(🧑 vs. 🤖) San Francisco Approves 24/7 Robotaxis, Is NYC Next?
(🧑 vs. 🤖) San Francisco Approves 24/7 Robotaxis, Is NYC Next?
In major milestone, San Francisco becomes first dense, urban American city to approve 24/7 self-driving taxis, that can charge passengers. Is NYC next?
GM-backed Cruise and Google parent-subsidiary Waymo, can now operate 24/7 self-driving taxis, with no vehicle cap, in San Francisco
Historic decision in dense, urban City environment will see human drivers compete for passenger trips against driverless cars
NYC needs to create better regulatory framework before allowing robotaxis
Although mass autonomous vehicle (AV) adoption might be years away in NYC, the Mayor, City Council, TLC, TLC drivers and other industry participants must advocate for strong protections early & effectively
Such advocacy is not meant to prevent the adoption of new technology, but ensure a smooth and equitable transition, when and if self-driving technology becomes viable
In a 3-1 vote, the California Public Utilities Commission (CPUC) will allow General Motors-backed Cruise and Google parent-subsidiary Waymo to operate 24/7 self-driving taxis (“robotaxis”). Not to overstate the development, but San Francisco for-hire drivers, from cabs to Uber/Lyft, will now essentially compete with robots (🧑 vs. 🤖)!
“Today is the first of many steps in bringing AV [Autonomous Vehicle] transportation services to Californians”
- John Reynolds, 1 of 4 voting CPUC Commissioners (& former General Counsel at Cruise)
“Today’s permit marks the true beginning of our commercial operations in San Francisco”
- Tekedra Mawakana, co-CEO of Waymo
“[It puts] Cruise in a position to compete with traditional ridehail, and challenge an unsafe, inaccessible transportation status quo"
- Prashanthi Raman, Cruise VP of global government affairs
Historic SF Decision
In California, the CPUC, a state regulator that oversees privately-owned public services such as power, water, telecommunications and rideshare companies (excluding cabs), has the power to decide which companies receive autonomous vehicle (AV) permits.
As implied by its power to issue AV (robotaxi) permits, the CPUC can revoke them as well. Interestingly, the approval DOES NOT place a limit on the size of the approved companies fleets. In fact, Waymo spokesperson Julia Ilina stated that the company plans to invite more than 100,000 people off a waiting list to test out its robotaxi service.
According to Wired, under previous permits, Cruise and Waymo operated roughly 550 robotaxis in San Francisco, though figures from the companies indicated they would collectively have only about 400 on the road at any given time.
Although robotaxis were operating in San Francisco before, they were previously limited in how much they could charge (or weren’t charging at all), where they could pickup and what time of day they could operate. Bloomberg also reports the resolutions permit AVs to operate without a human safety driver during the day or at night, throughout the entire city.
Public opinion around driverless cars in San Francisco is divided, which could be seen leading up to and during the six hour 👀 CPUC hearing. Autonomous vehicles (AVs) that have been operating in the Bay Area have been both blamed and praised. Residents cited multiple issues related to blocking traffic, slowing down first responders, while the elderly, disabled and bicyclists thought they offered the promise of a safer street environment.
“AVs are like my 85-year-old grandfather, who was a very, very cautious driver and never ran into anything, but created insane chaos around him, because of his erratic driving and the fact that he would just stop whenever he got confused.”
- Jeffrey Tumlin, Director of transportation, San Francisco Municipal Transportation Agency (SFMTA)
“I experienced rideshare drivers who have left me on the street and refused to open their vehicles. Drivers can discriminate against vulnerable populations, including queer, black, and trans folks, far more than any computer”
- San Francisco resident Sean Durkin
“I’m tired of seeing my family put in danger when we have a solution to the danger that human drivers cause.”
- San Francisco resident Jason Stafford
NYC Robotaxis?
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, we think this development in San Francisco is VERY notable. It’s a dense, urban city that has a large number of daily for-hire trips. According to reports, Waymo will be permitted to operate at speeds up to 65 mph, while Cruise’s self-driving vehicles can 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.
Elon Musk Tweet & Tesla Network
Tesla CEO Elon Musk makes the case ALL cars, in a world where self-driving technology is prevalent, 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's tweet in response to its publication, 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.
Four years ago, Musk announced that a fleet of one million Tesla robotaxis could be deployed in certain jurisdictions 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 auto OEM/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 (25-30%) for facilitating the transactions. In the event there are not enough owners willing to lend out their vehicles, Tesla will also have its own fleet to deploy.
Yes, we know there’s still a lot to figure out from insurance liability to congestion impacts to repairs to how the AVs react to different urban situations, weather, first responders, etc etc. However, do not dismiss these problems as unsolvable, there is not a lack of talent, enthusiasm or money dedicated to solving them.
NYC Robotaxi Regulation
Given our writings above, you might be wondering when we expect robotaxi fleets to become prevalent in New York City? For example, will it follow a similar trajectory to Uber / Lyft, first launching in tech-centric San Francisco, before “disrupting” NYC streets?
The short answer to this question is: it depends on ***REGULATIONS***. While 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 had followed the rules, made reasonable assumptions about regulations / regulatory enforcement and paid hundreds of millions to the City for their for-hire vehicle license rights, were left out in the cold. While we can’t rewrite history, we can ensure past mistakes are not repeated.
Who Is Issuing & Regulating NYC Robotaxi Licenses?
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 (robotaxis) licenses and rideshare companies in San Francisco, but NOT taxis.
The CPUC’s regulatory mandate is vast and consists of a State Governor-appointed commission (i.e., not controlled by San Francisco’s local municipal government). The fact that one of the four voting CPUC Commissioners used to be an employee at Cruise, on its face, seems like a direct conflict of interest, but we honestly don’t know if that’s a fair conclusion to draw. We do think it’s worth noting though.
“The CPUC regulates privately owned electric, natural gas, telecommunications, water, railroad, rail transit, and passenger transportation companies, in addition to authorizing video franchises. Our five Governor-appointed Commissioners, as well as our staff, are dedicated to ensuring that consumers have safe, reliable utility service at reasonable rates, protecting against fraud, and promoting the health of California's economy.”
- CPUC
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 regulators are effectively regulating the same for-hire transportation industry! In NYC, we thankfully have one, clear regulator for all sectors of the City’s for-hire transportation industry - the NYC Taxi & Limousine Commission (TLC).
HOWEVER, a key question to ask and answer is - Who is in charge of issuing & regulating NYC autonomous vehicle (AV) licenses?
In July 2021, we wrote an article about Mobileye becoming the first company to test driverless cars in NYC. When we looked into who granted these newly created permits it appears an AV company first needs to receive approval from the New York State DMV (expected), but to test AVs on NYC streets, a company needs an additional permit from the New York City Department of Transportation (NYC DOT).
The NYC DOT regulates, among many things, City transportation infrastructure related to sidewalks, bicycles, parking, ferries, buses, construction permits and commercial vehicle permits for trucks.
Now, to be fair, Waymo’s NYC AVs have safety drivers and also seem to be primarily mapping NYC streets. Since they are NOT actively conducting passenger paid for-hire trips, we think the NYC DOT regulation is not that controversial and actually helpful as it layers on additional City requirements, on top of State rules. However, IF these AVs start becoming robotaxis (i.e., conducting paid for-hire trips in NYC), it is our view that any AV permit used to conduct for-hire trips must be overseen and regulated by the NYC Taxi & Limousine Commission.
“I think for a human it’s very, very challenging to drive in New York City…not to mention for a robotic car.”
- Mobileye President & CEO Amnon Shashua
NYC Leaders Already Recognize Need For Robotaxi Regulations, But Need To Act
During the City Council confirmation hearing in May 2022 for current TLC Chair & Commissioner David Do, he 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, the former head of Washington D.C.’s Department of For-Hire Vehicles, told City Council members during his confirmation hearing Tuesday that he helped set up regulations to test autonomous vehicles in the nation’s capital — 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 Council members.
New York City officials have done little to regulate self-driving cars, and have allowed a limited number of companies to test the unproven technology on the streets on an ad hoc basis…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 proposed self-driving cars be regulated with special licenses (i.e., using existing medallions, perhaps FHV licenses) by the Taxi & Limousine Commission (TLC).
“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’s, all self-driving vehicles will eventually be used to transport non-vehicle owner passengers (i.e., 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 (i.e., picking up passengers without proper TLC-issued FHV licenses).
These definitely are the very 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 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.
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