Autonomous vehicles are being developed at an astonishingly rapid pace. The transformative technological change is disrupting the automotive industry. Indeed, autonomous vehicles will change the entire model of transportation and the players that will drive the industry forward.

The race to develop autonomous vehicles includes many entrants, from traditional automotive companies to leading-edge technology companies and entirely new technology entrants who have little or no experience operating in the unique automotive-supply chain. Along with powerhouses like Google and Apple, other significant companies are participating. For example, Baidu, a China search-engine giant, announced committing a 100-person autonomous vehicle team in Silicon Valley.

Ford recently announced doubling its Silicon Valley workforce for R&D of self-driving vehicles. Ride-on-demand service Uber already is testing self-driving vehicles (currently with human backup) on U.S. streets in various cities. 

Major chip companies are investing, too. Qualcomm very recently announced its purchase of NXP, referring in its announcement to “NXP’s leading industry sales channels and positions in automotive, security and IoT.”

Autonomous vehicles incorporate technologies not previously contemplated for conventional vehicles and such companies are playing in an arena where there are significant challenges to integrating traditional hardware (vehicles) and software. In reaction, governmental regulators are taking steps to address regulation of such vehicles.

In September 2016, the U.S. Department of Transportation issued a Federal Automated Vehicles Policy –not formal regulations – covering the safe deployment of highly automated vehicles, including autonomous vehicles. The report, spanning more than 100 pages, covers several areas including vehicle performance guidance, model state policy, current regulatory tools and model regulatory tools. The required level of compliance depends on the level of autonomy of the vehicle, i.e., an increased level of autonomy means more areas of compliance.