How the European Union Can Better Support the Development of Autonomous Vehicles

Michael McLaughlin July 13, 2020
July 13, 2020

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The European Union’s future prosperity is heavily reliant on it maintaining its status as a leader in the automotive industry. Indeed, the sector directly and indirectly accounts for more than six percent of EU employment, and the turnover it generates represents over seven percent of its gross domestic product. Vehicles with more autonomous capabilities are the future of transportation, however, and a 2019 European Parliament report found that the European Union was behind the United States and China in developing them. To address this challenge, the European Union should double its financial support for autonomous vehicle research and development (R&D), introduce policies to incentivize autonomous vehicle adoption, and consider the potential impact on innovation when engaging in antitrust probes. 

Besides being crucial for Europe’s economic prosperity, autonomous vehicles have tremendous potential to help Europe achieve its vision for a safer, more inclusive, and energy-efficient future. As vehicles become more autonomous, they can reduce accidents as human error plays a part in 95 percent of them. Autonomous vehicles can also create transportation options for more people—both by lowering the cost per passenger mile traveled, thereby making transportation more affordable, and potentially by giving people with disabilities who cannot drive access to transportation. Finally, autonomous vehicles are more fuel efficient—one study found that vehicles using adaptive cruise control consumed five to seven percent less fuel than human-driven vehicles.

If autonomous vehicles are the future, the European Union should invest accordingly. As such, the European Union should at least double its R&D support for autonomous vehicle technologies. Between 2014 and 2020, the EU allocated €300 million to fund research on autonomous vehicles. This funding has supported a wide range of projects, ranging from the development and demonstration of platooning technology to improving software algorithms that predict the behavior of road users to the piloting of autonomous vehicles. And as of 2017, the EU was also providing approximately €120 million annually to develop intelligent transport systems that will enable autonomous vehicles to communicate with other vehicles and roadside infrastructure.

However, the funding figures are less impressive when one considers that Waymo, the autonomous vehicle subsidiary of Alphabet, has spent $3.5 billion on research and development. To be sure, the private sector will provide the bulk of investment to develop autonomous vehicles. But autonomous vehicles’ direct benefits and positive spill-over effects on other technologies, such as the advancement of semiconductors and digital maps, dictate that the EU should increase its funding.

Another priority for the EU should be to implement policies that encourage the adoption of autonomous vehicles. As such, the EU needs to establish a uniform regulatory environment and enable widespread testing. The EU has made progress on the first task by providing member states guidelines on assessing the safety and approving the use of autonomous vehicles. However, many nations still have different requirements for testing autonomous vehicles on public roads and some only allow limited testing. Waiting until other nations perfect autonomous vehicles on their roads would put the EU at a disadvantage to develop and adopt them. Member states should work to harmonize their requirements and move away from approving testing on a case-by-case basis to setting guidelines that allow safe testing on all roads. EU member states should also consider their own policies to encourage the use of autonomous vehicles, such as toll exemptions.

Finally, the EU should consider the potential impact on the development of autonomous vehicles when considering antitrust probes. The current antitrust concerns in the EU regarding autonomous vehicles mostly revolve around standard-setting, essential patents, and access to data. EU competition authorities should be wary of forcing firms to share vehicle or user-generated data in ways that discourage investment or innovation, invade driver or rider privacy, or undermine business models that support the development of shared, autonomous vehicles.

Future antitrust actions may develop as a result of market consolidation. Numerous automakers have already partnered with each other and there is likely to be significant consolidation in the future because developing the necessary technologies is incredibly expensive and manufacturing benefits from economies of scale. The EU’s competition policy has a history of making it difficult for firms to achieve scale to compete globally, and the European Union should learn from these mistakes.

Autonomous vehicles have the potential to play a vital role in the EU’s economy while also helping the block create a smarter and more inclusive future. To reach this future, however, the European Union needs to increase its support for the technology.