First Self-Driving Car Fatality Will Be a Test for the Entire Industry

One of Uber’s autonomous Volvo XC90 SUV’s killed a pedestrian in Arizona

Source: Uber

The autonomous car industry has had its first death. And it’s an event that has been dreaded from day one. The first self-driving car fatality took place on Sunday in Arizona, when a pedestrian was struck and killed by a car that was operating in fully autonomous mode.

The vehicle was a Volvo, and it was part of Uber’s test fleet. While the investigation is just beginning, there are legislative and insurance implications, as well as potential fallout for Uber, Volvo and the entire nascent autonomous car industry.

First Self-Driving Car Fatality as Uber Hits Pedestrian

The news broke yesterday that a Volvo XC90 operating as part of Uber’s test fleet of self-driving vehicles hit and killed a pedestrian in Tempe, Arizona. According to Reuters, the Volvo had a human operator but was in fully autonomous mode at the time of the accident, which took place on Sunday. The Volvo was travelling at 40 mph on a four-lane road when it struck a woman walking her bicycle outside of a crosswalk who had stepped into the vehicle’s lane. The woman, Elaine Herzberg, later died of her injuries.

While this is far from the first autonomous car accident, it was the first self-driving car fatality and it has serious implications.

The National Transportation Safety Board (NTSB) has announced that a team will be investigating the accident.

Uber and Volvo in the Hot Seat

A lot of companies are involved in testing autonomous cars. Given how long it’s been at it, odds were that Alphabet Inc’s (NASDAQ:GOOGL) Waymo would have been the first to reach this unhappy milestone. Then there’s Tesla Inc (NASDAQ:TSLA), which suffered a fatality in 2016 when a driver with Autopilot engaged slammed into a transport truck. The car in this case was only partially-autonomous, however.

Instead it was Uber — which is testing self-driving cars as key financial element of its long term strategy — and Volvo — an automaker that’s built its reputation on safety — involved.

The self-driving car fatality immediately puts both companies on the hot seat.

Uber has reportedly pulled its autonomous car fleet off the roads. It was operating in Phoenix (including Tempe), San Francisco, Pittsburgh and Toronto. Uber has been counting on self-driving technology to eventually eliminate human drivers from its ride-sharing service. Doing so would eliminate its biggest expense, with drivers currently collecting between 65% and 80% of every fare. Autonomous cars are key to its future profitability.

Volvo has invested heavily in autonomous technology, and signed an agreement to supply Uber with up to 24,000 cars. Sunday’s autonomous car accident involved the company’s flagship XC90 SUV. The negative publicity could affect Volvo’s reputation for safety and impact its self-driving auto program.

Potential Industry Impact

Practically every car company on the planet is it least experimenting with autonomous technology. And virtually every technology company is involved as well, from Google to Apple Inc. (NASDAQ:AAPL). Even BlackBerry Ltd (NYSE:BB) is testing self-driving cars.

Billions of dollars are being invested in the technology, because the autonomous car market is expected to be worth $126.8 billion in less than a decade. The appeal of autonomous cars includes the potential for lower traffic congestion and rider convenience. But it’s largely built on the idea of safety. With human drivers and their error-prone judgement out of the equation, autonomous vehicles have been billed as being far safer — for everyone, not just the passengers. The first self-driving car fatality was going to happen eventually, but it’s always been theoretical.

Sunday’s accident makes it all too real.

Now the challenges that could potentially disrupt the industry before it goes mainstream begin. Legislators will be looking much more closely at the rules around self-driving cars and their testing in public spaces.

Insurance implications will be tested — who is at fault? Uber, Volvo, or maybe a company that made the sensors on the car? Will the public begin looking at autonomous cars in a negative light instead of welcoming the technology?

A Moment of Reckoning

The first self-driving car fatality will likely mark a watershed moment for the autonomous car industry.

The outcome of the NTSB investigation and the inevitable legal challenges to come could set the industry back, or could result in a framework that standardizes testing and helps the industry to move forward. People could shrug and look at this as a freak accident, or public sentiment could turn against autonomous cars just as they’re on the cusp of becoming a reality. The fact that Uber is the company operating the vehicle involved could complicate matters, given its reputation for questionable tactics and hiding information…

Expect the self-driving car fatality to kick off a tense period for the companies directly involved, and the entire autonomous car industry.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2018/03/first-self-driving-car-fatality-will-test/.

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