Mike Hawes, CEO of the Society of Motor Manufacturers and Traders, recently said: "The automotive industry is responding to perhaps the most significant change since the invention of the car". The drive (no pun intended) to put automated and electronic vehicles (AEVs) on the road is not just about economics, it also dovetails with the government's net zero emissions strategy.
As with all disruptive technologies, there is a rush to create a suitable legal framework for AEVs, particularly given the safety issues involved, and there have been a number of recent changes to the law and other initiatives, designed to help bring AEVs to market as soon as the technology allows.
The Automated and Electric Vehicles Act 2018 (AEVA), facilitates technological innovation and development, and provides clarity around liability and insurance, focusing on liability of insurers and electric vehicle infrastructure.
The AEVA introduces compulsory insurance for autonomous vehicle technology, using a single insurer model policy where both the 'driver' and any victim of an automated vehicle accident will have first instance recourse from an insurer in the event of death, personal injury or damage caused by an automated vehicle (subject to exceptions).
Victims are not expected to engage in disputes with manufacturers – the insurers will, of course, have potential recourse against manufacturers (or other potentially liable third parties) in the usual way under existing product liability and common law, but given the complex supply chains involved, this could give rise to complicated disputes.
Insurers will be reassured by the fact that cover can be excluded where the insured has made unauthorised software alterations (or they have been made with the insured's knowledge) or where the insured person has failed to install safety-critical software updates (which the insured knows, or should reasonably have known, were safety-critical).
Manufacturers need to ensure that user manuals are sufficiently clear, that system controls are in place to prevent software being overridden and tampered with (whether by a user or third party 'bad actor'), and consider the extent to which system maintenance records need to be monitored on an ongoing basis (and by whom).
They will also need to consider consumer expectations, be able to trace all vehicle components including software throughout the supply chain and obtain warranties and indemnities from other providers in the supply chain in order to ensure they are fully protected.
There are a number of limitations to the scope of the AEVA. It does not cover all areas of responsibility so it will be up to manufacturers and suppliers to make sure that user manuals in particular are sufficiently clear, and to decide who will take responsibility for ensuring that consumers understand what they need to do in order to maintain insurance, particularly in relation to vulnerable consumers or those who may not be sufficiently tech savvy to deal with software updates.
The drastic transformation to the traditional vehicle ownership model is also an issue in terms of liability for AEVs. Individual ownership is being replaced by various mobility service models (including shared ownership, subscription, on-demand mobility and Mobility as a Service or MaaS offerings), in some instances with multiple users using a vehicle in a day.
Who is responsible for critical updates where there are multiple drivers who do not own the vehicle? How will update statuses be monitored by the insured person (and should this extend to manufacturers and even dealers), and how easily and effectively will instructions and warnings be communicated to users at the start of their journeys? Ensuring data security for multiple users of a single vehicle will also present challenges.
The AEVA appears not to cover users/victims of accidents caused by vehicles with levels of automation which cannot be characterised as "fully-autonomous" (although this is a slightly grey area). As such, consumers are likely to need to continue relying on traditional motor insurance and the Consumer Protection Act 1987, which imposes strict liability on a manufacturer in the event of a vehicle defect (ie the injured party is not required to establish fault).
Guidance is needed to cover the circumstances in which it is "appropriate", or not, for an insured to have allowed a vehicle to drive itself, in order for contributory negligence provisions under the AEVA to be invoked by insurers. Another issue is that the AEVA only applies to accidents caused by vehicles on roads or other public places in Great Britain (and so does not cover accidents in Northern Ireland or abroad).
Going forward, we are likely to see many more disputes between insurers and manufacturers, or other third parties (such as vehicle servicing providers, software or other suppliers, or product liability or professional indemnity insurers). Given the potential complexity of supply chains, there could be a number of parties involved (and a number of parties who are liable).
Insurers seeking to rely on the AEVA's liability exclusions may, look to telematics for evidence of unauthorised software alterations. This may result in delays to compensation and any use of personal data will need be in compliance with applicable data protection law. Expert evidence (for example in relation to the software) is likely to be critical.
Hacking of connected or autonomous vehicles (or fleets of vehicles) remains a real threat. The government's updated Code of Practice on automated vehicle trialling includes sections on data protection and cyber, confirming that automated technology trials are likely to involve processing personal data – the ICO has also confirmed that collision data, geolocation data, driver settings and telematics are likely to be personal data.
The recommendation is that organisations involved in trialling autonomous technologies follow the government's Key Principles of Cyber Security for Connected and Autonomous Vehicles, and adopt relevant security standards (such as PAS 1885:2018 and BS 10754-1:2018). The fifth chapter of the Code of Practice also has new recommendations regarding data, including minimum expectations regarding the recording of pertinent data relating to trials.
The Department for Transport recently announced a competition to develop a UK-based cyber testing facility for test tracks and virtual environments in which to subject driverless cars to simulated cyberattacks. This is intended to give the UK a head-start in the automotive cybersecurity market (which Jesse Norman MP has suggested will soon be worth tens of billions of pounds globally).
The UK's Information Commissioner's Office (ICO) is separately developing an auditing framework for AI tools and technologies. Fully-automated decision-making models are one of the eight AI-specific risk areas which will be covered by the framework.
The first part (of three) of the Law Commission's consultation on AEVs has just concluded, and explores the following areas across nine sections of the consultation paper:
The purpose of the consultation is to establish the legal framework required to support the successful commercial deployment of automated vehicles and their use as part of public transport networks and on-demand passenger services.
From the 178 written responses, one key area arising out of the first part of the consultation was the proposal that, as an immediate intermediate step, the government should begin work on establishing a safety assurance scheme before autonomous vehicles reach the market, to support the implementation of the AEVA and to prohibit unauthorised systems.
Responses suggested that this scheme could focus on driver training and methods of testing automated vehicle roadworthiness.
Other responses to the consultation highlighted:
In February this year, the government updated its (non-statutory) 2015 Code of Practice on the Trialling of Automated Vehicles in response to the industry's desire to conduct more advanced trials. Under the updated Code of Practice, certain information must be published by those carrying out driverless vehicle trials, including performance reports and safety information. The government invited feedback on the updated Code of Practice through an Invitation to Comment which closed in May this year.
Elsewhere, the government is likely to continue considering amendments to The Road Vehicle (Construction and Use) Regulations 1986 (Regulations) and The Highway Code as new technologies emerge and affect the way that automotive users operate on the road. The Regulations were amended in June 2018 to allow the use of handheld mobile-enabled remote-control parking technology.
There are various prohibitions under the Highway Code (eg relating to the use of handheld mobile devices and the requirement that both hands be engaged on the wheel at all times) which will clearly need to be revisited and adapted in order to accommodate the introduction of new semi and fully autonomous technologies. In due course, aspects of the MOT test may also need to be re-examined.
The government separately continues to pump funds into various projects and research and development (to the tune of £150 million through the Centre for Connected and Autonomous Vehicles, match-funded by the industry across more than 70 projects). In March this year, the government announced that £90 million would be invested in towns and cities, in part for the purposes of transport innovation testing.
The government has also announced plans for a testing ecosystem (likely based between London and Birmingham), to be the primary testing infrastructure for both government-funded and independent autonomous technology testing projects.
The government is similarly committed to funding the development of electric car battery technology (recently committing to provide £23 million for the development of such technology). There is a wealth of opportunity in this space – for example, energy stores in electric vehicle batteries can be used as a source of energy to support the national grid.
Jesse Norman MP recently stated that by 2040, demand for UK-produced batteries is likely to be 50 times what it is today and that the government is investing £25 million in backing prototype zero emission vehicles, together with a further £25 million investment into the next round of the Advanced Propulsion Centre's projects (including the development of high-performance battery packs and hydrogen-powered engines).
Across various measures, the government has committed to investing £1.5 billion in ultra-low emission vehicles by the year 2020, and has outlined a strategy to improve the affordability of zero emission vehicles and related incentives.
The second part of the AEVA deals with electric charging infrastructure, specifically:
Failure to comply with certain requirements may lead to financial penalties and/or inspections and/or the provision of information or documents.
The government also recently launched its Road to Zero Strategy, outlining its ambitions to support the transition to zero emissions road transport and to reduce emissions from conventional vehicles during such transition. The strategy is long-reaching, stretching to 2050, and includes the government's target for at least 50% of new cars to be ultra-low emission by 2030.
Looking to the future, we believe that the government will continue to invest heavily in the development and testing of AEV technologies in order to deliver on its Industrial Strategy and maintain the UK's position in these global technology markets. We also expect to see continued rolling reform, including in the introduction of various statutory instruments to follow and implement the AEVA.
Further, we await the results of the second and third parts of the Law Society's consultation, together with its final recommendation report in 2021.
With huge investment capabilities and vast technological leaps being made around the world (particularly in China, the USA and Japan), it will be essential for the UK to ensure it keeps up with the pace of global development and retains its position in the market.
Commentators in the market have pointed to the UK's favourable unitary legal system, infrastructure, and more manageable size and climate, as factors which will assist the UK in staying ahead of its rivals.
Continued government support will of course be vital, as will a smooth exit from the EU (as far as possible). Brexit continues to cause uncertainty for the automotive industry, with UK production levels having declined in 2018 compared to 2017.
In addition to investment, sustained collaboration across stakeholders in the industry has been, and will continue to be, critical; for example between traditional automotive manufacturers and developers, technology companies, government bodies, insurers, lawyers, the telecoms sector, consumer groups, data scientists, academics and Ordnance Survey.
Fully-autonomous vehicles are inevitable, but if they are to make it onto our roads any time soon, a number of issues need to be addressed, not least of which is consumer confidence. Without that, take up will be delayed no matter how ardent the government's ambitions.
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