Bridging the Divide: Autonomous Vehicles and the Automobile Industry

Jack Caporal – Former Fellow, Scholl Chair in International Business
William O’Neil – Intern, Scholl Chair in International Business
Sean Arrieta-Kenna – Intern, Scholl Chair in International Business

The automobile industry is in the midst of a technology-driven revolution. The industry transition to autonomous, connected, electrified, and shared (ACES) vehicles has the potential to boost technological development and economic activity in the traditional manufacturing cities of the United States, bridging the divide between high-tech innovation hubs and regions historically known for industrial economies.

With the right policy environment, important investments, and effective retooling of existing advantages and relationships, traditional automotive manufacturing clusters can be at the forefront of the technological revolution within the auto industry and seize the growth and employment opportunities that it brings. The Mahoning Valley in northeast Ohio offers a useful case study of economic revitalization through coordinated investment to transform an existing local infrastructure and workforce to the growing electric vehicle (EV) and autonomous vehicle (AV) sectors. Once a hub for steel production, the Mahoning Valley has rebranded itself as “Voltage Valley,” now home to hundreds of new-energy tech startups and one of the largest electric vehicle battery plants in the country.

Due to the massive digitization of today’s cars, vehicle manufacturing should be considered a process that takes place in the physical and digital world. Imaging, robotics, navigation, connectivity, data processing, and artificial intelligence broadly are the building blocks of AVs. The importance of software development, which is increasingly recognized by automakers transitioning to producing smarter vehicles, will lead to the formation of economic clusters in cities like Pittsburgh which focus on critical technology development. Pittsburgh is the home of multiple successful AV startups, many of which are well connected to Carnegie Mellon University, demonstrating the role that higher education can play as a pipeline for emerging industry talent outside of traditional manufacturing hubs.

The clustering effects evidenced by the Mahoning Valley and Pittsburgh case studies demonstrate how policymakers can incentivize the scaling of AV development to unlock social benefits. AVs would benefit the general population by improving road safety, ameliorating traffic congestion, and reducing the emission of greenhouse gases and other pollutants. For individuals, AVs offer significant efficiency benefits: increasing access to ridesharing and public transportation, as well as reducing costs and travel time due to the route optimization and traffic management functions of artificial intelligence (AI). While improvements in traffic management and road safety would be immediately tangible, some benefits, like the reduction in emissions and average vehicle miles traveled, would likely become apparent only after a longer period of time.

The benefits of ACES vehicles are broad, especially for cities not traditionally considered technology hubs. However, to fully realize these benefits, the auto industry must work with policymakers and the general public to establish a favorable regulatory environment and build consumer confidence in artificial intelligence and AVs. Full-scale deployment will facilitate the potential of ACES vehicles to bridge the gap between the high-tech hubs and the rest of the United States. Obstacles to broader AV deployment and how to overcome them will be addressed in a forthcoming paper.