The automotive industry has long been a global market where manufacturers need to constantly monitor international laws and regulations. But as traditional automotive OEMs expand their product offerings to include services such as ride hailing, car sharing, and mapping, the legal risks are becoming increasingly localized.
Cities, states, and provinces have begun to flex their muscle in response to the introduction of new mobility products and services. New York city has placed a cap on the number of vehicles for ride-hailing platforms and will institute congestion pricing in early 2021. Los Angeles has created a tool for data collection and monitoring of private mobility-as-a-service (MaaS) companies. Peer-to-peer car sharing companies that compete with traditional rent-a-car agencies have challenged laws requiring them to pay local rental fees. And mapping services have been forced to navigate legal concerns over which local streets they can route users through.
Federal regulation of the automobile industry since the passage of the National Traffic and Motor Vehicle Safety Act of 1966 has largely nationalized the legal practice relating to consumer automobiles and commercial vehicle transport. Federal preemption of automotive practices regarding vehicle design requirements, consumer recalls, and fuel economy standards have significantly limited the authority of states to legislate claims relating to the automobile economy.
Automotive retailers have always had to manage the various state laws that effect litigation for consumer plaintiffs. States have differing statutes, such as lemon laws, that can impact the viability of consumer lawsuits. And diverging caselaw among state courts concerning consumer protection and contractual claims can present challenges to automotive OEMs.
However, mobility services like ride hailing and car sharing introduce a new array of business and legal questions. Transportation services create a different relationship between the service provider and the consumer. These issues can relate to employment, payments, contracts, data collection, cybersecurity, and a host of other legal issues that extend far beyond the quality of the manufactured vehicle.
New mobility services also present new challenges to states and cities that have historically regulated issues that impact parking, taxi licensing, and urban congestion. Several cities have responded with new laws to manage these concerns with more regulations likely to come. In response to the explosion of municipal regulations affecting mobility services, the service providers have begun to lobby for state laws that preempt local rules.
‘Smart’ cities with vast digital infrastructures and data collection capabilities will require that mobility companies have ‘smart’ people to manage legal compliance. In the future there may be federal laws that regulate, and federal agencies that oversee, services such as ride hailing, car sharing, and autonomous vehicle services. In the meantime, automotive companies that enter the market for new mobility services will have to engage with state and local laws in this emerging policy turf war in the transportation economy.