Why the California DMV Crushed Uber Technologies' Self-Driving Test

Registration revoked: California's Department of Motor Vehicles ordered Uber's self-driving cars off the road, at least for now. Image source: Uber Technologies.

Continue Reading Below

Well, that didn't last long: After just one week, Uber Technologies' self-driving pilot program in San Francisco has been shut down.

Uber ended the program late on Wednesday after the California Department of Motor Vehicles (DMV) revoked the registrations on all 16 vehicles involved. It was the latest move in an escalating public dispute between Uber and the DMV over the state's permitting rules.

What happens now?

What Uber and the DMV have been arguing about

California requires that companies testing self-driving vehicles on its public roads apply for a permit. The application process is straightforward and mostly involves the payment of a $150 fee. Companies holding permits are required to report any crashes and any instances in which a human driver takes over a vehicle during testing.

That last requirement may have been the sticking point for Uber, which refused to apply for the permit.

Anthony Levandowski, the head of Uber's Advanced Technologies Group, argued that because the company's self-driving system is an early prototype and it requires test drivers to keep their hands on the steering wheel at all times, it's essentially no different from driver-assist systems already on the market -- and those are exempt from the requirement for a permit.

Here's what Levandowski said during a conference call last Friday, after the DMV formally informed Uber it was in violation of the permit requirement:

This was not inconsistent with Uber's past practices of jumping into a new market first and then working out the legalities later. But needless to say, the DMV didn't buy it.

What the DMV said about its action

The DMV said it revoked the registrations for all 16 Uber-owned vehicles involved in the test after "it was determined that the registrations were improperly issued for these vehicles because they were not properly marked as [autonomous driving] test vehicles." It again invited Uber to seek a permit, after which it would be allowed to resume its pilot program.

The move followed several less drastic steps by the DMV to warn Uber that it was wading into trouble. The DMV's chief counsel sent Uber a letter last Friday demanding Uber cease its pilot program until it obtained a permit, but after Uber dug its heels in, the DMV apparently felt it was time to escalate.

What happens now?

Uber said it will look to redeploy its prototype self-driving cars somewhere else. But it also said it's "100 percent committed to California," its home state, and would continue to push for rules it considered "workable."

Meanwhile, its attempt to bring cutting-edge service to its home state is on hold -- at least for now.

10 stocks we like better thanWal-MartWhen investing geniuses David and TomGardner have a stock tip, it can pay to listen. After all, the newsletter theyhave run for over a decade, the Motley Fool Stock Advisor, has tripled the market.*

David and Tomjust revealed what they believe are the10 best stocksfor investors to buy right now...and Wal-Mart wasn't one of them! That's right -- theythink these 10 stocks are even better buys.

Click hereto learn about these picks!

*StockAdvisor returns as of December 12, 2016.The author(s) may have a position in any stocks mentioned.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.