Pub. 57 2016-2017 Issue 1

34 without errors, crashes, or breaches – certainly not to the level of accuracy and security required with self-driving vehicles. It is one thing when such issues occur with phones, computers, or a connected refrigerator; it is quite another altogether when such issues occur with an automobile or a fleet of millions of automobiles, especially automobiles with autonomous/self- driving features that can jeopardize the safety of the drivers, their passengers, and those around them. And these concerns are even more critical in a world with V2V and V2X 73 technol- ogy, where an error or a virus in one vehicle can expose the entire driving public to catastrophic failures. In this context, security must come first, and vehicles must be designed and repaired with security as a non-negotiable requirement. Indeed, we agree with the Department of Transportation (DOT) and the National Highway Traffic Safety Administration (NHTSA) that autonomous-enabled vehicles require that automobiles and the auto industry be held to the same safety and security standards as the aviation industry. 74 Automakers must design vehicles with that high standard in mind, and automakers and regulators alike must remember that standardwhen balancing convenience and cost savings against safety. Despite the potential for profound changes outlined above, we do not believe autonomy alone will have any substantial effect on vehicle sales or ownership. There is no simple, linear relationship between the fact that a car can operate without a driver and consumers’ need for, and demand for, personally- owned transportation. Whether the car is driver-operated or autonomous, consumers will still have unique and personal needs that can only be filled by owning their own vehicles. To be sure, full autonomy will provide tremendous benefits to many with limited transportation options today, such as the elderly or disabled. It will also likely fill a niche in certain urban and other markets that may reduce personal car ownership de- mand to a limited degree. Overall, however, it is unlikely that personal ownership demand will decrease materially. Dealers share in the excitement about the safety and efficiency promise of autonomous vehicles. It is clear that they are coming. It is also clear that whatever changes may come, consumers’ need for a local dealership will increase, and it is also likely that the relationship and reliance between dealers and their manufac- turer partners will also increase. Franchised dealers sell more EVs today than auto manu- facturers sell directly. While there has been a tremendous resurgence in interest in EVs, EVs themselves are not new. 75 And, as noted above, any suggestion that franchised auto dealers would be unable or unwilling to sell EVs is completely unfounded and, for some, merely self-serving. Dealers are merchants and are agnostic about the propulsion systems of the vehicles they sell; they want to, and will, sell what consumers want (and what the manufacturers make). This is evidenced by the fact that dealers currently sell many more EVs than any manufacturer selling directly and will continue to do so to the extent that customers demand those products. To date, EVs have been niche products. Although sales are beginning to accelerate, their ultimate success or failure will be determined by the market. If these vehicles meet the needs and/or desires of consumers at an affordable price point, now or in the future, consumers will seek them out and dealers will be there to ef- fectively sell them. 76 The market penetration of ridesharing has no relationship totheprovisionsof state franchise laws. The concept of ride- sharing itself is also not new. Indeed, car sharing companies have been operating in the U.S. for nearly 100 years. 77 And various options, including rental cars, public transportation, taxicabs, and shuttles, have existed in full form for decades. To be sure, fully autonomous vehicles may change the econom- ics and scope of ridesharing and make these concepts more efficient. However, the effect this may have on private vehicle ownershipwill bemoremuted than some predictions suggest. 78 73 “V2V” refers to “Vehicle to Vehicle” communications; “V2X” refers to “Vehicle to Everything” communications. 74 See, e.g., http://www.freep.com/story/money/cars/2016/02/13/faa-and-nhtsa-using-similar-regulatory- playbooks/79314200/ (noting that “[DOT Secretary] Foxx, who oversees 12 agencies, including NHTSA and the FAA, made it clear in December he wanted automakers to borrow from the aviation playbook”). The aviation industry does not conduct software updates over the air, but only via a secure physical connection performed by an FAA trained technician. 75 While some of the battery technologies may be relatively new, the electric car certainly is not. In both 1899 and 1900, the all-electric Columbia captured the annual sales crown and more than 38% of all vehicles sold in 1900 were electric. See also http://energy.gov/articles/history-electric-car (“Introduced more than 100 years ago, electric cars are seeing a rise in popularity today for many of the same reasons they were first popular.”) 76 There is also no direct connection between EVs and autonomous vehicles or ridesharing. The development and adoption of autonomous technology will proceed indepen- dently of EVs. While there may be a case for a model utilizing fully autonomous electric vehicles in combination with fleet ownership as a way to overcome the range limitation problems inherent in today’s EVs (because a fleet of autonomous EVs can be recharged remotely, with another EV in the fleet always at the ready), that is purely a business case that should not affect policy decisions and will be irrelevant to the vast majority of consumers, who are generally agnostic about power train options. (Mr. Diamond confirmed this consumer powertrain indifference during panel four when he stated that “most people don’t care if they fill that up on gasoline, diesel, biofuel, natural gas, electricity, fuel cell. They just don’t care. That is I think what we’ve discovered, for the most part.” TR. IV; 3.) 77 See https://www.hertz.com/rentacar/abouthertz/indexjsp?targetPage=CorporateProfile.jsp&c=aboutHertzHistoryView (Noting that the company was founded in 1918). 78 See, e.g., 2016 Boston Consulting Group (BCG) study predicting “that car-sharing will cost the industry just 550,000 vehicle sales worldwide in 2021, a year in which global auto sales are expected to approach 100 million vehicles.” (http://www.cnbc.com/2016/02/23/car-sharing-impact-will-be-limited-despite-a-jump-in-shared- mobility-start- ups-bcg-says.html (citing the BCG study).  NADA RESPONSE — CONTINUED FROM PAGE 33  NADA RESPONSE — CONTINUED ON PAGE 36