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Q&A with Jake Medwell of Austin-based 8VC & Loren Smith: AV trucks, labor issues, and the regulators

The views expressed here are solely those of the authors and do not necessarily represent the views of FreightWaves or its affiliates. Jake Medwell, founding partner at 8VC, and Loren A. Smith Jr., president of Skyline Policy Risk Group, discuss key industry topics for this regular quarterly Q&A exclusively on FreightWaves.

By Jake Medwell and Loren Smith

JAKE MEDWELL: There’s a ton of activity right now with automated technologies and transportation. This could have a big impact on trucking and other modes of transportation, and it all seems really exciting. What are you seeing on technology development and where the regulators may come down? Any notes of caution here?

LOREN SMITH: Well, new technologies are here and continuing to improve, and they are already saving lives and improving efficiency. However, there is a note of caution: Fully autonomous vehicles are going to take a few more years than you might expect, and the regulators are looking very closely at the technology in ways that could pump the brakes on development.

JAKE: So you think fully autonomous is a ways off?

LOREN: Yes, we’re probably 5-10 years from seeing AVs that can, for example, navigate an intersection with stop signs and pedestrians and other drivers waving at each other to go through. Some of the AVs that are out there right now could probably handle that situation most of the time. However, getting from 95% to 99.999% or thereabouts has to happen.

Automated technologies, of course, have been operating for decades where you have controlled access areas such as warehouses or where low-speed movement reduces risk. Companies like Outrider and Nuro are active here.

Overall, it just has to be clear to other road users – mainly humans – what’s happening so they can react.

JAKE: And the government will have something to say about all this.

LOREN: Oh yes. In fact, one of the most interesting shifts from the Obama administration to the Biden administration is the higher level of scrutiny the automated technologies are getting. There’s obviously been a ton of focus on the change in administrations from Trump to Biden, Republicans out, Democrats in, and so forth. However, the shift in emphasis from Obama to Biden is worth noting.

JAKE: What sort of changes? The Obama folks were pretty tech-focused, right?

LOREN: They were – the Obama administration was generally pro-technology, especially safety technology. Healthcare, safety and technology were major priorities.

JAKE: And this has changed?

LOREN: To be clear, it’s a shift in emphasis, but the Biden team is particularly focused on workforce issues as well as their focus on climate policy (which in transportation particularly means electric vehicles) and equity, particularly racial equity in terms of mobility for all communities. It’s also the case that the tech industry’s standing with the public is less positive than it used to be.

JAKE: Let’s talk about those workforce issues. Are we seeing blowback against the possibility of jobs getting automated? You have a lot of companies having a hard time with recruitment and retention of drivers, but a lot of people are still worried about automation potentially eliminating lots of jobs.

LOREN: Yes, and the impact of the labor unions here is very important. The unions are worried about the possibility that, on relatively short notice, a lot of their members could see their jobs wiped out. One of the biggest shifts over the past 5 years has been the growth in scrutiny AVs are getting from unions as well as from safety advocates and trial lawyers.

The Obama administration was certainly pro-union and tried to make it easier in a number of ways for unions to organize workers. But the Biden administration has a new level of urgency, partly because the big new wave of automation looks closer than ever, and partly as the ongoing aftershock of Donald Trump’s success in pulling in blue-collar voters. The Biden team is under pressure to produce.

JAKE: But the Biden folks aren’t going to stop automation from happening, are they? Can they – or would they even want to do that?

LOREN: No, they aren’t going to stop it, but the argument might be more like, “Just slow down a bit while we think about each step.” If you look at the regulatory agenda published by the administration, you can see a shift. Regulatory proposals that would help nudge AV development forward have been moved to the long-term agenda. On the front burner now is a regulation requiring automatic emergency braking on new vehicles. That one is more focused on shoring up a voluntary agreement from 2016 (something safety advocates have wanted for years), but we’ll have to see what the details of the rule look like.

What’s more significant than the regulatory items, however, are the investigations and the data collection. The National Highway Traffic Safety Administration, the major vehicle safety regulator, issued an order earlier this year requiring information on any incident involving any vehicle with automated technology be submitted by the manufacturer within ten days, with fines issued for failing to comply. NHTSA has also opened an investigation into Tesla to look at safety concerns including Autopilot. Tesla, of course, has been at the forefront of development in this area, but it’s a notable shift lamented by some technology advocates.

JAKE: But the government is not trying to shut down automation, right? Will we see a chilling effect?

LOREN: It could be, but I think it’s more trying to cushion the blow and give policymakers more time to understand what the real job impacts are and what actions, if any, might make sense. The upshot for manufacturers and operators is going to be a bit more paperwork in this area. Some may question how much it’s worth it. If there’s no prospect of being able to fully automate trucking, does that affect R&D investment?

JAKE: And so for trucking, fully autonomous is a ways off?

LOREN: It might be something like by 2030 when we’ll see trucks that are essentially autonomous, but there will still be a human in the cab, at least as a minder. Then by 2040 you might have serious discussions about going totally driverless.

JAKE: That far off, you think?

LOREN: The main thing is that it’s going to take a while for folks to be comfortable with the concept and to make sure the technology itself is fairly foolproof.

JAKE: You mentioned folks wondering if it’s worth it – is that a risk, that R&D dries up?

LOREN: The odds are low, but it’s worth watching. I think that automated technologies are still coming. For one thing, the insurance companies are watching this area closely. There’s money to be made in getting tech into trucks that will make them safer, and that will reduce insurance costs for trucking. And the future is not written – people can influence it.

JAKE: I like that hopeful thought. Challenges, but they can be overcome!


ABOUT THE AUTHORS

Jake Medwell, founding partner of 8VC, focuses on both consumer and enterprise investments. A serial entrepreneur who has spent his life building and scaling companies, he also leads 8VC’s logistics and transportation focus. Prior to launching 8VC, Medwell co-founded Humin, a consumer mobile software company where he built the engineering team and led growth. He also co-founded The Kairos Society, where he sits on the board of directors. While in college at the University of Southern California, he founded Sole Bicycle Co. and grew it into an industry leader. Most recently, he co-founded Operation Masks with partner Drew Oetting to help bring personal protective equipment to medical workers on the front line of the fight against COVID-19.

Loren A. Smith Jr. is the president of Skyline Policy Risk Group. From 2017 to 2021, he worked at the Department of Transportation as deputy assistant secretary for policy. There, his leadership included serving as DOT’s chief environmental review permitting officer; chair of the management team for the ROUTES Initiative on rural transportation; and as a member of the task force on regulatory reform, including leading efforts on supersonic aviation. From 2009 to 2016, he was an analyst for Capital Alpha Partners, a Washington-based research firm that studies public policy for investors. He specialized in transportation policy, particularly relating to autos and infrastructure, and published more than 500 research notes.

Contributed Content

Note: FreightWaves occasionally publishes commentary from industry sources with expertise, information and opinion on current transportation topics. The opinions expressed in the article are solely those of the author and not necessarily those of FreightWaves. Submissions to FreightWaves are subject to editing.

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