Autonomous freighter en route...
Autonomous freighter en route… courtesy Otto

It could be the plot of an Ocean’s Eleven movie: A team of daring engineers heads to the wilds of Nevada to create a dazzling spectacle, defy officials, and walk off with a $680 million jackpot.

In May of this year, OTTO unveiled a video of an 18-wheeler thundering down a freeway with no one at the wheel. The San Francisco-based startup had retrofitted a freight truck with lidar, video cameras, radar, and other sensors, enabling it to operate “completely driverless without a driver in the backseat,” according to co-founder Lior Ron at the time.

Before the autonomous run, Jude Hurin, the administrator in charge of autonomous vehicle (AV) regulation at the DMV made it clear to David Goldwater, OTTO’s lobbyist that “I am concerned….Every company we have dealt with in the past has obtained a test license in our state prior to the media event….Your video is going to produce questions directly to your company and Nevada DMV as to why they do not have a red test plate on the vehicle. I am also going to have Daimler Trucking and others calling me to ask why OTTO is allowed to do this when they couldn’t.”

Goldwater had a different take on the issue, replying, “The truck does have a DOT [Department of Transportation] number, but is not part of a specific trucking company. Therefore, I think the easy answer is it’s not a ‘test truck’ yet. The efforts of Nevada’s leaders are to try to get OTTO and similar companies to move here. Most certainly, when the trucks are testing, all laws and regulations will
be followed.”

But Hurin was adamant. In an email sent early the next morning, May 13, he warned Goldwater: “It does not matter if you have another State’s license plate or US DOT sticker on it…if they show the vehicle engaging the technology and it implies or is obvious that Nevada is the site that they have engaged the system for the video, then it is a violation of our current AV testing laws.”

OTTO’s founders were faced with a stark choice. They could submit to the DMV and undertake the laborious process of modifying, testing, and licensing their truck. This would likely take a month or more, and could risk their first-mover advantage in driverless trucking. Or the engineers could continue with their test
as planned.

They decided to go ahead with the filming, and over the weekend OTTO started to emerge from stealth mode. Backchannel was one of the media outlets offered interviews with OTTO on Monday, May 16.

Terri Albertson, director of the Nevada DMV, noticed the Nevada reference in Backchannel’s story and suggested to Hurin that the department post it on their website. His reply was nothing short of explosive: “Nope!!…They have no license, they are testing no matter what anyone tries to tell me and they have no passengers in the vehicle when current law requires two people….This could very well damage Nevada’s Autonomous ‘Pioneer’ image and our relationships with current OEMs and automated companies who already have a license…OTTO is driving these vehicles illegally and without the required $5 million bond that is needed to protect our citizens.”

Bizarrely, the autonomous driving regulations come with no penalties for breaking them.

“The autonomous regulations and policies are living, breathing pieces of this cutting-edge technology,” Hurin told me. “The Department will be submitting another set of AV regulatory amendments in 2017. One of the areas we have already earmarked for these regulations is penalties for this type of violation.” 

Not making an issue of Otto’s unlicensed demo certainly helped Nevada in the short term. It avoided alienating a leading player in driverless technology and probably helped secure its first autonomous testing facility. But this also came at a cost. Until Nevada clarifies its autonomous vehicle laws and introduces penalties for breaking them, it is difficult to see why any self-driving company should bother with the hassle and expense of certification.

As Otto’s founders count their whirlwind winnings from their sale to Uber, Nevada has shown that well-meaning attempts at keeping tabs on new technology can evaporate just as fast.

This is a wild and crazy story – if it doesn’t make sense, read the whole thing because it still won’t. The punchline is that this same crew ended up in charge of the cookie jar and now operate Nevada’s first Autonomous Technology Certification Facility (ATCF).
So add it up. Someone understood the laws – and likely the players and the landscape – well enough to come out shooting the dice. Then Nevada craps out. In August Uber rolls in with a cool $680M to snap up the prize. And the founders who opened their doors in January, cross the pass line to tell the tale.
Now do you actually suppose that the May demo was critical to Uber’s decision? Do you think Uber would have cared if there was a driver in the truck? I don’t. But we’ll never know.
What we do know is that it is unlikely that anyone would get away with flying an autonomous aircraft without FAA approval.
BTW Fortune offers up some insights as to what is in it for Uber. “The trucking push is partly a gambit to leverage Uber’s mapping and logistics expertise.” And to disintermediate the brokers…
PRO TIP Wishing won’t make them go away fellas.



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