🤖🚖 Robotaxis In NYC? Should TLC Drivers Be Nervous?
New NYC DOT program overseeing self-driving vehicles *with* safety driver, launches. Should TLC Drivers be nervous (?) and why we think the TLC, not DOT, should be in charge of licensing robotaxis
NYC’s Department of Transportation (DOT) launched a new Autonomous Vehicle (AV) permitting program that requires safety driver
Fully driverless or self-driving vehicles (robotaxis) will not be permitted on NYC public roads under new DOT program
There are still many NYC-specific hurdles related to successfully running a robotaxi service, but do not underestimate pace of technology progressing
NYC Taxi & Limousine Commission (TLC) should be in charge of most self-driving vehicle licensing, not DOT, as (1) NYC AVs will almost always be used as for-hire vehicles (FHVs), and (2) to help manage permanent employment disruption to over 100,000 NYC for-hire drivers and impacts on their families/dependents
Taxi medallions and FHV licensing (TLC Plates) regime should be adopted for robotaxis as a way to ensure a smooth and equitable transition, when and if AVs becomes viable
“This technology is coming whether we like it or not…so we’re going to make sure that we get it right.”
- NYC Mayor Eric Adams statement
“As the world’s leading autonomous vehicle ride-hailing company, Waymo looks forward to continuing our partnership with Mayor Adams and his administration as we continue to safely bring our technologies to more cities and communities across the country.”
- Michelle Peacock, Waymo’s global head of public policy
“New York City has the most challenging traffic environment in the country and is no place for testing out dangerous autonomous vehicle technology.”
- Brendan Sexton, President of the Independent Drivers Guild (IDG)
Last week, the City’s Department of Transportation (DOT) launched an “Autonomous Vehicle (AV) Demonstration or Testing Permit Program”. While the more broadly interesting headline story was about self-driving vehicles, or robotaxis, coming to NYC, it actually wouldn’t be the first time AVs have driven on City streets.
In 2021, Mobileye began testing self-driving vehicles in NYC. According to Gersh Kuntzman at Streetsblog NYC, Mobileye was the only company granted permission to test self-driving vehicles under a previous State program that was managed by the Department of Motor Vehicles (DMV).
That program directly led to political hearings and other technical discussions (i.e., AV insurance requirements), helping lay the foundation for the creation of NYC DOT’s self-driving permitting program, announced a few days ago. In addition, New York State Governor Kathy Hochul also recently extended the statewide AV pilot permit program to 2026.
NYC AV (“Robotaxi”) Regulations
We think the more interesting story to focus on right now is who’s in charge of regulating AV permits or licenses in NYC. If and when full self-driving comes to pass, we believe it’s very important that the City gives the NYC Taxi & Limousine Commission (TLC) regulatory authority over most AVs (“robotaxis”).
In our view, a self-driving vehicle in NYC will almost always be a for-hire vehicle (FHV), especially if the vehicle is not owned by the passenger(s). Even if an AV is owned by its passenger(s) there will be congestion considerations, especially if that person allows others to be transported in the vehicle.
Furthermore, if another regulatory authority, in this case the DOT, has oversight over licensing robotaxis in NYC, the TLC will be greatly disadvantaged when trying to protect the over 100,000 NYC for-hire driver base it licenses, whose livelihoods (& families/dependents) will be greatly impacted by a robotaxi service launching.
At the very bottom of the DOT page on the new AV permit program it does mention “Entities and test vehicle operators utilizing AVs in for-hire transportation services must comply with the New York City Taxi and Limousine Commission’s (TLC) rules and regulations, including obtaining a TLC license.”
Now, to be fair, all AV companies wanting to test in NYC currently are required have safety drivers and also seem to be primarily mapping NYC streets. Since they are not actively conducting passenger paid trips, we think the NYC DOT regulation, for now, is not that controversial and actually helpful as it layers on additional City requirements, on top of State rules. Basically, it makes sure NYC has regulatory control over its streets vs. the State.
However, if and more likely when AVs start becoming robotaxis (conducting paid passenger trips in NYC), it is our view that essentially all AV permits used to transport any passenger, regardless of who owns the vehicle, must be overseen and regulated by the NYC TLC.
Embracing the Future, Remembering The Past
NYC definitely should be a City that’s at the forefront of adopting new technology. Hard lessons were learned from slow to catch-up regulation that saw Uber & Lyft rise rapidly, unsustainably, and at a catastrophic personal and financial cost to many City yellow cab, livery & black car base drivers and fleets.
TLC-licensed drivers and businesses who followed the rules, made reasonable assumptions about regulations / regulatory enforcement and collectively paid hundreds of millions to the City for for-hire vehicle license (taxi medallion) rights, suffered tremendously. While we can’t rewrite history, we can ensure past mistakes are not repeated.
NYC Shouldn’t Make SF Mistakes
We aren’t San Francisco or California experts, but one thing that stuck out to us was a four (potentially five) member state utilities commission 🤔, California Public Utilities Commission (CPUC), has the power to issue and regulate AV licenses (robotaxis) and rideshare companies in the City of San Francisco (and across California), but not local SF taxis. SF taxis are regulated by the San Francisco Municipal Transportation Agency (SFMTA), which according to its site “aggregated multiple San Francisco city agencies, including the Department of Parking and Traffic, Muni, and since 2007, the Taxi Commission”.
Regulatory dynamics in San Francisco basically seem quirky and different City and State regulators are effectively regulating the same for-hire transportation industry! These dynamics, as we write about below, likely resulted in a chaotic fully driverless, robotaxi launch in SF last year.
NYC should be very careful not to make the same mistakes. This city’s regulatory regime on AVs should not be overly influenced by New York State or too intertwined with other City agencies who might be competing for the same tax dollars. As of now, in NYC, we thankfully have one clear regulator for all sectors of the City’s for-hire transportation industry - the NYC Taxi & Limousine Commission.
Let’s keep it that way. NYC AVs clearly should be primarily regulated by the TLC.
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SF Robotaxi Chaos
Last August, the California Public Utilities Commission (CPUC) allowed General Motors-backed Cruise and Google-backed Waymo to operate 24/7 self-driving taxis (robotaxis) without safety drivers.
Sci-Fi became “Sci-Fact” in Silicon Valley’s urban heart. San Francisco for-hire drivers who worked with taxis and on Uber/Lyft’s platform, were competing with machines (🧑 vs. 🤖)!
Now, eight months later, Cruise has lost its SF license to operate a robotaxi service and its Co-Founder / CEO resigned after a series of incidences, complaints and setbacks. The final straw perhaps being an event where a pedestrian was dragged ~20 feet by a Cruise robotaxi, after she was hit into the AVs path by a human-driven vehicle. It should be noted Waymo has not been subject to the same disciplinary action as Cruise.
Will NYC Robotaxis Replace TLC Drivers? When?
While robotaxi fleets have been operating for years in places like Arizona, and the promise of self-driving vehicle fleets displacing drivers has been talked about for over a decade, last August’s San Francisco robotaxi deployment was very notable. Like NYC, SF is a dense, urban city that has a large number of daily for-hire trips. According to reports to at the time, Waymo was permitted to operate at speeds up to 65 mph, while Cruise’s self-driving vehicles could travel up to 35 mph.
We think it’s quite clear now that robotaxis will be part of the for-hire transportation marketplace discussion for years & decades to come.
However, there is a big difference between a few examples that get a lot of publicity versus something on the verge of mass adoption. In that regard, we wanted to share some thoughts on what we think the main hurdles are to mass market self-driving adoption and why we think we still have several years, maybe even more than decade, to go before we see many “robotaxis” on the streets of NYC.
In addition, the way self-driving could play out might be hard to fully conceptualize. Some areas of a city or town may be “autonomous-only”, while others only allow “human-driven” vehicles. Lyft Co-Founder (& former President) John Zimmer laid out such a vision in a March 2018 CNBC interview.
To be clear, this is not us saying don’t worry about or don’t track autonomous vehicles announcements - technology can move fast and new information or progress can result in revised predictions.
AM Take: Main Hurdles for NYC Robotaxis
NYC Weather
Similar to any human driver, a self-driving car can be tripped up by bad weather, such as snow, sleet, fog and rain. Do you think it was an accident that Waymo chose sunny, warm and dry Arizona to launch its first AV service?
While AV technology continues to improve as computers are exposed to more scenarios and learn via increasingly powerful Artificial Intelligence (AI) systems, NYC’s four season climate will present challenges for engineers and self-driving companies to work through.
Unique NYC Road Dynamics
NYC is unlike most cities when it comes to traffic and road dynamics.
“People here are very very assertive because the majority of drivers here are professional drivers. Whether they are Uber, Lyft or taxis, they are driving because they need to make their living. They don’t have time to be polite. The culture here is very, very aggressive when the traffic is congested. It is unlike everywhere else. People complain about Boston, but New York City is much worse.”
- Amnon Shashua, Mobileye Founder & CEO
Pedestrians who often don’t follow street rules, the prevalence of double parking, bikes, scooters, buses, light pollution from buildings that may distort how an AV perceives its surroundings, all make it challenging to make driverless vehicles work in NYC.
Costs
Self-driving vehicles are really expensive. Think about the cost of all the computers, sensors and cameras needed to make, or convert a vehicle into, an AV.
Although costs will likely come down over time as the supply chain to make AV-related technology scales, currently it’s estimated that Waymo’s Jaguar I-Pace model equipped with self driving tech costs between $130,000 to $150,000. Even assuming the vehicle doesn’t experience a fender bender or need a lot of maintenance, the cost of deploying and servicing a 24/7 AV fleet large enough to service NYC would be in the tens of billions of dollars. Mass adoption, we believe, would require the cost of AVs to significantly come down.
Insurance
Currently, in order to get an AV testing permit in New York State and NYC, a company must follow several rules, including proof of at least $5 million in automobile insurance and agreeing to indemnify the City from claims related to any incidences. Who remembers our lawsuit lending article? ☂️🥊
Elon Musk & Tesla Network
Tesla CEO Elon Musk has made the case all cars, in a world where self-driving technology is ubiquitous, will essentially become for-hire vehicles (FHVs), where vehicle owners contribute their car to a robotaxi network.
When well known Tesla analyst Tasha Keeney from ARK Invest came out with a new note in September 2020: Could a Tesla Ride-Hailing Network Run Over Uber and Lyft?, Tesla CEO Elon Musk essentially confirmed that he wasn’t interested in launching an Uber and Lyft rival in the near future or at least until full self-driving (FSD) was more developed.
Five years ago, Musk announced that a fleet of one million Tesla robotaxis could be deployed by 2020, but that has not yet come to pass. The pandemic may have caused delays to such plans, but it also appears Tesla’s FSD technology is progressing. Whether the plans are delayed by 12 months or 12 years, it still appears, Tesla is very much aiming to launch a robotaxi service.
Tesla’s vision is powerful, and we tend to agree with the overall arc of how Musk sees the automotive-mobility services story developing. The only difference is we think it plays out over the next 5 to 10+ years, while he sees it becoming a reality within the next 3 to 5 years.
The Tesla Network seeks to be a combination of offerings, including peer-to-peer car rentals (similar to Turo) and a ridesharing service, such as Uber. For example, Tesla owners might have the ability to lend out their vehicles, autonomously, when they are not driving, allowing both the owner to earn extra income and Tesla to earn a commission (25% to 30%) for providing their vehicle to the network. In the event there are not enough owners willing to lend out their vehicles, Tesla might also have its own fleet to deploy.
Yes, we know there’s still a lot to figure out from insurance to congestion impacts to repairs to how the AVs react to different urban situations, weather, first responders, etc etc. However, it would be foolish to dismiss these problems as unsolvable. There is not a lack of talent, enthusiasm or money dedicated to solving them.
NYC Leaders Already Recognize Need For Robotaxi Regulations, But Need To Act
During his City Council confirmation hearing in May 2022 current TLC Chair & Commissioner David Do, actually brought up the need for more clarity regarding the regulation of self-driving cars (AVs) and implied that the TLC could lead the way 👏👏👏.
“David Do…told City Council members during his confirmation hearing…that he helped set up regulations to test autonomous vehicles in [Washington D.C.] — and suggested doing the same in the Big Apple.
‘We need to think about automated vehicles and how we can fit them in our industry in a way that’s equitable, safe and accessible,’ Do told [NYC] Council members…Do said he wants to ‘ensure that no job is lost’ as autonomous vehicle technology advances.”
- New York Daily News (May 17, 2022)
In addition to Chair Do’s suggestions, NYC Council Member Justin Brannan has previously proposed self-driving vehicles be regulated with special licenses that might use existing taxi medallions (perhaps FHV licenses) as a starting point. This licensing regime, overseen by the TLC, would likely help drivers financially benefit from the rise of a NYC robotaxi fleet, offsetting financial impacts from losing their ability to work.
“When Uber and Lyft first came to the city, there were no laws in place to stop them from flooding the streets…We didn’t see them coming back then and I think today, we’re still paying the price. This is a way for us to get in front of it…If Uber and Lyft want to go AV, then they need to work with existing medallions…That would prevent them from creating another bubble and steamrolling us”
“By preemptively creating a regulatory structure that allows for AV testing and operating licenses, cities would then be able to distribute such licenses fairly, allowing a smaller, more equitable pool of owners and operators the opportunity to stay competitive, and keeping a small cadre of massive app-based FHV operators from dominating the market. Cities must act before this technology reaches full commercial viability to get ahead of this looming crisis and guarantee fairness in the for-hire vehicle market for decades to come.”
- NYC Councilman Justin Brannan (two separate NY Daily News pieces (1)(2))
We agree with the direction of both Chair Do’s and City Councilman Brannan’s comments and applaud them for being proactive and specific. In our view, similar to Tesla and Elon Musk, all self-driving vehicles will eventually be used to transport non-vehicle owner passengers (high utilization robotaxi). For example, if Musk’s vision of the Tesla Network comes to fruition, the City runs the risk of allowing privately licensed vehicles to effectively and illegally function as for-hire vehicles, picking up passengers without proper TLC-issued licenses.
These definitely are the early days of self-driving and we’ll keep learning more about how the technology and regulations develop. The rise of autonomous vehicles is a paradigm shifting technology that all NYC TLC drivers and industry participants, including Uber and Lyft, must keep very close track of.
As always, let us know your thoughts in the comments section below or by emailing us at info@automarketplace.com.
AutoMarketplace NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace on YouTube ▶️
I believe that robotaxis will replace drivers at some point in the future, the way technology is improving probably will be cheaper then paying drivers