TRANSPORTATION AND LOGISTICS BRIEFING: Audi shows off new level of autonomy — More consumers gaining exposure to self-driving cars — Privacy concerns with commercial drones

Welcome to Transportation & Logistics Briefing, a new morning email providing the latest news, data, and insight on how digital technology is disrupting transportation and delivery, produced by BI Intelligence.

Get the free Top 5 Disruptive Trends Shaping Transportation & Logistics report and start receiving our brand new Transportation & Logistics newsletter.

Have feedback? We'd like to hear from you. Write me at: jcamhi@businessinsider.com.

AUDI SHOWS OFF ITS SELF-DRIVING PROWESS: Audi demonstrated its new 2019 A8, its first vehicle with Level 3 Autonomy, at the Frankfurt Motor Show this week, moving ahead of many competitors in the self-driving car race, Reuters reports. The automaker’s semi-autonomous Traffic Jam Pilot system will allow the A8, which was first introduced this past July, to drive itself in certain situations.

By enabling the driver to take their hands off the wheel, the Traffic Jam Pilot system will move Audi ahead of other automakers, like Tesla, that have implemented Level 2 Autonomy systems. Such Level 2 systems assist the driver with steering and adjusting speeds, but still require the driver to keep their hands on the wheel. Level 3 means the car's systems can navigate on their own with no help from the driver in certain circumstances. No other automaker has yet put a Level 3 Autonomy system into market production anywhere in the world, according to CNET. For now, the system is constrained to driving on highways at speeds under 37 mph, confining it to highway traffic jam situations only. However, the system will allow drivers to take their hands off the wheel in such situations, according to Audi. Should something go wrong, the car beeps at the driver to take control. The carmaker said that it would assume any liability for accidents that occur when the system is engaged and the driver is not in control.

Audi officials also said that it plans to quickly enhance the system’s ability to handle a vehicle at higher speeds, with a target of achieving speeds of 81 mph in the “near- or medium-term.” The challenge with accomplishing such speeds seems software-related, as one Audi executive said that its sensor and hardware components are already capable of higher speeds.

However, Audi could face an uphill battle in convincing regulators around the world to approve its system. Since it is the first automaker to commercially launch a Level 3 Autonomy system, Audi will have to gain the blessing of regulators one-by-one in each individual market where it plans to sell the A8. The automaker plans to start that effort in its native Germany, which passed a law in May that legalizes self-driving cars as long as there is a driver sitting behind the wheel. German politicians have also been pushing the EU to adopt common self-driving car standards, and are in talks with officials from France and Luxembourg about setting up a common testing ground for self-driving vehicles.

In the US, Audi’s system may not comply with certain states’ self-driving car regulations. For example, New York requires that a driver have at least one hand on the wheel at all times in any semi-autonomous vehicle. Legislation recently passed by the US House of Representatives would sweep away these state-level rules though, replacing them with guidelines recently released by the Department of Transportation (DoT). The guidelines include best practices around Level 3 Autonomy, such as monitoring the driver’s engagement while the car is driving itself, indicating that the DoT would likely approve Level 3 Autonomy systems that meet those best practices if the House’s bill becomes law.

all vehicle shipments forecast 1

MORE CONSUMERS GAINING EXPOSURE TO SELF-DRIVING CARS: US consumers are much more open to buying or riding in self-driving cars after taking a test ride, according to a new survey from consultancy AlixPartners. Although 49% of the 1500 respondents to the survey said they don’t feel confident in autonomous vehicles ability to handle the roads, 29% of consumers say they’d be willing to consider buying an AV and to pay an incremental $2,600 on average for the features.

Those that had already ridden in a vehicle with some semi-autonomous capabilities were much more likely to feel confident about self-driving cars. Forty-nine percent of the respondents who had experience in semi-autonomous cars were “confident” or “very confident” in the cars’ ability to navigate roads. That’s compared to just 26% for those who had no such experience. One explanation could be that experience with autonomous features will lead to greater consumer confidence in the technology. For context, 18% of respondents said they’d already experienced a car with semi-autonomous features, up from only 3% of respondents in last year’s survey.

Safety related malfunctions and cyber security concerns were the top fears among the survey’s respondents. Eighty-four percent of respondents said they were concerned the vehicles’ software would malfunction, while 80% said they were concerned about a hardware malfunction. Seventy-seven percent of respondents said they were concerned about an autonomous vehicle being hacked, and 75% said they were concerned about having their personal data stolen from an autonomous car. Increased testing and development of autonomous features may help to defray some of these concerns.

Enjoy reading this briefing? Sign up and receive Transportation & Logistics Briefing to your inbox.

PRIVACY TOPS RISKS FOR COMMERCIAL DRONE OPERATORS: Legal ramifications associated with potential privacy violations is by far the top concern among enterprise risk managers in regards to the use of commercial drones, according to a survey earlier this month by Munich Re, the world’s largest reinsurer.

Of the 100 risk managers surveyed for the study, 61% said they were concerned about the potential for invasions of privacy by commercial drones, leading to possible lawsuits and regulatory action.
Inadequate insurance coverage for drone operations and personal injury lawsuits stemming from drone accidents were the next top concerns, each cited by 15% of respondents. Lawsuits over property damaged by drones were also cited by 9% of the respondents.

Privacy concerns were more common among risk managers because there is little precedent for how courts may decide privacy cases involving drones, or what kinds of fines and damages they may levy for violations, Jason Dunn, AVP of strategic products at Munich Re, told BI Intelligence recently. Companies flying drones armed with cameras in close proximity to people and their homes could raise multiple risks. Individuals or businesses could potentially bring lawsuits against companies flying drones over their property. Law enforcement officials may also try to press companies to provide footage relevant to criminal investigations, which could open companies up to legal action. Such cases could become frequent as more companies start flying drones closer to major population centers, Dunn noted.

The federal government also has yet to release any concrete regulations around commercial drones and privacy. The Electronic Privacy Information Center (EPIC) sued the FAA last year for not doing enough to provide clear guidance on this topic. The National Telecommunications and Information Administration (NTIA) released guidelines around drones and privacy last year, but they are completely voluntary and unenforceable.

Despite these significant privacy issues, the majority of respondents (62%) to Munich’s survey expected drone use by businesses to become commonplace within the next five years, up from 37% of respondents to a similar survey in 2015. BI Intelligence estimates that annual enterprise drone shipments will top 800,000 in 2021, up from about 100,000 last year. Companies launching drones will need to pay close attention to state laws regarding drone privacy, such as those passed by California and Texas, when operating in their jurisdictions. They would also do well to formulate an official policy for handling sensitive data collected by drones that is in line with the NTIA’s recommendations.

In other news…

Alphabet’s Waymo will use Intel microprocessors to power its self-driving cars, Intel CEO Brian Krzanich revealed in a blog post earlier this week. The chip designing giant also revealed that its been supplying processors for Alphabet’s autonomous vehicles since the inception of Google’s self-driving car testing program back in 2009, well before the company spun it out into a separate, standalone company late last year. The deal could give Intel a leg up on Nvidia, a rival chip designer that’s also betting big on the self-driving car market. Nvidia has deals in place to supply chips to numerous automakers, including Volvo, Audi, and Toyota.
Legacy automotive supplier Bosch struck a new partnership with Utah-based startup Nikola Motors to build two hydrogen-electric powered semi-trucks by 2021. The trucks will contain powertrains built by Bosch, and hydrogen-electric fuel cells supplied by Nikola. The firms didn’t specify whether these vehicles would have self-driving capabilities, but given that Bosch has been testing self-driving car technologies in cars in California for the last few years, it’s possible these technologies may be built into the trucks. The companies will take on Alphabet’s Waymo, Tesla, Uber, Daimler, and a handful of startups in eyeing the increasingly crowded electric semi-truck space.

Join the conversation about this story »