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Why Uber Had To Leave California

Uber's self-driving cars are gone from California and are now in Arizona

25Jan

Ride-hailing company Uber Technologies, Inc. has something of a name for expanding services into a new area while not always playing by the local rules, as was the case in a recent December 2016 tiff involving its hometown, San Francisco, California.

Uber has sought to be a player in the nascent area of self-driving cars with test programs in California and Pennsylvania. The California Department of Motor Vehicles has required makers of autonomous vehicles to apply for special permits costing $150 for each test vehicles. Uber, however, claimed that since their cars were always tested with drivers sitting inside ready to take over the wheel, the cars did not meet the definition of autonomous vehicles and only needed standard vehicle registration. California also requires companies to file a report any time one of their self-driving cars has had a crash or a driver has had to intervene. It's unclear if Uber had refused to register in order to avoid revealing such information.

California Regulations

Uber, together with Tesla, are the only two auto companies that have rejected California's special test vehicle registration. The special permits were readily acquired by about 20 companies, including Baidu, Mercedes-Benz, Nissan, Ford, Honda, Delphi, Bosch, Alphabet's Waymo, and General Motors, who are currently testing their self-driving technology on California roads. Uber, however, simply introduced its autonomous Volvo XC90 SUVs into its regular ride-hailing service without seeking prior permission from the DMV, and without having applied for the special test permits. The California state attorney general threatened to take legal action if Uber continued operating their test cars without a permit. The contentious standoff made national headlines before California forced the 16 Uber test Volvos off the roads by revoking their registrations. The DMV invited Uber to apply for the self-driving test permits through a special team that would shorten their time below the 72-hour permit waiting period.

Tech-friendly Arizona

In contrast to California's strict regulatory stance, the neighboring state of Arizona has established a Self-Driving Vehicle Oversight Committee to advise transportation officials on how to advance the progress of autonomous vehicles. Waymo, newly spun off from Google's Alphabet had already been testing its self-driving cars in Arizona, and had recently taken Governor Doug Ducey for his first test ride. Seeking to portray his state as a magnet for automakers with the disruptive self-driving technology, Governor Ducey lost no time wooing Uber. 'While California puts the brakes on innovation and change with more bureaucracy and more regulation, Arizona is paving the way for new technology and new businesses,' he said in a statement. 'California may not want you, but Arizona does!' he tweeted. Uber promptly loaded the test Volvos onto one of its Otto self-driving flatbed trucks and hauled them to Arizona.

In fact, Uber already had a collaborative relationship with the University of Arizona to develop mapping and safety technology as part of the autonomous vehicle project. Uber has mapping vehicles based on the University campus and also has given a $25,000 grant to the College of Optical Sciences in the course of their working partnership. The impact that other issues such as liability and road safety will have on Arizona insurance coverage remains to be determined before widespread adoption of self-driving cars.

Other Regions

Arizona isn't the only state involved in testing programs. GM, which is also testing self-driving cars in Scottsdale, Arizona, has expanded its autonomous vehicle tests to Michigan which recently passed legislation in support of tech-friendly policies and less restrictive regulations. Alphabet's autonomous car project earlier had expanded its testing grounds from its home state of California to Kirkland, Washington, and Austin, Texas. Uber, itself, still maintains its existing modified Ford Fusion testing program in Pittsburgh, Pennsylvania.

Uber has not benefited uniformly from its aggressive flouting of local laws in pursuit of expansion. It recently gave up on its riding-hailing service in China, in favor of investing in a local service called Didi Chuxing. It has also reduced its presence in some German cities.

Uber may eventually bring its autonomous cars back to California, however, for the state's talented workforce and its vast market.

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