SOLUTION: MGMT 5050 The University of Sydney Autonomous Vehicles Summary Paper

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July 15 , 2018
Autonomous Vehicles: Technological
Changes and Ethical Challenges
ary Barra stood in the front of a crowded room at the 2014 Congress of the Intelligent
Transportation Society (ITS). It was a Sunday in September, and the year had already been
a whirlwind. In January, she had been appointed to the position of CEO of General Motors
(GM), making her the first female CEO of a major automobile manufacturer. Three months later, she
appeared on the cover of Time and was honored as one of the year’s 100 most influential people,
highlighted among the likes of Beyoncé, Barack Obama, and Vladmir Putin.
Barra worked her way up at GM.
She began her career there in 1980 as
a co-op student, later graduating with
a BS in electrical engineering from
General Motors Institute) in 1985
and an MBA from Stanford in 1990.
At GM, she previously served in
positions ranging from engineering
to human resources and product
Barra turned her attention back to
delivering the welcome address for
the 21st annual gathering, which had attracted thousands of industry and government leaders to Detroit,
Michigan. The theme was “Reinventing Transportation in Our Connected World,” and she had exciting
news to share.
After some opening remarks, she gave an abbreviated history of GM’s innovation in connected
technology. Then, she focused on the future: Super Cruise. Barra elaborated, “That’s the working name
for the GM semi-automated driving technology that allows for hands-free driving on the highway- both
at speed and in stop-and-go driving.”2
Autonomous vehicles had been a hot topic in the news. Earlier that year, the technology company,
Google, revealed its prototype of a completely driverless car. There had also been murmurs across the
automotive industry that several carmakers were developing autonomous driving technology. Public
interest was high, and there was pressure for large automakers to keep up.
Barra continued her speech:
This document is authorized for use only in Lynn Gribble’s MGMT5050-Prof Skills & Ethics T3 2020 at University of New South Wales from Sep 2020 to Dec 2020.
Autonomous Vehicles: Technological Changes and Ethical Challenges
In 2013, Popular Mechanics magazine ranked Super Cruise among the year’s most
important innovations in technology, medicine, space exploration and automotive
design. They thought it might be in production as soon as 2018. Well, we’re going
to better that by about two years and launch Super Cruise in the same timeframe
as V2V [vehicle-to-vehicle communication technology]. And it will appear for the
first time on an all-new Cadillac that’s going to enter a segment where we don’t
compete today. With Super Cruise, when there’s a congestion alert on roads like
California’s Santa Monica Freeway, you can let the car take over and drive handsfree and feet-free through the worst stop and go traffic around. […] Having it done
for you – that’s true luxury.3
Despite public anticipation, autonomous driving technology was nascent and in the early stages of
testing on public roads. Only a handful of states had any laws in place related to autonomous vehicles.
Many consumers and experts worried about the safety implications of releasing autonomous vehicles
onto the streets.
Barra began to wrap up her monumental announcement. She made a point to mention her
company’s commitment to consumer safety and enjoyment, “Rest assured, Super Cruise will keep
drivers alert and engaged, and when they want to take control, they’re going to find a car that’s really
fun to drive.”4
Road Conditions: Autonomous Vehicle Background
In the 2010s, many major automotive companies were designing autonomous vehicles, but none
had been released to the public. However, in late 2015, Tesla Motors5 (“Tesla”), the Palo Alto-based
manufacturer of electric vehicles and unique energy solutions, released a software update for its cars.
Named Autopilot, an homage to the autopilot feature on airplanes, the software was controlled through
a touch screen, and enabled cars to automatically manage speed, steer within lanes, change lanes, and
park. The software involved feedback from cameras, radar, ultrasonic sensors, and GPS to offer live
data feedback. Cars that had been in driveways for years had been manufactured with all of the required
hardware to later become semi- autonomous with the Autopilot software update.
Tesla was founded in 2003 with a mission to accelerate the world’s transition to sustainable energy.
The company was co-founded and led by the well-known futurist, Elon Musk. In 2012, Tesla released
the first fully electric premium sedan. The sedan earned acclaim from Motor Trend, the U.S. National
Highway Traffic Safety Administration (NHTSA), and many others. Tesla’s release of Autopilot was in
keeping with its cutting edge reputation, and its Model S sedan became colloquially known as the first
autonomous car available to the public.
However, the common perception of the Tesla Model S as “autonomous” was vastly oversimplified.
SAE International, a standards-making body for automotive engineers, published a taxonomy that
Jacqueline Orr, Research Scholar at USC Marshall School of Business, created this case in consultation with Ali E. Abbas,
Professor of Industrial and Systems Engineering at USC Viterbi School of Engineering & Price School of Public Policy, and
Jeremy Dann, Lecturer in Entrepreneurship at USC Marshall School of Business and Director of the Case Program. The
authors would like to thank industry expert Jason Orr for his contributions to this case, particularly with regard to the legal
and policy contexts surrounding autonomous vehicles. This case was developed from published sources. Cases are developed
solely as the basis for class discussion and are not intended to serve as endorsements, sources of primary data or illustrations
of effective or ineffective management.
Copyright © 2018 Lloyd Greif Center for Entrepreneurial Studies, Marshall School of Business, University of Southern
California. For information about Greif Center cases, please contact us at This publication
may not be digitized, photocopied, or otherwise reproduced, posted or transmitted without the permission of The Lloyd Greif
Center for Entrepreneurial Studies.
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Autonomous Vehicles: Technological Changes and Ethical Challenges
SCG 545
defined six levels of automation. At the lowest level (Level 0 on the SAE scale), a human driver
performed all aspects of driving; at the highest level (Level 5 on the SAE scale), a driving automation
system performed all of the tasks associated with driving.
At the time of its release, Tesla’s Autopilot technology performed at Level 2 automation—capable of
steering and acceleration, but only with constant supervision by a human driver who monitored road
conditions. See Exhibit 1 for a full overview of the SAE levels.
Revving the Market
The potential of vehicle autonomy reached far beyond personal cars. Ridesharing companies (such
as Uber and Lyft), taxis, trucking, manufacturing logistics, and public transit were all expected to be
transformed by autonomous control technology. In January 2015, Boston Consulting Group predicted
that the autonomous vehicles market size could be $42 billion by the year 2025,6 a figure which likely
caught the attention of every automotive industry leader. Another staggering statistic was the NHTSA’s
estimate that 35,200 people died in motor vehicle accidents in 2015, a 7.7% increase from the prior
year.7 A separate NHTSA report found that 94% of vehicle crashes were a result of (human) driver
error.8 See Exhibit 2 for more data regarding roadway injuries and deaths. Thus, companies likely
viewed autonomous vehicles through a lens of not only substantial financial benefit, but also profound
societal benefit.
Between its lifesaving potential and its expected impact on the economy, vehicle autonomy was a
high profile topic in 2016. Many car companies wished to capitalize on this hype, but were wary of
labeling their technology “autonomous” in order to avoid overstating the capabilities of their driving
automation systems. Marketing efforts at the time often evoked the promise of driverless cars while
opting for language such as “driver assist” rather than “autonomous.”
The On-Ramp: Cadillac’s Vision for the Future
General Motors (GM)’s luxury car division, Cadillac, was among the world’s oldest car brands,
founded in 1902. But by the mid-2010s, its brand reputation was more passé than time-honored. A
reflection of this, Cadillac sales dropped 6.5% between 2013 and 2014.9 Cadillac President Johan de
Nysschen, appointed in August 2014, sought to change that. Tasked with Cadillac’s global business
success, including sales, product development, strategic brand development, and marketing, de
Nysschen relied on his management and board history with Infiniti Motor Company Ltd., Audi of
America Inc. and Audi South Africa, Volkswagen of America, Inc., and BMW South Africa.10 The same
year that de Nysschen was hired, GM announced that it would allocate $12 billion to grow the Cadillac
brand, and intended to launch at least eight new vehicles by 2020.11
Rejuvenating the brand would not be an easy task. Automotive analyst Adam Jones stated that it
had never been more difficult to do this in the premium car segment. He warned, “It’s going to take
tremendous time and money. I’m not saying it can’t work, but there’s a lot of cultural inertia behind
Cadillac, and there’s a huge amount of competition coming from a German auto industry that’s getting
even more aggressive. There’s not going to be any quick win.”12
At the 2015 New York Auto Show, de Nysschen was candid about Cadillac’s brand challenges, but
also spoke confidently of its aspirations for the future. “Cadillac wants to move back to the center stage
of the luxury car market,” he said. “We also have to appeal to a new audience. The Baby Boomer
generation remains important for us, but by 2020, more than 80% of the luxury cars in the world will
be bought by someone who is from Gen X or Gen Y. They bring different expectations to the market,
and brands that do not evolve will be marginalized.”13 [Generation X referred to people born in the
1960s and 1970s, after the Baby Boomer generation. Generation Y, also known as Millennials, referred
to people born in the 1980s and early 1990s.]
This document is authorized for use only in Lynn Gribble’s MGMT5050-Prof Skills & Ethics T3 2020 at University of New South Wales from Sep 2020 to Dec 2020.
Autonomous Vehicles: Technological Changes and Ethical Challenges
Super Cruise and Autopilot
GM’s semi-autonomous technology, Super Cruise, was originally announced in 2012, with a Cadillac
press release boldly titled, “Self-Driving Car in Cadillac’s Future.” The same spring, GM also began
demonstration drives for journalists and others. John Capp, GM’s director of Global Active Safety
Electronics and Innovation said at the time, “The primary goal of GM’s autonomous and semiautonomous vehicle development is safety. In the coming years, autonomous driving systems paired
with advanced safety systems could help eliminate the crash altogether by interceding on behalf of
drivers before they’re even aware of a hazardous situation. More than ever, consumers will be able to
trust their car to do the right thing.”14 Like Tesla’s Autopilot, Super Cruise would automatically keep it
in lane, make steering adjustments, and regulate speed and braking.
In 2014, GM announced that Super Cruise would be available in the fall of 2016. The software was
intended to be a feature on the Cadillac CT6, a full-size luxury sedan which would be priced between
$54,490 and $84,460. But with Tesla’s release of semi-autonomous technology in 2015, GM’s
leadership had the opportunity to examine the public’s reaction to this new technology, and to assess
the views of various expert stakeholders before releasing its own technology.
In an October 2015 post on its corporate website, Tesla discussed the arrival of Autopilot. As with
most Tesla announcements, media buzz soon followed. However, some consumers and experts were
concerned about Tesla’s semi-autonomous technology, which was capable of controlling all of the car’s
movements in traffic, but required constant human supervision. Tesla’s CEO, Elon Musk, explained,
“We tell drivers to keep their hands on the wheel just in case, to exercise caution in the beginning.”15
Startlingly, almost as soon as Autopilot was released, videos surfaced on YouTube demonstrating
drivers’ over-reliance on automated features. Some drivers had even fallen asleep at the steering wheels
of their Teslas. Arianna Simpson, who survived a collision in which her Tesla vehicle ran into a parked
car on a highway, said that Autopilot “did absolutely nothing.” Simpson went further to say, “When I
have a bug on my app, it crashes. When I have a bug on my car, people die.”16 Dean Pomerleau, an
expert at Carnegie Mellon University with 25 years of experience with self-driving technology, also held
a critical view. He surmised, “Human nature is such that if they’re not doing anything, they’re going to
get distracted or drowsy and incapable of taking over [a semi-autonomous car that is not properly
The mixed responses to the release of Tesla’s semi-autonomous Autopilot left multiple angles for
other carmakers to consider. Based on Tesla’s accident logs and NHTSA data about overall traffic
fatalities, it was reasonable to conclude that the availability of Autopilot saved lives by reducing the
number of automobile-related deaths. Luxury cars increasingly had become defined by more than just
comfort or performance, but also by innovative technology. Being among the first to release semiautonomous vehicle technology would go a long way in attracting the younger demographic that
Cadillac was actively pursuing. But research by Pomerleau and others contended that consumers may
not fully understand how to properly drive semi-autonomous cars. Unlike with fully autonomous
vehicles, drivers would need to embrace relinquishing control of only some aspects of driving, but
remain fully alert and able to take back control of the car at any moment. Car manufacturers would
need to figure out how to combat drivers being lulled into complacency. In addition, companies had to
mitigate the liability risk with new technologies, which legal experts were only just beginning to analyze.
For an established company such as GM, there was a lot at stake legally and financially, but also
tremendous market opportunity if the company moved quickly.
With approximately a year until the 2016 Super Cruise release date that Barra had promised, GM’s
leadership team had to decide whether to proceed as planned, delay the release until it had been even
more extensively tested, or forgo the release of semi-autonomous technology in favor of releasing a fully
This document is authorized for use only in Lynn Gribble’s MGMT5050-Prof Skills & Ethics T3 2020 at University of New South Wales from Sep 2020 to Dec 2020.
Autonomous Vehicles: Technological Changes and Ethical Challenges
SCG 545
autonomous vehicle at a much later date. No analysis would have been complete without exploring legal
implications and competitive behavior.
Licensed to Drive: Legal Implications
In early 2016, there were no federal statutes or regulations governing the release of automated
driving systems, and only a handful of states had enacted laws to address the testing of automated
vehicles. With no courtroom precedents to rely on, legal scholars and other commentators debated how
liability for personal injuries caused by automated vehicles would be decided in a future legal battle.
Many believed that automobile collisions involving automated vehicles would be treated as product
liability cases rather than unavoidable accidents, therefore exposing car manufacturers to more
Under general legal principles, manufacturers could be made to pay for injuries caused by their
products if they were found to be “unreasonably dangerous,” if the manufacturer was negligent in
designing the product, or if the manufacturer failed to warn users about risks associated with the
ordinary uses of the product.19 In some cases regarding other products, manufacturers had previously
been held liable for the “foreseeable misuse” of products, where a jury decided a manufacturer should
have known that users would use them in dangerous ways.20
There were also no established standards for testing the safety of automated driving systems. Many
people wondered how fault could be assigned in instances where an automated vehicle was operated by
software with artificial intelligence, which they believed to be an inscrutable “black box.”21 On the other
hand, even early testing appeared to demonstrate an accident-per-mile rate that was equal to, or lower
than, an average human driver.22 Even so, some feared that juries might hold automated vehicles to a
higher and perhaps unachievable standard compared to human drivers. 23 From the perspective of
automobile manufacturers, semi-autonomous vehicles were in a legal gray area, with the potential to
expose them to great legal risk.
State Measures
Nevada was the first state to explicitly allow autonomous vehicles, in 2011. Within the next five years,
only a few states followed suit in taking action related to autonomous vehicles. State laws varied widely
in their effects: Florida allowed full deployment of autonomous vehicles, but California, Michigan, and
Nevada allowed autonomous vehicles to be operated only for testing purposes. North Dakota passed
legislation directing research into the safety and fuel economy of autonomous vehicles. Other
jurisdictions opted not to pass any new laws; some held the view that autonomous vehicles could be
legally operated anywhere unless there was a law that affirmatively banned them. In most states,
autonomous vehicles existed in a regulatory vacuum.
State governments and various municipalities diverged on how receptive they were to autonomous
vehicle testing or deployment. While California passed regulations that restricted companies’ ability to
test on open roads, other jurisdictions like Arizona actively courted autonomous vehicle developers and
encouraged them to set up operations there. California’s position was likely influenced by the state’s
powerful consumer protection groups, who were reluctant to allow new autonomous technology on
public roads. For example, a March 2015 letter from Consumer Watchdog to the Director of the
California Department of Motor Vehicles stated, “We call on the DMV to ensure the public interest is
put ahead of the self-serving agendas of the autonomous vehicle technology manufacturers.”24 Some
other states likely saw this as an opportunity to promote economic development and capture some of
the technology sector that had historically resided in California.
This document is authorized for use only in Lynn Gribble’s MGMT5050-Prof Skills & Ethics T3 2020 at University of New South Wales from Sep 2020 to Dec 2020.
Autonomous Vehicles: Technological Changes and Ethical Challenges
Modern Marvel, Ethical Dilemma
Under the Hood: The Technology Powering Semi-Autonomous Vehicles
The particular design of automated vehicle technology varied by developer, but the technologies all
shared common features. All developers used a stock vehicle and retrofit it with a variety of sensors,
including cameras, rad …
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