Business First Look

Uber vs. California DMV: legal showdown over self-driving cars

The California Department of Motor Vehicles has ordered Uber to shut down its new self-driving car service in San Francisco, saying the ride-hailing company did not obtain the proper permit. 

An Uber driverless car waits in traffic during a test drive in San Francisco on Dec. 13, 2016.
Eric Risberg/AP
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Just hours after its launch, California regulators have ordered Uber to shut down its self-driving car service in San Francisco – or else.

The state Department of Motor Vehicles issued a letter to the ride-share company on Wednesday demanding that it stop picking up San Francisco passengers in its so-called self-driving cars, on the grounds that Uber had failed to obtain a special state permit for autonomous vehicles on public roads. But the ride-share company has dismissed the order, arguing that its cars do not meet the state's definition of an autonomous vehicle and therefore do not require a permit. 

The showdown exhibits the challenges that state and federal regulators face in regulating self-driving cars as a growing number of carmakers and tech companies continue to develop autonomous vehicles.

The California law requiring permits for autonomous vehicles, adopted in 2014, requires testers to obtain a permit if the vehicle is capable of driving itself "without the active physical control or monitoring of a natural person." Because their self-driving Volvo SUVs aren't yet advanced enough to drive without human assistance, Uber says, they shouldn't qualify under the law. 

There may also be a competitive advantage to operating without a permit, as companies with one must report all crashes and instances in which a person takes control during testing to the state as public information. 

But California regulators argue that the cars are, legally speaking, "autonomous vehicles." And, as DMV Chief Counsel Brian Soublet said in an interview with the Associated Press, the permit process gives the public confidence in the safety of self-driving vehicles.

"Don't start doing this stuff. Apply for the permit. Follow the rules," Mr. Soublet urged Uber. In a letter to the ride-hailing company, Soublet warned that the DMV "will initiate legal action" if Uber "does not confirm immediately that it will stop its launch and seek a testing permit." 

Anthony Levandowski, the leader of Uber's self-driving service, acknowledged the controversy in a blog post Wednesday, citing a "more fundamental point" to the dispute: "how and when companies should be able to engineer and operate self-driving technology." 

"[S]everal cities and states have recognized that complex rules and requirements could have the unintended consequence of slowing innovation," Mr. Levandowski wrote, naming Pittsburgh, Arizona, Nevada, and Florida as "leaders" in this respect. "Our hope is that California, our home state and a leader in much of the world’s dynamism, will take a similar view."