Europe fears it's losing autonomous race

The European auto industry has a fear when it comes to the advent of autonomous driving.

It's that Europe is falling behind in the new technology race, losing the competitive advantage to companies in the U.S. and China, where advanced research is occurring faster and more freely.

Johann Jungwirth, for one, is visibly frustrated.

Volkswagen Group's chief digital officer knows that automotive companies are locked in a battle with tech companies for leadership in autonomous driving.

Jungwirth, a former Apple engineer, fears European regulations are hampering efforts to bring VW's battery-powered Sedric concept to market. VW management has decided to move Sedric, short for "self-driving car," into production. But instead of in VW's home market of Germany, it will launch first in the U.S.

"My goal is to be in the first U.S. cities with driverless cars in 2021," Jungwirth said as he presented the latest iteration of the car in Hanover, Germany. After that will come a rollout in China, Singapore and in Middle Eastern cities such as Dubai. "And then comes Europe. We would love to come earlier since it's our home market, but the legislation just isn't there."

European leaders and consumers are well aware of the potential of autonomous driving. Every year, half a million metric tons of carbon dioxide emissions in Germany alone could be saved by eliminating the search for parking spaces, which studies show account for up to 30 percent of inner-city traffic. Every year 1.25 million people die around the world, and as many as 50 million are injured in road traffic accidents, according to United Nations statistics. Every year children, the elderly or the physically challenged have little or no access to individual mobility.

VW's Sedric and others like it could change that. Vehicles legally permitted to operate without any driver behind the wheel would revolutionize transportation.

But there are challenges.

Carmakers looking to test vehicles such as the Sedric in small-scale pilot operations prefer California over Europe — at least initially. Many carmakers have teams of engineers around Silicon Valley, the population is tech-savvy and open to innovation, the streets are much wider, weather conditions are usually ideal and the state government supports them.

By comparison, one major roadblock in Europe is the United Nations Economic Commission for Europe, a standards-setting body responsible for regulating the homologation and use of motor vehicles. Roughly 60 countries participate in the oversight of European traffic, and no consensus has been reached over the rollout of self-driving vehicles. Regulators are focused on more gradual innovations.

Virtually the entire continent is governed by the U.N.'s Vienna Convention on Road Traffic. This largely restricts the use of self-driving vehicles on public roads to limited testing scenarios, and legalizing their commercial operation is years from becoming reality.

"We really have a competitive disadvantage because of the UNECE," said Jungwirth, who worries that those late to the market might end up fighting over the scraps left behind. "The winner could take it all."

Responding to the criticism, the UNECE introduced a procedure that lets companies apply for a special exemption for a vehicle such as the Sedric. This is now subject to debate among UNECE member states, however, meaning the outcome of negotiations is uncertain and at least a four-fifths majority would need to vote in favor.

Neither the U.S. nor China has aligned its laws with European regulations on road traffic or type approval. This allows those nations to respond faster to technological advances, but also creates a patchwork of regulatory environments for carmakers.

"Progress must not stop at national borders," argued Daimler board member Renata Jungo Brüngger. "Legislation must keep up with technical progress, otherwise paramount innovations for automated and autonomous driving cannot be brought to the road."

Fearing cash-rich tech companies will capitalize on their expertise in artificial intelligence and machine learning, most major carmakers are spending heavily to keep pace.

Renault unveiled its EZ-GO concept in Geneva that could form the basis for a self-driving vehicle fleet. Daimler plans to pilot a highly autonomous vehicle fleet in California in the second half of next year. Rival BMW looks to test in China and has formed a consortium around Intel and Mobileye.

All hope to bring the technology to market early next decade. Between tech and auto companies, AlixPartners estimates some $65 billion will be invested this year, up nearly tenfold from 2015.

In the lead, however, is industry pioneer Waymo, a spinoff from Google that has racked up 7 million miles of testing on public roads since it started nine years ago.

Now ready to launch its own branded mobility service starting this year in Arizona and California, Waymo is looking to branch out. With an eye toward Europe, it demonstrated its prototype Chrysler Pacifica in Italy in early June during an investor day held by industrial partner Fiat Chrysler Automobiles.

"There are differences in the regulatory and policy environment that are really important, very different from what we're facing in the U.S., but there is also an opportunity for us to experiment here in Europe," Waymo CEO John Krafcik told the Automotive News Europe Congress in Turin.

But VW may have one clear advantage as it tries to narrow Waymo's lead. Neither Waymo nor its partner, FCA, has a purpose-built self-driving vehicle on the horizon. Public acceptance of the technology is important, and the perception of security could be a key competitive advantage.

The Sedric, with its sturdy, monolithic appearance, gives occupants the feeling they are safely ensconced in a vehicle impervious to damage. Waymo, meanwhile, has to make do with a bulky laser scanner on the roof, which Krafcik says assures passengers concerns through an outward symbol of the vehicle's intelligence.

Krafcik downplayed the need for vehicles such as Sedric that need to master all situations.

"We're pretty skeptical on Level 5," he said, adding. "It will take decades and I don't even think it's necessary."

Jungwirth disagrees.

"The technology is almost ready. I would love to see the legislation support us," he said. "Testing is fine, but what we need is commercial operation in order to scale up."