Hoping to put the Dieselgate scandal in its rearview mirror, Volkswagen is focusing less on individual vehicle ownership and investing more in ride-hailing, autonomous driving, and electric cars.
MOIA’s focus is changing urban mobility.
These efforts will take place under Moia, a new standalone mobility services company.
Moia signals VW’s intent to compete with tech companies such as Google, Apple, and Uber as a provider of innovative transport solutions.
Volkswagen officially launched Moia at the Tech Crunch Disrupt technology event in London on December 5.
Moia (a Sanskrit word meaning “magic”) will operate as an independent brand under the VW umbrella, which also includes the brands Audi and Porsche.
The Moia brand is VW’s second step away from its traditional vehicle manufacturing business. In May, VW invested $300 million in Gett Inc., a ride-hailing company that operates in more than 100 cities.
Moia’s initial focus is on ride-hailing and on-demand pooling services. It also plans to introduce an electric car as soon as 2021. European pilot projects start in 2017, but Moia eyes an international market.
“Even though not everyone will still own a car in future, Moia can help make everyone a customer of our company in some way or another,” said Volkswagen CEO Matthias Mueller in a statement.
“We’re a startup with VW group’s resources and we have a global aspiration,” said Moia CEO Ole Harms. “Our sights are set on becoming one of the global top players for mobility services in the medium term.”
Automakers Facing Seismic Industry Changes
An industry that since its inception has focused on selling internal combustion vehicles to individual drivers is under technological assault.
Dieselgate may have been a blessing in disguise for Volkswagen.
Not only is the industry moving towards electric cars with automated features, it’s also facing a future in which drivers themselves are obsolete.
Companies like Uber and Lyft that provide on-demand ride hailing are obviating the need for personal vehicles. Under legal pressure to classify drivers as employees, Uber and Lyft may scrap drivers altogether and introduce driverless taxis. If they do, they’ll have competition from Google and Apple, which are investing heavily in driverless cars. Vehicles from Tesla, Volvo, Ford and other automakers already feature sophisticated automation systems and may be fully automated within a decade.
Volkswagen is a latecomer in this competitive, rapidly-changing, tech-driven environment. Daimler AG, for example, already has a car-sharing service as well as public-transit and cab hailing apps. General Motors is investing $500 million in Lyft and planning an on-demand network of self-driving cars.
While VW brand Audi offers car sharing in San Francisco and Hong Kong and plans to offer self-driving and fully electric cars in 2017 and 2018, overall VW lags behind the competition from an innovation standpoint.
Ironically, Dieselgate may have been a blessing in disguise for the world’s second-largest automaker. The scandal delivered a near-fatal blow to its “Clean Diesel” passenger car campaign, and VW now seeks a strategic revamp as a leaner, more efficient, and future-looking automotive company.
VW recently announced it would lay off 30,000 workers—5 percent of its global workforce—while adding 9,000 new technology positions.
Berlin-based Moia currently employs 50 workers and will have about 200 employees by the end of 2017. Volkswagen intends to generate a substantial share of its revenue from the startup by 2025.
Self-driving cars are no longer a dream of the future. Although still in its infancy, on-road vehicle automation technology grows by leaps and bounds each year, and governments and private companies agree that the eventual transition to cars without human drivers is all but inevitable.
“Self-driving cars have gone from sci-fi fantasy to an emerging reality.”
That doesn’t mean the shift to driverless cars will be seamless. Automated vehicles from multiple companies have been involved in accidents, including a deadly Tesla crash in May. There are also numerous questions about privacy, regulation, insurance underwriting, and liability.
A future where software and hardware make more driving decisions could let people off the hook for crashes. But will automakers step up and pay for damages—or will they try and pass the blame to another party?
These are some of the issues ClassAction.com will be keeping a close eye on in the months and years to come as we aim to keep people in the know.
President Obama recently wrote in a Pittsburgh Post-Gazette op-ed that, “self-driving cars have gone from sci-fi fantasy to an emerging reality.”
That reality is seen in the efforts of automakers such as Ford, Volvo, and Tesla—as well as tech companies like Google, Apple, and Uber—to roll out fleets of self-driving cars as soon as 2021.
In the same editorial, Obama announced a White House conference on October 13 in the Steel City to discuss new technologies and innovations. His administration has published a 15-point safety checklist it hopes automakers and tech companies will adopt before self-driving cars hit the road.
The incoming administration could have different policy goals for self-driving cars, but politics aside, the rising tide of autonomous vehicle technology makes it an issue that regulators can’t escape.
A Rush to Market?
Google, the leader in self-driving technology, has been working on autonomous cars since 2009. The company’s car program has already put nearly sixty self-driving vehicles on roads in four states and logged two million miles. Apple is also rumored to be working on its own self-driving car, while Uber and Lyft have plans to introduce driverless taxis. Lyft CEO John Zimmer boldly predicted, “By 2025, private car ownership will all but end in major U.S. cities.”
Ford and Volvo plan to mass-produce fully autonomous vehicles by 2021. Cars from Audi, BMW, Mercedes-Benz, Tesla, and other makers already feature sophisticated automation systems that can parallel park, follow a lead vehicle at a safe distance, and break to avoid collisions, among other features.
ClassAction.com attorney Mike Morgan, however, cautions that, in their zeal to become self-driving car market leaders, companies may not be focusing enough on big picture safety.
“The most dangerous part of self-driving cars is the rush to market,” said Morgan. “Everyone wants to be first to sell the most cars but the truth is the technology they are using is going to lead to catastrophic results.”
Degrees of Automation
In terms of legal repercussions, the distinction between fully autonomous and semi-autonomous technology is a significant one.
In the former, an automated driving system performs all driving tasks under all conditions. Such vehicles—which are still years away—would not even have a steering wheel.
Semi-autonomous vehicles, on the other hand, require some level of driver engagement, depending on the system capabilities. Tesla Motors Inc.’s Autopilot is a semi-autonomous feature that can control the car in certain conditions. Similar systems are planned for 2017 General Motors and Volvo vehicles as luxury options.
The Society of Automotive Engineers (SAE) developed standards for driving automation levels, ranging from 0 (no automation) to 5 (full automation). Tesla’s Autopilot—blamed for a deadly crash earlier this year—is officially Level 2.
Countdown to the Driverless Future
Experts disagree on when autonomous vehicles will become mainstream. The Insurance Institute for Highway Safety (IIHS) estimates that there will be 3.5 million self-driving vehicles by 2025, and 4.5 million by 2030, although it cautions that the vehicles will not be fully autonomous.
A majority of autonomous vehicle experts surveyed by technical professional organization IEEE said they expect mass-produced cars to lack steering wheels and gas/brake pedals by 2035.
While a future of self-driving cars seems certain, there are roadblocks to their widespread adoption. The same IIEE survey that asked experts when autonomous cars might be widespread also asked about potential obstacles. Leading responses included legal liability, policymakers, and consumer acceptance.
Tesla Autopilot Mishap Could Spell Legal Trouble
A lawsuit over the deadly Tesla accident in May, in which a man’s autopilot did not recognize a tractor trailer turning in front of his Model S and his car smashed into it, is a strong possibility.
Tesla maintains, “Autopilot is an assist feature. You need to maintain control and responsibility of your vehicle.” But ClassAction.com attorney Andrew Felix counters, “Even the term ‘autopilot’ was used to coerce customers into a false sense of confidence and safety while this technology is still in its infantile stages.”
Tesla has not gone so far as to blame the man for the deadly crash. Should Tesla do so in the context of litigation, several legal arguments would be available to his family. But how they’d apply under the circumstances remains unknown.
“This is all new territory technologically and legally as well,” said Harvard Law School professor John C.P. Goldberg. “There are well established rules of law but how they apply to the scenario and technology will have to be seen.”
Volvo Promises to Assume Accident Liability. Will Others Follow Suit?
In the Tesla example, liability could come down to onboard vehicle log data. But semi-autonomous cars, which need some driver input, are very different from fully autonomous cars that assume little or no driver responsibility.
“Existing liability frameworks are well positioned to address the questions that will arise with autonomous cars.”
Legal experts generally agree that carmakers will assume blame for crashes when a computerized driver completely replaces a human one. For its part, Volvo has promised to assume full accident liability whenever its cars are in autonomous mode.
John Villasenor, a professor at UCLA and author of the paper, “Products Liability and Driverless Cars,” is confident that minor, sensible tweaks to current laws—not broad new liability statutes—will ensure that manufacturers are held accountable. “Existing liability frameworks are well positioned to address the questions that will arise with autonomous cars,” he told IEEE Spectrum.
A Bigger Slice of a Smaller Pie
Although this framework would seem to spawn a mountain of litigation for carmakers, the upshot is that automated technology is expected to drastically decrease accidents, the vast majority of which are caused by human error. After all, automation has already made cars safer. Electronic stability control systems, for example, have saved thousands of lives.
“From the manufacturer’s perspective,” according to tech policy expert and USC professor Bryant Walker Smith, “what they may be looking at is a bigger slice of what we all hope will be a much smaller [liability] pie.”
But what if the driverless technology is forced to make a decision between, say, crashing into a barrier and killing the car’s only occupant, or running over a pedestrian to avoid a crash?
New Age, Age-Old Dilemma
This is the type of scenario a game developed at MIT asks in a variation of the classic “trolley problem” thought experiment, which poses the following moral quandary: a runaway trolley is heading towards five unsuspecting workers. Do you pull a lever, sending the trolley down a different track where there’s only one worker, or do you do nothing and let it kill five?
MIT, in its “Moral Machine” game, presents people with a self-driving car with failed brakes and asks them to make a choice: swerve or stay straight; hit legal pedestrians vs. jaywalkers; hit a boy or an elderly man; etc.
That an autonomous car algorithm might have to make such a life and death decision shows how technology’s intersection with humanity is never black and white—or certain.
Lawmakers Forced to Play Catch-Up
Technology moves faster than the law and ethics.
In the first decades of the 20th century, when the number of cars on roadways exploded, there were no traffic laws, traffic signs, lane lines, or licensing requirements. The speeding vehicles terrified horses and ran over thousands of unaccustomed pedestrians, leading the state of Georgia to classify automobiles as “ferocious animals.”
Slowly, though, as the automobile became a staple of American life, governments figured out sensible legal solutions to the hazards cars were creating. A similar trajectory seems likely in response to whatever unintended consequences self-driving cars bring.
With the speed of technological change these days, the time may not be far off when human-driven cars are as quaint a concept as horse-driven carriages are today. Indeed, given the breakneck pace of innovation, the ink may not be dry on self-driving car legislation before lawmakers are grappling with flying cars.
Through all the changes, count on ClassAction.com to keep you up to speed.
From January to June, the company recorded losses of $1.2 billion. (In 2015, Uber lost $2 billion.)
In July, after two years and two billion dollars lost in China, Uber bowed out of the country, selling its operations there to hated rival Didi Chuxing.
On August 18, a judge rejected the $100 million settlement Uber had reached with drivers in California and Massachusetts over their independent contractor misclassification. Two weeks later, The Wall Street Journal reported that Google would launch its own ride-sharing service via popular route-finding app Waze.
From January to June, Uber recorded losses of $1.2 billion.
Finally, in October, New York’s Department of Labor ruled that Uber drivers are employees—a ruling echoed later that month by three London judges.
Oof. Even for The Most Valuable Startup in the World, that has to hurt.
It would be hyperbole to say that Uber is in danger of failing. (A $62 billion valuation affords at least a little security.) But, unlike a year or even six months ago, one can now conceive of a world in which Uber falters.
Here are the three greatest threats to the ubiquitous ride-sharing service.
Uber faced 50 federal lawsuits in 2015: more than Lyft, Instacart, Handy, and Airbnb combined. They outpaced these other gig economy companies in 2014, 2013, and 2012 as well.
They have fought more legal battles than billion-dollar startups Snapchat, Pinterest, WeWork, Dropbox, SpaceX, and Palantir (whatever that is). And the end is nowhere in sight.
In April 2016, a $100 million settlement was reached in two class action Uber lawsuits representing 385,000 drivers in California and Massachusetts.
Scores of drivers filed objections to the deal, which they considered unfair. The lead plaintiff, driver Doug O’Connor, fired his attorney. In a formal objection filed with the court, Mr. O’Connor said that the deal “is not in my interest or in the interest of any Uber driver.”
U.S. District Judge Edward Chen agreed. On August 18, 2016, he rejected the Uber settlement, saying it was not “fair, adequate, and reasonable” for drivers. (These cases will now go to arbitration.)
Judge Chen noted that the amount offered to drivers was just ten percent of what the Uber lawsuit claimed drivers were owed: $1 billion.
Dozens of Uber lawsuits are still pending in courts nationwide. In addition to monetary losses, Uber should dread the potential of a judge ruling that Uber misclassifies its employees as contractors.
In his decision, Judge Chen also emphasized that under the terms of the settlement Uber would pay just $1 million in state penalties—which could otherwise total more than $1 billion.
Two weeks later in Pennsylvania, a state regulator reinstated an $11.4 million fine against Uber for exactly these kinds of penalties. This fine arrived about six months after California’s Public Utilities Commission (CPUC) hammered Uber with a $7.6 million fine for shirking state regulations.
The Pennsylvania Public Utility Commission (PUC) says that Uber operated illegally in the state from February to August 2014, providing almost 123,000 rides without state approval. According to the PUC, Uber also obstructed the state’s investigation into its dealings.
Two judges originally set the fine at $49.9 million, but the PUC reduced the total to $11.4 million—against the wishes of state officials.
Uber vowed to appeal, calling the fine “absurd.” But decisions like the PUC’s and CPUC’s often establish a precedent. What is to stop the other 48 states from issuing similar (or even higher) fines?
Moreover, as Uber knows all too well, global expansion is expensive. The startup has met resistance in Australia, Belgium, Brazil, Denmark, France, and countless other countries. Adapting to each nation’s unique laws, waging lengthy legal sieges, and fighting taxi unions costs a lot of money.
In China, Uber tried for two years to make it work. After $2 billion in losses, they threw in the towel.
In May, Google launched an exclusive carpooling service in the Bay Area. Now, through the Waze app, Google is expanding that soft opening so that anyone in San Francisco or Oakland with Waze can request a ride.
The service costs a maximum of just 54 cents per mile, far cheaper than Uber or Lyft. Though it is currently just a carpooling service, presumably Waze will broaden its offerings to include the kinds of on-demand rides made famous by Uber and Lyft.
And like Uber, Waze may not need drivers to do so.
Google’s Self-Driving Car Project (developed by Google X) has been in the works for a decade, with the aim of releasing these cars into the wild in 2020.
It is easy to envision, then, a scenario in which Google/Waze spends the next four years building a ridesharing infrastructure and customer base across the country, and then replaces at least some of its drivers with driverless cars—which would save it a bundle.
In the meantime, Google can learn from Uber’s mistakes and either classify its (human) drivers as employees or offer them similar reimbursements, tips, and other employee rights that Uber has failed to deliver. Because Uber has already waded through so much thorny legal territory (and continues to do so), Waze’s path should be much clearer and smoother.
Uber is the most valuable startup in the world, but Google’s parent company Alphabet Inc. is The Most Valuable Company in the World, with a market value of $546.50 billion: nine times that of Uber.
Uber is a giant, but Google is a god. It has several advantages over Uber (money, branding, experience) and could very well take the startup down—or, more likely, over—in the long run.
Ride-hailing company Uber will pay $100 million to settle a pair of class action lawsuits in California and Massachusetts, but under the terms of the settlement drivers will remain independent contractors, not employees—a major win for Uber.
Under the settlement, Uber agrees to pay up to $100 million to 385,000 drivers in the two states, introduce a policy explaining the circumstances that will lead to drivers in these states being deactivated from the app, explain its decision to terminate drivers, give drivers more information about their individual rating and how it compares to their peers, and set up a driver’s association in both states. Drivers will also be permitted to post signs in their vehicles asking for tips. All of these concessions appease driver concerns.
“We believe the settlement we have been able to negotiate…provides significant benefits—both monetary and non-monetary—that will improve the work lives of the drivers and justifies this compromise result.”
Previously, Uber drivers could be deactivated from the app without much warning or recourse for declining a certain percentage of trips. As Tech Crunch notes, the new policy on accepting rides was likely key to the settlement, since requiring drivers to accept a certain percentage of trips could be seen as a job requirement appropriate for employees.
A new driver deactivation policy explains the circumstances in which drivers are denied access to Uber, and how (if at all) drivers can appeal a ban.
The attorney representing the Uber driver, Shannon Liss-Riordan, views the settlement as a victory for drivers. “We realize that some will be disappointed not to see this case go to trial,” Liss-Riordan said. “We believe the settlement we have been able to negotiate…provides significant benefits—both monetary and non-monetary—that will improve the work lives of the drivers and justifies this compromise result.”
Many experts, however, view Uber as coming out ahead in the settlement, because reclassifying drivers as employees would have forced Uber to pay for driver expenses and other job-based perks such as healthcare, costs that could have run into the billions of dollars and threatened the future prospects of the company’s high-margin business model.
The settlement must be approved by U.S. District Judge Edward Chen before it is binding.
While this particular deal applies only to drivers in California and Massachusetts, it should play a major role in determining the outcome of similar Uber litigation pending in other states.
Most Drivers Will Only Get $24 or Less From Settlement
$100 million sounds like a generous sum, but upon closer inspection, it turns out that the actual amount drivers receive could be as little as $10 in some cases.
To start with, the maximum value of the settlement is $100 million. Plaintiffs will receive an initial sum of $84 million, plus an additional $16 million if Uber goes public and its financial valuation increases 1.5x from its December 2015 valuation.
And according to MarketWatch, although some drivers may receive an $8,000 share of the settlement, most will get $24 or less, and some as little as $10. Payments will be calculated based on total miles driven, whether drivers signed an arbitration clause, whether they’re certified class members, and how many drivers actually file a claim. Named plaintiffs will receive an “enhancement” of up to $7,500.
Get Involved in an Uber Lawsuit
Uber class action lawsuits similar to those that just settled in California and Massachusetts are being filed nationwide. Drivers who think they aren’t being treated fairly by the tech company may be eligible to join an existing class action, or initiate one where they live.
Get answers to your questions about Uber lawsuits during a no-cost, no-obligation case review.