Looking under the hood at Local Motors’ demise amid autonomous-shuttle headwinds

If chips were the most acute challenge, the most peculiar complication Local Motors endured involved federal rules.

A 2015 law, Fixing America’s Surface Transportation Act, contained provisions that limited the ability of companies that had not previously produced vehicles that complied with Federal Motor Vehicle Safety Standards to test and deploy their creations.

Newcomers such as Nuro and Local Motors instead could apply for exemptions from the standards to get larger numbers of vehicles legally on the road. But the exemption process has proved cumbersome: It took U.S. Department of Transportation officials 18 months to process and approve Nuro’s application, which remains the only exemption request granted across the industry.

Local Motors’ Olli vehicles were not eligible for the exemptions, the second executive said, because they weighed more than 4,000 pounds.

Meanwhile, a federal regulation called Part 591, created to help foreign companies import exotic sports cars such as Ferraris and Lamborghinis, was used by European autonomous shuttle manufacturers EasyMile and Navya to ship their vehicles to the U.S. without needing to conform to Federal Motor Vehicle Safety Standards.

The only way for Local Motors to deploy its shuttles beyond closed-campus environments and on U.S. public roads, then, was to become an importer itself. Thus began a frequent and onerous odyssey: From its Knoxville, Tenn., factory, Ollis were shipped north to Detroit, where they were transported across the Ambassador Bridge into Windsor, Ontario.

Local Motors would then file an application with the Department of Transportation and U.S. Customs and Border Protection to import the vehicles, which would be quickly approved. Without any work done to the vehicles in Canada, they’d be taken back across the bridge and legally imported into the U.S. under Part 591.

Discussions with federal officials from both the Trump and Biden administrations ultimately did not resolve the regulatory entanglements, though NHTSA has since filed a notice of proposed rule-making that could soon ease the burden on companies with nonconforming vehicles. It is expected to be published in the Federal Register in April.

Local Motors delivered Ollis for 18 months via that logistical process, according to the second executive. It added an approximately $15,000 cost to each shuttle sold, which came on top of the retail cost of $275,000 to $325,000.

It wasn’t a decisive blow, but the regulatory burden didn’t help with penny-pinching public transit customers, and it exacerbated delays.