The industry of connected cars and driverless vehicles continues to soar.

According to recent studies, the European market of connected cars will be the largest in the world, with an annual turnover of EUR 48.8 billion by 2022 against the EUR 16.4 billion generated in 2017.

As to driverless vehicles, it has been estimated that by 2035, about 75% of the vehicles around the globe will be automated or managed remotely. The level of automation will increase year on year, starting from the mass market adoption of adaptive speed control systems (that is those systems which automatically adapt the cruise to local speed limits and environmental conditions) as the cost of these safety features goes down and they become standard in all cars.

However, to meet such expectations, this projected growth needs to be supported by prompt adoption of suitable technology standards and an appropriate legal and regulatory framework.

Rise of the connected car

Way back in 2015, the European Union laid down the basis for the future development of connected cars. Regulation (EU) 2015/758 (Regulation) has set forth specific rules on the mandatory deployment of the eCall in-vehicle system, a functionality that ensures an automated communication to the 112 emergency services following a car accident. The communication may be established either manually by the vehicle occupants with the push of a button or automatically based on the activation of in-vehicle sensors after the crash. Upon connection, a minimum set of data is transmitted from the car to a Public Safety Answering Point (PSAP), such data to include information about the accident including time, specific location and direction at the time of the crash, vehicle identification, indication on whether the eCall was activated manually or automatically. The PSAP will then help with rescuing activities, including by alerting the appropriate agencies depending on the accident, and giving them directions to the specific location.

From 31 March 2018, the Regulation will require vehicle manufacturers, that intend to sell vehicles within the European Union, to equip such vehicles with an eCall module capable of establishing a voice and data connection to emergency services.

Once the law requires the car to be connected to the outside world via telecommunications networks, a wider utilization of the internet – for infotainment, diagnostic analyses, value added services, other data transmission, vehicle software updates, web based applications etc. – is just one step away. Hence the opening up of connected cars, making future driverless vehicles a reality.

Technology standards

In Europe, it is still to be seen which technology will qualify as the standard connection that will allow cars to communicate not only with the web, but also with each other as well as with the surrounding environment. In order to send and receive signals to/from the objects around them, connected cars may use short-range technology and/or long-range cellular systems.

The short-range technology – or vehicle-to-vehicle (V2V) system – will allow cars to communicate using radio frequencies specifically allocated by regulators. This technology is capable of operating in a very tight timeframe with low latency and can be quickly deployed so as to ensure prompt response among vehicles. In this way, for instance, it will be possible to synchronize cars' braking systems in order to avoid accidents or reduce the risk of crashes.

On the other hand, the long-range cellular system will allow cars to connect not only with the other cars nearby, but also with the environment around them. If adopted as a standard, such technology would improve the overall transport system in a vehicle-to-infrastructure (V2I) or vehicle-to-grid (V2G) context, allowing, for instance, management of traffic lights and signaling to reduce road congestion.

The EU has historically considered the deployment of 5G networks as, among others, a critical enabler for the development of connected cars technologies. However, the benefits arising from short-range technology also need to be carefully taken into consideration. One key benefit is a nimble deployment of the required technology in a relatively short period of time. Indeed, short-range technology would not require the deployment and operation of extensive platforms and could be ready for use promptly once the network equipment is installed in the car, and upon allocation of the required spectrum.

The choice between selecting either of the above technologies or combining both is not easy and will materially affect the future development of the industry. Indeed, commentators, for the last few years, have suggested that autonomous driving could be driven more by regulations than technology.

National Laws and Regulations - Baker McKenzie's Survey

For now, as is the case in many other industries, legislators and regulators in the automotive sector are working hard to keep pace with the technology.

According to our recent survey on driverless vehicles (available here), the majority of respondent countries do not have specific regulations or rules with reference to driverless vehicles. Indeed, automated car technology is still considered at its early stages and some national legislators might not necessarily perceive an immediate need to amend or replace the relevant road regulations. This does not mean that the potential of autonomous car technologies is underestimated in such markets. To the contrary, an increasing number of countries have already begun public and private trials in order to test the efficiency and features of autonomous vehicles. In addition, the majority of the governmental bodies and State agencies in the jurisdictions surveyed have released statements and documents encouraging the continued development of autonomous cars and driverless vehicles.

National legislators will also have to address several other complex issues, such as the liability associated with autonomous cars in case of a crash. At this stage, very few jurisdictions have approved or are considering approving specific regulations on liability and insurability of automated cars. Even if such vehicles were subject to the general principles of tortious liability, specific rules will be needed once driverless cars are ready for the mass market. Indeed, a large utilization of automated cars in public roads and private properties will likely increase the number of parties potentially responsible in case of accidents7. In addition to "drivers" (a software or an app?), also manufacturers as well as public bodies in charge of road traffic infrastructures and signaling could be held liable in case of accidents, along with operators that provide IT platforms and infrastructures, connectivity services – just as every player in the value chain.

Autonomous and connected cars may seem futuristic technologies, but they are a near reality. Tests are on their way in many countries worldwide and their innovative nature has created high expectations. Legislators at all levels should therefore be ready to review the relevant regulations as expeditiously as possible in order to be prepared for the next generation of services and the upcoming revolution in the automotive industry.