U.S. federal regulators are expected to issue new rules in the next few months that could jump-start the market for cars that communicate with other cars and road infrastructure

June 26, 2013, 5:13 p.m. ET

Driverless Cars Are Likely to Get Boost From DOT Ruling

STEVE ROSENBUSH

Federal regulators are expected to issue new rules in the next few months that could jump-start the market for cars that communicate with other cars and road infrastructure.

The technology—on demonstration this week a U.S. Department of Transportation event in Washington—uses a combination of positioning technology, such as GPS or other kinds of sensors, and high-speed wireless networks.The immediate goal is to reduce the number of accidents, cut back on toxic emissions and make transportation more efficient. But the rulings could also have a big impact on the development of next-generation vehicles, including cars that drive themselves, and could provide an opening for companies from outside the auto industry.

Auto makers such as General Motors Co., GM +2.29% Ford Motor Co., F +2.14%BMW BMW.XE +1.29% and Volkswagen AG, VOW3.XE +1.65% already are conducting research on automated vehicles, which can maintain their own speed, stay centered in lanes, avoid collisions, and navigate without the aid of a person at the wheel.

Car companies are taking a variety of approaches. Some, such as BMW, Volkswagen and Nissan Motor Co. 7201.TO -0.41% are using their own engineers. But Daimler AGDAI.XE +0.33% will turn over all software development for its electronic driver-assistance features to Finland-based Elektrobit Corp. EBC1V.HE +6.59%

Technology companies such as Google Inc. GOOG +0.86% also are working on this technology. The Internet company has about 20 driverless research vehicles that it is testing on public roads in California and elsewhere. Chris Urmson, the head of Google’s automated-car development team, says the company remains focused on research and science and that the business model for the technology hasn’t been fully established.

“We are creating software and algorithms with the ability to process massive amounts of data quickly and effectively, and keep everyone safer in the process. We are a computer-science company and it seems like a good fit for us,” he says.

The efforts could be indirectly accelerated by the National Highway Traffic Safety Administration, the DOT agency that writes and enforces federal vehicle-safety standards. The agency is expected to decide in the next five months whether to mandate the use of connected car technology in new vehicles produced after a certain date, a government official familiar with the matter said. A decision regarding trucks is expected next year.

Such rulings would not only put increased pressure on traditional auto manufacturers, but create a market for companies developing technology in the arena.

David Hall, the founder and chief executive of Velodyne Acoustics Inc., which makes the laser sensors that gather data for Google’s automated vehicles, says government policy on connected cars could help drive down the price of his products, which now sell for $75,000 to $85,000.

“Everyone says I should make cheaper sensors, but I am not going to do that until I believe the market is two or three years away from developing,” he says. “It is a chicken and egg problem.”

“Connected cars aren’t the same thing as automated cars, but at some point they converge,” says Bryant Walker Smith, a lecturer at Stanford Law School and a fellow at the Center for Automotive Research at Stanford University.

Some features of automated cars, such as dynamic cruise control, which adjusts to the speed of nearby vehicles, already have been introduced into production vehicles. Some experts say it could be 20 years before fully automated vehicles are on the road, although more automated features will be introduced along the way. The full benefits of automated cars require coordination of vehicles on the road, though. For example, engineers believe that getting vehicles to travel together on the highway in closely packed caravans could boost fuel efficiency.

Such coordination requires self-driving capability as well as vehicle-to-vehicle communication.

“From the technological point of view, more sensors that enable vehicle-to-vehicle communication would be great. That would make the problem [of automated driving] a lot easier. You would not need to look around the corner to know that a car is coming, or what kind of car it is, or its speed,” says Maarten Sierhuis, who runs the Nissan Research Center Silicon Valley in Sunnyvale, Calif.

The federal government’s interest in the technology is rooted in safety and environmental issues. There were more than 30,000 fatal traffic accidents in the U.S. in 2010, and tailpipe emissions are the largest man-made source of carbon dioxide, nitrogen oxides and methane, according to the DOT.

The department has been working with car companies since 2002 to assess how high-speed wireless-communications networks and vehicle positioning systems could be used to help drivers avoid crashes.