Speeches and Presentations

Remarks: Deutsche Bank Global Auto Industry Conference

Dr. Mark R. Rosekind , NHTSA Administrator

Wednesday, January 13, 2016 | Detroit

Mark R. Rosekind, Ph.D.
Administrator, National Highway Traffic Safety Administration
U.S. Department of Transportation
Detroit
Wednesday, January 13, 2016
As Prepared for Delivery

Ladies and gentlemen, good afternoon. Rod, thank you for that introduction, and thank you for the invitation to speak here today.

Unlike most of your speakers this week, I’m not here to raise our stock price. While NHTSA and the Department of Transportation are obviously aware of the economic realities of the auto industry, NHTSA’s is almost exclusively focused on automotive safety, with one additional duty I’ll mention in a moment.

So, since I’m not here to move markets, why am I here?

Well, first, because the global financial markets play a huge role in how our economic resources are allocated around the world. And that makes all of you, as key participants in the markets, important players in the financial universe that affects the companies NHTSA regulates. You hold that influence at a time of enormous potential and significant challenge for the auto industry. NHTSA and DOT are working every day to play a role that helps achieve that enormous potential and address those significant challenges. And so, what I hope to do today is discuss NHTSA’s role in that process, so that you have a clear picture of how the agency is working to shape the safety picture as all of you influence the financial picture.

Some of you at this point are probably saying, “Yes, yes, enough of the Econ 101, what about the driverless cars?” And we’ll get to them. But first I want to address two issues that are at the forefront of NHTSA’s work and are the subject of significant industry and public interest.

The first is what I will call the Era of the Big Recall. As you know, NHTSA in 2014 handed down more civil penalties for safety violations by manufacturers than in its entire previous 40 year history. And in 2015 we blew that record out of the water. Final recall numbers aren’t yet in for 2015, but they are likely to rival the records set in 2014. Over the last half-decade, the industry has faced what can only be described as a cascade of safety crises, from Toyota’s unintended acceleration issues to the General Motors ignition switch defect to the ongoing Takata air bag crisis. And while not directly related to safety, the Volkswagen emissions scandal adds to the litany of issues that threaten to damage public confidence in the industry’s commitment to public health and safety.

It’s an unfortunate truth that the justifiable celebration of a record year for the American auto industry, a remarkable success for manufacturers and for this administration’s role in supporting the industry, comes with regular questions from the media about, to be blunt, whether the industry can be fully trusted when it comes to safety.

Secretary Foxx is concerned enough about these issues that on Dec. 1, he convened a meeting in Washington of auto CEOs and senior executives to discuss how DOT can help the industry take some concrete steps, in collaboration among companies and with the department, to achieve real safety improvements and demonstrate to the public its ongoing commitment to safety. Follow-up discussions from that Dec. 1 meeting continue. This is a new approach for the industry and for DOT, and change is not easy. But the Secretary sees these challenges as an opportunity to break through from old ways of thinking.

That’s just as true of NHTSA as it is of the industry. Let me repeat a message I delivered in a public forum earlier this week: For us, the era of Big Recall is not a sign of progress. Record civil penalties are not a metric of success. If we’re levying a big fine, it means there has been a safety crisis. Americans have been put at risk. Too often, it means American lives have been lost. And NHTSA’s job is to save those lives, every one of them.

So while NHTSA will not hesitate to make strong use of its enforcement authorities when necessary, it is our hope that over the coming year we can work to build a more proactive safety culture, one committed to addressing safety issues aggressively and, preferably, seeking them out and fixing them long before they become the subject of major headlines about record fines. The Secretary strongly believes that such an approach is better for industry, better for NHTSA, and better for the American people.

I also want to say a quick word about fuel economy, and the department’s work with our partners at EPA to conduct the Midterm Review of light-duty fuel economy standards. For NHTSA, the end point of that review will be final fuel economy standards for model years 2022-2025. As you know, there is a detailed, prescribed path we must walk to get there.

The first step is a draft Technical Assessment Report, which we expect to complete by mid-year this year together with our partners at EPA and the California Air Resources Board. This report, which will be available for public comment, will assess the technical factors that are relevant to the 2022-2025 standards. With public comment on the TAR, we’ll move to the next phase, which for NHTSA is preparation of proposed standards, which after public comment would be finalized sometime in early 2018.

Industry concerns about this process are no great secret. The fear is that plunging fuel prices and soaring SUV sales make fuel economy gains unattainable, and that Washington doesn’t get it. Let me try to allay that concern.

First, the current, footprint-based standards are designed to accommodate changing economic conditions and consumer preferences. Manufacturers are not compelled to build vehicles of any particular size or type. If a manufacturer’s sales mix shifts, so does its fuel economy requirement.

Second, NHTSA staff will, by the time final standards are set, have spent thousands of hours meeting with stakeholders, including the industry’s technical experts, and poring over our own research, industry-provided data, and analysis from places like Argonne National Laboratory and the National Academy of Sciences. If you have followed the public discussion of the proposed heavy-duty fuel economy standards we proposed with EPA and CARB last year, you know that even those who disagree with aspects of the proposal have praised the agencies for extensive outreach and sound technical analysis.

NHTSA has robust mechanisms in place to ensure that when we meet our statutory requirements to establish the maximum feasible standards, we will do so after a process that considers all the relevant economic, technological and environmental data.

One last point to make on fuel economy: While the decline in oil prices stems from many factors, don’t discount the progress the industry has made on fuel economy as one of those factors. Efficiency gains have, without question, affected the supply side of the supply-demand equation. And that trend will continue to work to the benefit of consumers: Late last year, OPEC’s annual World Oil Outlook projected that America’s demand for oil in road transportation will decline by 3.6 million barrels a day by 2040, thanks to increasing efficiency even as miles traveled and fleet numbers rise. Consumers have already derived enormous financial as well as environmental and energy-security benefits from rising fuel economy, and we expect that to continue.

Your invitation to me today focused on vehicle automation, and this is a topic we’re eager to discuss at DOT and NHTSA. There are many, many questions swirling around this area – about how soon truly self-driving cars will be on the roads, about which manufacturers have the most effective vision for bringing automation from the test track to the road, about how automation will affect ownership patterns, legal liability concerns, the designs of our roads and cities, and much more.

What I’d like to do today is discuss two sets of questions: What is the vision at DOT and NHTSA about these innovations, and what steps are we taking to implement that vision?

First: If you are inclined to believe that the federal government is likely to be an impediment to innovation, let me offer a corrective. Our direction, from President Obama and Secretary Foxx, is to embrace this era of innovation and play an active role in encouraging it. Vehicle automation offers enormous possibilities for helping manage the congestion that already plagues our cities and is only going to grow without action. It offers potentially immense environmental and sustainability benefits. It offers to extend the benefits of individual mobility that Americans have enjoyed for decades to parts of our society which, because of socioeconomic challenges or disabilities, have missed out on the automotive revolution.

But at NHTSA, the biggest reason we are excited about this era is that it offers to transform our safety mission. We are already in an era of transformation in which safety efforts are no longer built on the grim assumption that there will be crashes, and helping people survive them. Now vehicles are being designed to ensure that the crash, once a foregone conclusion, never happens at all.

This is important because for all the public and media focus on safety defects and recalls, vehicle-related issues are the crucial factor in about 2 percent of fatal crashes. The overwhelming majority of crashes, about 94 percent, can be attributed to a human error or decision. About halfof all Americans who die on the roads aren’t wearing their seat belt. About one-third of all fatal crashes involve alcohol. We know that distraction issues play a role in about 10 percent of fatal crashes, and because distraction is so difficult to detect and measure, we believe that number understates the impact of distraction, perhaps dramatically so.

We know that 32,675 Americans died in crashes during 2014, and if we’re going to reduce that number dramatically, we need to address those human factors and automation can play a key role. Automated systems such as lane keeping assist and automatic emergency braking are already saving lives, preventing crashes, and reducing the tragic annual toll that we have accepted for the last century of automotive history. As those systems grow in importance, innovations such as vehicle-to-vehicle communications and increasing levels of automation will help save even more lives.

For all these reasons, Secretary Foxx has made accelerating the pace of vehicle innovation a major focus. That means accelerating our work on vehicle-to-vehicle communications, reviewing our regulatory framework to identify and address any provisions that could slow this transformation, establishing a vehicle innovation team that is looking broadly at opportunities to speed this transformation, considering what role the states can play; and having NHTSA help lead the automation discussion on areas beyond technology such as law, insurance, even ethics.

Our goal is pretty simple: If a technology innovation can reduce the death and injury on America’s roads, we aren’t just for it, we’re for it right now.

That said, this transformation represents an awesome responsibility for manufacturers as the wheel is taken out of the driver’s hands, and put in the hands of software engineers, system engineers, scientists and designers and human-factors experts.

One area that needs immediate, tangible action is cybersecurity. Failure to tackle the cybersecurity challenge would threaten the technology-driven safety transformation we all want to achieve. If drivers believe they are one virus away from a hacker taking control of their vehicle, they are not about to hand over the driving task to that vehicle’s automated systems.

There are tremendous opportunities in this realm for proactive steps. In fact, such steps are essential. Regulation and enforcement alone will not be sufficient to address these risks – cybersecurity threats simply move too fast for regulation to be the only answer. The industry can play an essential role by cooperatively establishing rigorous best practices that address the broad range of cyber threats; by reacting quickly and aggressively when such threats emerge; and by working closely with government and independent security analysts to identify and defeat attacks. The decision to establish an industry-wide cybersecurity Information Analysis and Sharing Center, or ISAC, which became operational this month, is a great start, ISACs in other industries have proven valuable in rapidly disseminating threat and counter-measure information, and it’s admirable that the auto industry has established its own ISAC before, not after, a major episode of malicious hacking.

Perhaps most important, the secretary has directed NHTSA to ensure that federal safety standards designed to protect the public don’t actually interfere with safety, by inhibiting technology innovations that can prevent crashes. This includes a top-to-bottom review of our regulatory framework to identify potential obstacles to safety innovations, and strategies for addressing those obstacles. In the very near future, we hope to make announcements on two initiatives: Some immediate, tangible actions we can take within our existing authorities to enable and accelerate innovation, and more medium-term objectives setting the path toward widespread deployment of autonomous vehicles, a path that keeps safety as our North Star.

This is a remarkable time to be involved in vehicle safety. In many ways, the car hasn’t changed as much in the entire last century as it’s about to change in the next few years. And that change, a safety revolution driven by technology, promises to transform the way NHTSA tackles its life-saving mission. Over the next year, DOT and NHTSA are committed to establishing the tools and methods to ensure that this technology revolution also sparks a revolution in safety.

Thank you and I’m pleased to answer your questions.