U.S. Automakers and U.S. Government Policy

United States Transportation Secretary Anthony Foxx has announced the Obama Administration’s intention to include $4 billion of funding for driverless cars in the next budget proposal. The President’s budget is merely guidance for Congress, which passes the final official appropriations bill, but inclusion of such a large sum in the President’s budget signals some degree of political support for automakers developing the technology.

“We are bullish on autonomous vehicles,” Mr. Foxx said.

Even more important than funding is how the Administration seems to be interpreting laws in favor of driverless cars. The Executive branch is responsible for enforcing laws created by Congress, and in doing so it often has freedom to interpret laws for new situations. So far, the Obama Administration has been pushing for states to develop regulatory frameworks allowing for autonomous cars and for the federal government to approve new designs as safe under safety regulations.

In addition, [Foxx] urged companies to seek interpretations of existing federal vehicle standards from regulators for new technologies under development.


“This is the right way to drive innovation,” said Mr. Foxx, adding that federal regulators were also working with various states to create a consistent national policy for driverless cars.

The partnership is being presented to the public as focused on safety, unsurprising given that American corporate rhetoric often focuses on either safety or health. The partnership is being presented to business observers as about resolving regulatory or policy uncertainty, which has become one of the most-used justifications for government policy.

But without guidance from regulators, companies have been uncertain about the legal environment that awaits their new vehicles. “The industry is anxious to have a framework, particularly in terms of safety,” Mr. Reuss said.

The language about uncertainty in the legal environment is much more palatable than simply saying that the firms need regulatory approval to develop their products. Claiming the issue is about uncertainty shifts the emphasis from the power dynamic between government and business to instead place the burden of innovation on government. This is not unusual in American business rhetoric, which sometimes portrays business as the victim of government regulation. For example, observers sometimes argue government needs to reduce regulation to “unleash” innovation or economic growth. In the case of the autos, though, the companies very clearly need help from government, primarily because driverless cars will not work with the current traffic behavior in the U.S. Instead, these firms need government to create new regulations affecting how people drive and how cars are regulated that help solve some of the innovation problems of driverless cars. For example, we might see regulations banning driven cars from some parts of cities in order to make those areas feasible for driverless cars.

Foxx made the announcement at the Detroit Auto Show, which makes sense. It also makes sense that he was surrounded by automaker executives when making the announcement. What is a bit surprising is that executives from Google, Inc., were also there. Traditional automakers are trying to become technology companies while technology companies are trying to become automakers. For now, they all seem to have an effective relationship with the Obama Administration that is producing favorable regulatory shifts toward allowing unproven autonomous car technology.

At the announcement, Mr. Foxx was flanked by executives of several carmakers and tech companies, including Google, which has been testing its autonomous vehicles on California roads since last year.


“It takes real collaboration with our regulators so this is done right and done safely,” said Mark Reuss, head of global product development at General Motors, the nation’s largest auto manufacturer.

Given that the federal government saved several automakers from possibly collapsing during the financial crisis, it is impressive the companies have been able to maintain such influence over government regulation of the industry. Example: last year was a record number of safety recalls for vehicles in the United States. This year, the government is meeting with automakers to develop voluntary safety measures related to the recalls.



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