Self-driving cars, also known as “autonomous cars”, are “smart cars” which can manoeuvre themselves on planned routes without human input.

At present, fully autonomous car is no longer a vision but a realistic scenario, thanks to advanced manufacturers such as Tesla and Google. By replacing human drivers, it is believed that road safety will be vastly improved, at the same time user’s comfort and leisure time will be enhanced by enabling them to do other activities during car journeys. At present, self-driving cars are yet to be introduced into Malaysia, as the legislator and the automotive industry have yet to overcome the related technological and legal challenges. This article presents you an overview of these challenges.

Liability Law – Road Accidents

Recognising that an autonomous car itself cannot be responsible for personal injury, the key question then becomes:

Who should be responsible in the event of an accident caused by driverless cars – the driver or the manufacturer?

To answer this question, liability under insurance laws in Malaysia for road accidents involving autonomous vehicles will need to be reformed and regulated. In developed countries such as the US and the UK, we can see a paradigm shift is from liability on the part of the user towards the manufacturer with regards to damage caused by the malfunctioning of an automation product.

In light of this, manufacturers are expected to provide extensive information about the performance and limitations of their systems, taking into account the risk of cyberattacks and the life-threatening consequences for passengers. Inadequate instruction manuals or insufficient danger warnings could lead to claims against the manufacturers.

Liability law – Determining Recourse in Supply Chain & Contractual Allocation of Risk

With an increased manufacturer liability, seeking recourse in the supply chain will become more complicated and challenging. With numerous players involved in the manufacture of semi or fully autonomous cars, in addition to IT suppliers who are responsible for mobile communications, cloud and navigation systems, complex liability and recourse questions will arise. Given the large number of players in the supply chain, a clear description of the various interfaces and liability for each party is important from both technical and legal perspectives.

Manufacturers need to choose the most suitable contract model (ie: “all-party contracts” or multiple individual contracts) for the given circumstances to ensure fair, effective allocation of liability. As such, good planning and robust regulations in this area is needed before autonomous cars can be rolled out on a wide scale.

Data Protection Law

Autonomous cars are usually “connected vehicles” which are capable of assessing the road environment as well as communicating with other driverless cars to ensure road safety. As a result, they generate huge volumes of data every time they embark on a new journey.

This raises s deluge of new legal issues concerning the permissible access to vehicle data and its use and commercialisation.

Can the manufacturers, mobile communications suppliers and/or insurers have access to the data regarding the vehicle’s location, condition and routes, driving style, internet habits and other preferences of the driver?

In most legal systems, there is a general principle that all individuals enjoy rights to privacy and data protection. While obtaining the driver’s explicit consent can help overcome the legal hurdle for suppliers, in many cases the driver will not be the original buyer of the car. This further complicates obtaining consent to process personal data.

A Change in Traditional Business Models

With the ever-closer collaboration between the automotive and technology industries, traditional business models are evolving accordingly. While traditional car purchase is usually a one-time transaction, autonomous cars/connected car services are often offered as discrete elements akin to a license/subscription agreement with continuous obligations. Embedded connectivity solutions enable manufacturers technical access to the streams of data to offer more innovative additional services and functionalities, and hence the possibility to optimise and monetise their relationship with the end users.

From a regulatory perspective, the manufacturer may then be being classified as a supplier of telecommunications services, subjecting themselves to a new range of legal obligations under telecommunications law.

Finally, the automotive industry is seeing a gradual change in mobility habits and concepts. In this modern era, green technologies, car sharing solutions and ride hailing concepts are gaining increasing importance. Such business models create opportunities to introduce users to environmentally friendly electric vehicles. However, electric vehicles require the country to have sufficient infrastructure in terms of charging facilities and range of lithium ion batteries, which are currently not available in full force in Malaysia.

In a nutshell, there are still many challenges that need to be overcome before driveless cars become a reality in Malaysia. Nothing is going to change overnight, but we must be prepared for a drastic shift in automotive technology, insurance and business practices in the next decade to come.