Two developments yesterday have strengthened the rent-rather-than-own model of driverless cars: California issued tough driverless regulations, and Google is reportedly setting up a standalone company specializing in ride shares.
California’s department of motor vehicles finally released a draft version of the regulations, a full year later than the deadline set by the state legislature. It requires not only that a driver sit behind an actual steering wheel—unlike the most outré Google design, which has no steering wheel at all—but also that vendors lease rather than sell the cars to consumers.
Google was thus confronted with the very policies it had lobbied against. "We're gravely disappointed that California is already writing a ceiling on the potential for fully self-driving cars to help all of us who live here," the company said in a statement.
Disappointed, certainly—but perhaps not surprised. Google appears to have anticipated the bad news by cozying up to other, more lenient jurisdictions. On Saturday the London Telegraph reported that British regulators had met a number of times with representatives of the Google car program. The Telegraph report was based on government records the newspaper had obtained. Here’s a telling excerpt:
“At one meeting at Google’s London offices in February, Sarah Hunter, the head of policy for Google’s experimental division, Google X, said the company was ‘very positive about the non-regulatory approach being taken in the UK [which] places the UK in a good position and could be seen as an example of best practice.’ ”
Another move that Google may have made to accommodate California’s tough stand is its reported decision to set up a stand-alone robocar business to offer ride sharing services. The business would be put under Google’s Alphabet umbrella company next year, Bloomberg reports. The point is to offer automated ride sharing and thus to challenge Uber and taxicabs generally, perhaps beginning in a city Google has already mapped in detail, such as San Francisco or Austin.
Bloomberg says Google declined to confirm the report. As recently as three months ago Google cofounder Sergei Brin had said there were no immediate plans to set up any such standalone company.
Google used to say that it wanted to develop robocars, not to mass-produce them, but the company has changed its tune. “We’re … making a few hundred of them,” Ms. Hunter said last September. “We’re making them to enable our team to learn how to actually build a self-driving vehicle from the ground up.”
By making its own product, Google can avoid any dependence on the auto industry, which prefers to increase the level of automation only gradually and so to keep the human driver involved for a long time to come. And by offering cars—even cars with steering wheels—for ride sharing, Google can at least stay in the game in California. California is not only Google’s home state, it’s a key auto market and the trend setter for auto regulators everywhere.