and conditions for adoption, making appropriate investments in highway-network technology to facilitate communication between autonomous vehicles and between such vehicles and highway infrastructure and operators, and reforming pricing and investment policies to enable the safe and efficient operation of autonomous vehicles.
Accordingly,