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Today I’m pleased to offer readers my interview of Eric Lombardi, a candidate for the leadership of the Ontario Liberal Party, and (if he succeeds) for the office of Premier of Ontario. The material that we discuss is separated by caption, as follows; readers may wish to skip ahead to their favourite subjects.

• Managing Decline or Building Abundance

• Ribbon-Cutting vs. a Manufacturing System

• The Housing Theory of Everything

• Bringing Down Construction Costs

• Rail: Speed, but Also Coverage

• Road Pricing

• Driving Automation

• Rural Areas, Remote Areas, and the North

• Energy and Nuclear

• In Conclusion

The reason I am giving readers permission to skip ahead is because this piece is lengthy, about four times the length of a typical Changing Lanes piece. But I am nonetheless presenting it in full, for two audiences.

If you live in Ontario, you will find it interesting as a vision for the province’s future: one potential leader’s account of how to build a more prosperous province. If you live anywhere else, you will also find it interesting, as an example of what the abundance agenda looks like, translated into a campaign frame, and defended by someone who aims to win votes with it.

What follows is a conversation about why housing costs what it does; a theory of why Toronto builds transit at four times the cost of Paris; a case for high-speed regional rail, road pricing, and driverless cars; and a plan to make people consume more electricity rather than less.

Changing Lanes is a non-partisan newsletter, and we do not endorse any candidate of any party. But we are interested in any candidate who thinks that innovation, technology, wise policy, and good institutions can make the future better than the past. Lombardi seems to believe this, and to have thought deeply about how the abundance agenda can succeed in his particular context. I am confident that readers of this newsletter will find what he has to say interesting.

Lombardi and I spoke on 1 June 2026. The transcript of our remarks has been lightly edited for clarity.

Managing Decline or Building Abundance

Andrew Miller: It’s a pleasure to speak with Eric Lombardi, the founder of More Neighbours Toronto, Toronto’s foremost YIMBY organization. He has stepped back from that work to explore the leadership of the Ontario Liberal Party — so there’s a chance that, in a few years, he could be the next Premier of Ontario. I won’t put words in his mouth, but it seems to me that Lombardi’s interests are very abundance- and YIMBY-coded, which is the very philosophy we endorse here at Changing Lanes. So I reached out, and he graciously agreed to sit down and talk about his vision for mobility in Ontario. Eric, it’s a pleasure to speak with you. Thank you for agreeing to speak with me.

Eric Lombardi: Andrew, it’s a pleasure to be here. My exploratory will soon become a campaign, so stay tuned over the next week or two — perhaps by the time we release this, I’ll be formally in the race. [Note: Lombardi formally declared his candidacy on 9 June 2026, a week after we spoke.]

Eric Lombardi

AM: That’s breaking news. It’s no longer an exploratory campaign… it’s happening! Very exciting. Let’s talk about your vision for Ontario. I think the place to start is what I’d call the spiciest thing you say: that Ontario is managing decline. Long-time readers of Changing Lanes will know I’m against what I call genteel decline, which is what I think a lot of what happens in Toronto and Ontario amounts to. I wonder whether we mean the same thing, but I won’t tell you what I think. When it comes to how people and goods move around this province, what do you mean by decline, and what’s the alternative?

EL: What I mean by decline is just the real facts of how our economy has performed over the last 25 years. Once you remove immigration and inflation, our economy has been one of the worst-growing in the entire developed world. We’ve had enormous productivity challenges, and over this time we’ve seen increasing dysfunction in the state’s capacity to deliver the goods and services that produce a higher quality of life. The result is that living standards for ordinary people have fallen. And the biggest part of this is how much of the burden has been placed on the next generation, in the form of what I call a milestone recession: the modern economy has made it increasingly difficult for young people to hit the traditional milestones of life — finishing school, getting a good job, buying a home, starting a family. All of them are shifting further into the future. While this is a problem globally, much of it can be explained by economic trends specific to the province that have worsened those global factors.

We also need to understand how decline gets managed by politicians. It’s been bipartisan across the spectrum here in Canada: the adoption of communications-forward politics rather than outcomes-forward politics. So even as things function less well, there’s always an air of optimism — we’re doing things, we’re building things, we’re growing the economy, we’re creating jobs. But the numbers don’t hold up to the language.

Ribbon-Cuttings vs. a Manufacturing System

AM: I spent eight years with the Government of Ontario as a civil servant, and I came away with a certain cynicism. The attitude in that era — I won’t point fingers at any particular premier — seemed to be that our job was to write a cheque, so we could then hold a press release or an event and say we’re spending X tens of billions, Y hundreds of billions, on this problem. And once the press release was out, that was it. Whether the money achieved any of its goals, whether it was even the right thing — none of that mattered. What mattered was being able to say you’d done something.

EL: In politics we love to announce big cheques, and we like to talk about all the jobs we’re creating. We don’t like to talk about the jobs we’re destroying by taxing those cheques to pay for the spending. This thinking about trade-offs has become almost entirely absent from our politics, and that’s one of my motivations for running. What upsets me, specifically in infrastructure — and we’ll talk a lot about transportation today, but it’s just as true in energy — is that we think in projects, because a project is something a politician can announce. And often the projects we pursue don’t start from a technocratic ranking of what would optimize value for money; they start from what politicians want to draw on a map to please which voters, and where.

So instead of thinking about how we build as a project, I want to orient Ontario toward thinking about how we build as a manufacturing system. What are the networks we want to reach in 25 or 30 years? Then how do we standardize designs — stations, below-grade, at-grade, viaduct-based rail, BRT — so that we’re consistently building toward a target over time? That’s how the great rail infrastructure systems around the world are built. Then you prioritize which projects and extensions come next. And the lever for government isn’t which projects get pursued; it’s how heavy a foot we want to put on the gas by capitalizing that process. That’s a very different perspective on growth and transport than what we see today.

The Housing Theory of Everything

AM: I want to get into that closely. But before we do — you mentioned energy, which is one of our minor themes here at Changing Lanes, so if you want to talk nuclear or renewables, we can. Before that, though, the area you’ve been strongest on, and that we spend the least time on here, is housing. So let’s warm up with that. Something I like to say — I didn’t invent it — is that housing policy and mobility policy can’t really be separated. You can’t build housing without a plan for how the people living there will move, and you can’t build a mobility system without thinking about the jobs, homes, and commercial uses you’re trying to connect. What’s your housing vision, and how does it relate to your transport vision?

EL: To be cheeky, I’d say you actually can separate them, but you create a lot of problems for yourself, and that’s part of why we are where we are. Just because you can doesn’t mean you should. Getting ahead of transportation and infrastructure policy to enable housing is incredibly important. But let me start with the big picture, then turn to my housing agenda.

I subscribe to the Housing Theory of Everything, which many of your readers will have seen in Works in Progress, out of the UK, a few years ago — I think it was Sam Bowman [Note: it was, with John Myers and Ben Southwood]. When an increasing share of people’s income goes to rent — whether that’s paying a landlord or paying higher interest on a mortgage to afford a suitable home — they’re not saving, they’re not investing, and they’re not spending. So the economy is deprived of all the healthy activity that drives growth, competition, investment, and higher wages. When you look at what’s happened with housing over the last 25 years, and then at our slow growth and the unhappiness young people express, these things are related. If you have one dial to twist to re-platform the province for growth, it’s fixing our broken housing system.

How do you do that? There are five areas. First, the rules around permitting and land use. Ontario municipalities set land use, so even though Mississauga’s and Toronto’s zoning codes look similar on the surface, you have independent policymakers deciding what studies a multi-family project needs, what’s allowed in each designation, all the bylaws. It’s too complex. I’d provincialize the setting of rules and make municipalities the appliers of rules — “provincial residential zone two applies in these areas” — rather than reinventing the wheel 440 different times. The same is true of the application process itself: in the GTA the average time to get a building permit is over 20 months; in places like Denmark it’s closer to 60 days. That’s not a sign of a functioning system. It’s a sign of a system so complex and discretionary that, even when all the rules are followed, people still believe the outcome is being corrupted. That’s a big problem.

Second is the building code. A lot of what we build is ugly and uncanny. Our code doesn’t distinguish between a four-storey building and a 60-storey one. If we reformed it — single-egress design, European elevator standards, updated fire-code standards for the built form, the way housing gets packaged — we could produce much nicer layouts at much lower cost, especially for the new urban places we’re trying to build. This is something a lot of YIMBYs miss: beauty should be a consideration in how we grow. When we make the case for growth, we should explain why it’ll be nice and beneficial for people — not just “housing is housing, it doesn’t matter how ugly it looks.” It does.

Third is taxes. American readers may not appreciate how much tax Ontario puts on new housing; there’s nowhere like it in the world. Until recently, when governments started to address it, housing was taxed more than cigarettes or alcohol — more than any other product or service in North America, to the tune of about 30% of the cost. I’d abolish all taxes on new housing construction, whether it’s land transfer tax (a tax on the exchange of housing), development charges (an upfront tax on every new home), or HST (a sales tax). These are unproductive taxes that create a like-for-like price gap between an existing home and a new one, which effectively forces buyers to speculate that existing-home prices will keep rising to justify buying new supply.

Fourth is non-market housing, which has been an abandoned part of the mix in Canada for about 40 years. We’re starting to come back to co-housing, co-operatives, not-for-profit and public housing. All of these need to be part of the mix and can complement private-market development. We should be talking about somewhere between 10 and 20% of all new housing being non-market in some form.

And fifth — we have to do right by young people, and by those who bought in the last 10 years and might face economic insecurity if house prices fall. For young people, we need to make housing affordable again. I think we should allow smaller down payments for first-time buyers — 10% on a CMHC-insured mortgage — to lighten that burden. If you’re young and could retire before you’d pay off your mortgage, you should be able to buy with a longer amortization, say 35 or 40 years, because you expect higher income later in your career; when you remortgage, you can always move to a faster payoff. Sometimes, when you’re trying to start a family, affording the home to start it in matters more, and that can’t be ignored. I’d also have the government give zero-interest loans of up to 5% toward the down payment for families with kids under six, because home ownership is something most families should be able to access and aspire to, and it’s good for kids and for society. And I’d give targeted renter relief to people under 35 and to families with kids under six, so they can save for that investment. We have to make it easier for young people to buy that first home earlier, if we want them to be able to think about starting families earlier too.

Then we have to do something for those who bought in, say, 2020 and might be out of equity, or might not have enough saved if they need to move for a job. You don’t want them trapped. We need to prevent downward mobility so people have economic confidence going forward. And if, as Premier, I’m going to say we need lower home prices for housing to be affordable — which no politician in this country seems willing to say — then I also need to be willing to say to people who couldn’t wait for government to make the right choices, and who now find themselves out of equity or in a debt trap: we have solutions for you, you have a great future, we’ve got your back.

Bringing Down Construction Costs

AM: I didn’t interrupt you there, because I wanted readers to see just how in the weeds you are on housing. You’re not a fly-by-night candidate on this; you’ve thought very deeply, and you’ve got a strong program. But given all that, what’s your thinking on mobility? We’re going to create a lot more infill housing and smart new communities — tell me how we’re going to move all the people who live in them.

EL: There are a couple of problems to solve. The first is how we build. Ontario has become uniquely inept at building infrastructure, both on time and at globally competitive cost. I know some of these challenges exist in the United States, and more broadly across the Anglosphere —

AM: Let me interrupt to say that I know you’re very influenced by the work of Alon Levy and the Transit Costs Project. Some Changing Lanes readers will know their work. This ineptitude is new. There was a time in my lifetime when Ontario, and Toronto, were some of the best builders in the Anglosphere on a cost-per-kilometre basis for new rapid transit. In your view, what changed? What’s the problem, and how do we fix it?

EL: Number one, we shifted from largely public-led infrastructure development to consortium-based public-private partnerships. When the TTC managed delivery of the Sheppard subway, or the Yonge North extension, we were closer to $300–400 million per kilometre — and we had nice stations that people thought were overdone and a waste of money. If we could get back to that inflation-adjusted value, it would be a miracle, because with the Ontario Line — and even the Eglinton LRT, which isn’t really rapid transit — we’re closer to $800 million, and over a billion dollars per kilometre, a million dollars a metre, to build now. That’s crazy. Politicians wanted to feel they could better manage costs by allocating risk to a third party, and at the time there was a sense that could work. But governments failed to recognize that you have to think about the private sector in terms of monopoly and competition dynamics. Where you want to use the private sector is for commodity services that can be procured competitively, because many providers can bid. What you want to keep in the public sector is monopoly expertise — which is harder to identify, and which you want to endure so it can learn over time. We broke that model.

We also uploaded responsibility for infrastructure to Metrolinx, which is also the owner and operator of GO bus and rail. My understanding is that Ontario would now be inadmissible to the EU, because we have an infrastructure builder that is both the operator and the builder. And we’ve seen, with arrangements like Deutsche Bahn on GO electrification, that it doesn’t work. So I’d reform Metrolinx, including separating GO operations from the infrastructure-development side.

AM: To put my cards on the table, Eric: I was in the Government of Ontario when the GTTA, as it was then called, was founded, and later when it merged with GO Transit. It’s not my world anymore, but I was there, and I’d say it never could have worked to combine a long-range planning function with an operator. GO Transit are operators; they had their own planning department, and they didn’t want to think about what was happening in other areas. And with the Deutsche Bahn situation, it’s clear they think running a diesel hub-and-spoke service for the morning and evening peaks out of Union Station is a perfectly fine mission, and why are you wasting their time asking for anything else? That blunted whatever force the former GTTA could have had as a long-range planner and as a way of prioritizing project lists. So there’s a great deal of merit to what you say.

EL: The first thing is to restore the healthy function of our institutions, because we’re spending four times, on a unit-cost basis, what others spend. Line 16 in Paris — fully underground, fully automated, built for the Olympics — came in at the equivalent of about $250 million per kilometre. We’re building the Ontario Line at $1.1 billion per kilometre, and $1.7 billion once you bundle in all the operational and financing pieces. That means we build far less than we should. Until we fix that, it’ll be very hard to dig ourselves out of congestion, because we need to build rail in the GTA the way China has built it in some of its major cities — we’re so far behind, having basically stopped for 50 years, and now everyone’s congested.

So first, fix how we build, so we can build more. Then, how do you approach building more in general? Number one, we need long-term plans for what we’re building, both for interconnectivity across the province — and I’m not sure you’ve had a chance to look at my high-speed rail proposal, which we can talk about — and for Toronto, the GTHA, Hamilton, Niagara, Windsor, London, Ottawa, Kingston, and even small centres. What’s the vision we’re building toward? How much transit will we build over the next 25 years? Once you have that vision — and even if I’m going to draw some lines on a map, it ultimately needs to be owned by an independent institution making prioritization decisions — you set up a manufacturing process to build it out. So instead of a politician like me cutting a ribbon at every announcement, it’s: our budget allocates $10 billion a year for rail transit expansion in Ontario, every year, in perpetuity, so we can build out the plan. That’s not a glamorous announcement, but it will get us far more transit if we think like a process.

AM: It’s absolutely true. The lesson from Alon Levy is that we need more state capacity — fewer consultants managing consultants. I’ll say that I’ve also been a consultant in that world, and I’ve seen the inefficiency that makes you shake your head. This isn’t a system anyone would have designed or chosen; it’s one we’ve fallen into. But let’s talk about rail.

Rail: Speed, but Also Coverage

AM: In some circles I’m the most hated man in Canada, because I’ve expressed strong skepticism about Project Alto — high-speed rail from Toronto to Quebec City, by way of Trois-Rivières, Montreal, Ottawa, and, God save us, Peterborough. One reason I think that project is ill-founded is that, to have strong high-speed rail between major centres, you need strong regional rail feeding those hubs; otherwise you’re just replicating, at great expense, the air travel we already have. So I was intrigued to read your proposal, because you seem to be proposing that Ontario, on the provincial side, build out that regional rail network — not just commuter rail into Union Station, but something much grander. Say more about your vision for Ontario rail.

EL: I’ll plug it: if you go to ericforolp.ca/HSR, you can explore the proposal. Let me share it here so you can see it.

I put this together because our premier, Doug Ford, has proposed spending upwards of $100 billion to tunnel four extra lanes under Highway 401 — already the widest highway segment in North America, I believe. I wanted to ask: what could we build with that kind of money if we put it into high-speed rail and made reasonable cost assumptions? So here’s an overview — the travel times you’d expect between destinations, and the cost assumptions for stations and for each segment. An expensive segment like Pearson to Toronto runs $170 million per kilometre, because it’s either viaduct or, in places, underground; over flat land in southwestern Ontario, it’s closer to $75 million. For reference, Project Alto assumes $60–90 million per kilometre, at least in its public announcements. You’ll also see the speed assumptions — a top speed of 320 to 350 kilometres an hour, which again aligns with Alto. The assumptions are all in the “why” section, along with the station costs I’d expect. Otherwise, you can explore the map. Anything shown as a dotted line isn’t included in my cost assumptions; everything else is. So for the segment coming through Peterborough to Toronto, I’ve actually added a stop at Oshawa — I’ll get to why — and I’ve assumed all the additional costs from Oshawa to Toronto and across the rest of southern Ontario.

Two things need to happen with Project Alto. First, we shouldn’t be talking only about the Quebec City–to–Toronto segment, because then we’re back to treating it as a project: we’ve hired a consortium, and that consortium now says it’ll be six years before shovels are in the ground. What we should pursue is the network we want over the next 25 years, and then get started fastest on the fastest segment. Look at how Spain built its high-speed rail: they didn’t start with Barcelona–Madrid, because it was more complex. They started with a simpler segment — Sevilla–Madrid, I believe — so they could learn and keep building toward the longer-term network. Second, you need to continue it to Windsor. I know some business cases suggest that doesn’t make sense, but over a hundred years of provincial economic development, it absolutely does.

The real value of a network like this is connecting the Greater Golden Horseshoe into one contiguous mega-region, from an economic and labour-mobility perspective. Right now, if you work in Kitchener–Waterloo, it’s an hour’s drive to Hamilton — some people do it, but it’s rare for these two centres, with about a million people around each, to participate in each other’s labour markets. With a connection, you could get between them in about 20 minutes, and that opens a huge world of opportunity. Same for Oshawa to the Pearson economic zone, the second-largest employment zone in the entire country. And the Toronto–Pearson connection matters because it links people to the airport, and might resolve some of our other Toronto debates. So the logic is: you can go from Ottawa to a tourist destination like Niagara Falls; from London, be sipping wine in Niagara-on-the-Lake in an hour and a half; live in Barrie and commute to Hamilton in reasonable time. Everyone in the region can reach far more employers, which means they can bargain for better jobs without the cost of moving — and employers can locate in Hamilton, Kitchener, or Oshawa and still attract talent from across the region. The whole prospect of building and investing in Ontario gets better.

AM: This plan appeals to me, again, because of my heterodoxy on rail. I would much rather have a good, fast, reliable connection between Toronto and Kitchener–Waterloo than to Montreal — because I already have a way to get to Montreal or Ottawa quickly: I take a plane. There’s no quick way to get from Waterloo to Toronto at 7:30 in the morning for a 9 a.m. meeting. You either drive — and you’re really rolling the dice — or you don’t go. It’s uncertain and unreliable, and there’s no alternative, because GO service doesn’t help. This would give the people of Ontario something they don’t have right now.

EL: I’ve heard the objection: doesn’t GO Regional Express Rail solve some of this? It’s not solving the same problem. High-speed rail makes the destination-to-destination speeds incredibly quick; what you want alongside it is strong local transit connected to it, so accessibility around each place is better too. Everywhere we put a major high-speed line, we should also be thinking about the local rapid-transit networks. Then it stops making sense to take the 400 down to the 403 from Barrie to Hamilton — you’d never do it, because it’ll always be faster and cheaper to take the train, then a bus, then maybe an Uber for the last mile. This unclogs so many of our roads, which is a huge problem in Ontario, and it creates incentives for investment and all the other things that make people’s lives more convenient.

I’ll make one more point: I’ve proposed an alternative to Project Alto here, too. What we want is to connect more of the province itself. The existing 401 corridor, which also carries part of the VIA line, has several smaller centres you can run regional service to. We should have the mindset that we’ll run both regional and express services on this network. Then it becomes possible to work in Ottawa and live in Kingston, because you only need to go in every two or three days. Interconnecting this region will probably see more traffic than a line from, say, Windsor to Montreal — and I don’t think that logic exists right now in how we think about these projects.

AM: My view — that regional rail matters more than intercity high-speed rail, that the one depends on the other — hasn’t been popular. But your plan is exactly what I’ve been arguing for; it’s very exciting. Let me add, since you raised it, that this is entirely complementary to GO electrification, which turns the GO system from a commuter rail into more of a “surface subway” — I don’t love the term, but it’s the one people use — with much shorter headways and more in-between stations, without increasing travel time, which allows for a lot more infill development. GO electrification is, I’m obliged to quip, off the rails: badly overdue and expensive. What’s your diagnosis of the problem, and how would you fix it?

EL: The biggest problem in Ontario is the same across almost every sector: a distinct lack of curiosity, from our government and our leaders, about the problems they’re tasked with solving. A month or two ago, both Prabmeet Sarkaria, our Minister of Transportation, and Doug Ford were asked about the tripling of transit infrastructure costs in Ontario, and it was, “Yeah — COVID and inflation.” You’ve been responsible for this for years, and you haven’t spent any time thinking about why these things don’t work? Here’s the problem: Metrolinx doesn’t have a true independent mandate. Most projects are contrived in ministry offices first, before they go to that supposedly separate institution. When you don’t have a mandate for institutional independence to actually make decisions, you get a lot of indecision — what I call decision-based evidence-making. And that ends up as squandered cost and time. So there has to be political will and pressure to make decisions, and to push decision-making down to independent institutions so they can move faster.

AM: I have to be circumspect, so I won’t go into detail, but from someone who was on the inside: your diagnosis is correct.

EL: One of the funny things about becoming an advocate — first with More Neighbours Toronto, and then chairing Build Toronto, the growth-oriented arm of the Build Canada movement here — is that people who are part of these systems come forward. I’ve talked to consultants and public servants. Even the consultants say, “People blame us for the costs, but we’d rather be doing twice as much; half of what we do is bureaucratic compliance nonsense, and we don’t get to do the things we want to focus on.” With More Neighbours, people would come to me from the Ministry of Municipal Affairs and Housing, or from the City of Toronto: “Can you advocate for this? It drives me nuts, but I can’t put my name to it.” I see my campaign as a platform for everyone who sees the dysfunction and knows the solutions, but who hasn’t seen anyone willing to spend the political capital to make the change. I’m running to do exactly that.

AM: So GO electrification is part of a root-and-branch reform of Metrolinx.

Road Pricing

AM: Let’s move from transit to another matter: road pricing. I’m on record calling it the number one policy no one wants to implement but everyone loves once it’s in effect. I avoid “congestion pricing”; I don’t even like “decongestion pricing”; I prefer “road pricing.” What’s your view?

EL: When I chaired Build Toronto, we published a memo on congestion pricing. For a while I thought I might avoid going on the record in support of congestion pricing. Then I realized the cat was out of the bag and I’d be attacked with it anyway, so I might as well defend a good idea. What we should focus on is the outcome people want: to be able to drive places reliably. If you brought in a pricing regime that still left people stuck in traffic, you’d get a lot of anger. But done properly, you won’t get all the traffic. So I’d employ congestion pricing in the GTHA, on our highways, to the extent needed to maintain a minimum speed of 50 kilometres an hour. That makes the highways their highest and best use at the times people need them. I recognize there are people who rely on driving for their jobs and their work, and lots of lower-income Ontarians who don’t have much choice but to drive — and there are things we can do for them. But what gets missed is that people don’t just value their money; they value their time, and we put no priority on that. A business paying a trucker $30 to $50 an hour, who’s going to spend an extra hour crossing the GTA, would have needed to pay maybe $20 to get there twice as fast. The economics work for those users too: they get to do more, move more.

Everywhere congestion pricing has been tried, it has worked, and everywhere it’s been tried, people have been loath to take it away. There’s a challenge here because of how people feel about the 407. The price shock on the 407 has made a lot of people angry, because it’s become a privileged highway. But here’s what people don’t appreciate: if we bring in congestion pricing that’s much lower than the 407 on our other highways, the 407 won’t be able to charge its steep prices to lure people off the rest of the network — so even the 407 will be forced to compete and get more competitive. What we should also learn from the 407 is that there’s private demand to own and operate highways. So for projects like the Bradford Bypass or the 413 — which have attracted a lot of controversy about whether they’re worth the government spending money on — I think the province should do the pre-permitting and set the design standards, but if the CPP or a pension fund wants to own and build a competitor to the 407, I’d love nothing more than for them to have the right to do that.

AM: I’ve written about this too, and I’m entirely in favour of managed lanes of the sort you’re describing. You just must build into the contract what you said: that the purpose is to set rates as low as possible while keeping the highway moving. If it’s just revenue collection, it leads to perverse incentives. But if the goal is to keep the lanes moving — you didn’t say it, but I assume this charge would be dynamic. At 3 a.m. on a Monday it’s low or zero, because there’s no demand; at 3 p.m. on a Thursday, as rush hour begins, it’s quite different. It reflects local conditions.

EL: Yes. The price should only reflect what’s required to keep the road moving at a minimum of 50 kilometres an hour. That’s it. People ask whether you’d use the money to reinvest in transit — yes, broadly, as part of the pool, but the goal isn’t to generate revenue for transit. The goal is mobility: making sure people can rely on the speed of the highway network.

AM: It’s not a revenue centre; it’s a transport system that needs to be managed to be most efficient as a transport system. We’re all technocratic wonks here, so we’re 100% on board with road pricing as a tool to move people and goods most efficiently.

Driving Automation

AM: Let’s talk about automation — probably the topic my readers are most interested in. We’ve flirted with automated vehicles in Toronto. We’ve got Gatik, quietly running automated trucks for Loblaw in parts of the city. We’ve got Waabi, which isn’t really doing anything here but was founded here, with big plans for Texas and elsewhere. Magna ran a pilot that was embarrassing and didn’t succeed. We had delivery robots briefly in the Distillery District before we kicked them out — it’s never been clear why, other than that they were different from the status quo and therefore mistrusted. But you lived in San Francisco while Waymo was building up, so you have a completely different perspective. What’s your take on automated vehicles, and what role would you like them to play in Ontario’s mobility system?

EL: Let me take a step back. With generalist, autonomous robotics — not just vehicles; I’ll use “robotics” — it’s almost like 1895: we’re seeing the combustion engine at the World’s Fair, but no one thinks they’re selling their horse and buggy any time soon. By 1915 there’s a mass trend toward the automobile. That’s where we are with robotics generally. And I don’t think there’s a jurisdiction with more of a right to win in this space than Ontario over the next 30 to 50 years. If we operate from fear, we’ll miss an enormous opportunity. Why? We have five or six factors in our favour.

First, we genuinely have a major centre of AI in this province. A decade ago, on the Deloitte Fast 500 fastest-growing companies in North America, Canada had about 10%, matching our share of the population. This past year we had 23%, and over 15% of the total were in Ontario — because the sector is here.

Second, we have a financial capital that augments it; New York and San Francisco can claim that too, but we have other things they don’t.

We have a resource supply chain in Northern Ontario — critical minerals and more — that feeds the physical supply chain for automotive, machinery, and mechanical engineering.

We have an automotive industry far larger than almost any competitor’s.

And we have a clean electricity grid; if we get electricity, state capacity, and industrial policy right, it could be the most competitive energy sector in North America by far.

All of this means that if we understand what it takes to produce robotic systems — vehicles and machines — for export, Ontario could be the Western leader. And we have maybe five years to capture the opportunity.

So Ontario needs to change how it permits the use of autonomous machines — vehicles, robotics; heck, I think it would be charming to have park robots that maintained our public spaces better. We need to be deliberate about permitting the ones already operating, as most of the world does, and we should be publicly clear that we’re willing to procure generalist robotics for other uses in our society. We need to move our regulatory system from “no, with exceptions” to “yes, with exceptions.” That’s the grand goal of how I view robotics, in vehicles and everywhere else.

AM: Recently, Mayor Chow of Toronto, her press secretary remarked that Waymo is only welcome in the city to the extent it won’t contribute to Uber drivers losing their jobs. So the attitude is guilty until proven innocent: this technology is dangerous, and until we can defang it of any threat to anyone, it’s not welcome. To me this is a quintessentially Canadian attitude: we prefer not to take risks, not to do anything that could, as Eli Dourado likes to say, make anyone uncomfortable or cost anyone a job. How do you challenge that broader fear of the future that seems so common here?

EL: If we meet the future with too much fear, we’ll never realize the opportunities it offers, or the jobs it could create. Whenever I hear this, I remind people that in 1850, 95% of us were farmers. Do you want to go back and work the fields? No. We now have a far greater diversity of more rewarding, higher-value, higher-productivity jobs, because we freed ourselves from low-value labour. That didn’t mean we ran out of food; it meant we got better at producing it with less human input, so we can consume more, and our material well-being goes up. So when we say we can’t say yes to Waymo, what that means is that fewer people can get around the city, because Uber has to pay its drivers to drive. With autonomous vehicles, the cost of mobility comes down a lot — which means more choice, more commerce, all the things that add to our lives.

In economics there’s a great example from the semiconductor industry: the Jevons Paradox. In the 1990s, as the cost of manufacturing semiconductors fell dramatically, there was a panic that everyone would eat each other’s lunch and demand would run out. But as the cost of compute fell, the demand for compute rose even faster — and the result was more jobs and more economic activity. When we have this mindset of protecting the past, we miss the future, and we miss how lives and material well-being actually improve. It’s a small-minded, here-and-now approach. Canada wasn’t always like this. We used to believe in progress, in development, in the future. Now we believe in putting up every barrier we can so that nobody is upset by change. That has to change.

AM: I talk a lot to American audiences, and they ask, “What about the people who lose their jobs?” And I want to say: that’s why you need a strong social safety net, so that a person’s worth, dignity, security, and future aren’t bound up in a particular job, and they can transition. Then I remember I’m talking to Americans, and I bite my tongue. But in Canada we have a strong social safety net. So — I won’t put words in your mouth — I believe there’s enough prosperity to be gained that we can tax the winners to make the losers whole, and that it’s a better deal than trying to keep the future out. If you try to protect what you have, you lose it; if you try to build something more, you gain even more besides, especially for those left behind.

EL: What people often don’t appreciate — and I’m a true liberal; I believe deeply in competition in a highly entrepreneurial economy, so that you generate wealth you can tax fairly to provide a level of human welfare befitting an advanced society — is why competition matters here. In uncompetitive markets, the incremental value of the investment and innovation you’d need to hire someone for isn’t as great, because you can bet your competitors won’t make the same investment. So when capacity opens up and you can lower your costs with AI, you don’t need to repurpose the people you had. But in competitive sectors, the extra value you get by automating a less valuable process means you can spend it where human labour creates the next increment of value, ahead of your competitors. So if you want to avoid mass layoffs and turmoil from AI, the first thing you need is a competitive economy that requires labour to take advantage of these benefits and get ahead. That means almost everything we produce in Ontario — a good or a service — gets better for the same cost, without killing jobs. That has to be understood, and I don’t think it’s appreciated enough.

Rural Areas, Remote Areas, and the North

AM: You’re running for Premier of Ontario — not of Toronto, not of the Golden Horseshoe. It’s easy to talk about mobility in the context of the Greater Golden Horseshoe, or even southern Ontario. But what’s your mobility vision for Northern Ontario? You’ve spoken about the Ring of Fire and critical minerals — how are Northern Ontarians going to get around in the future, if you have your way?

EL: A couple of things. Northern and rural Ontario never really recovered robust transit service after Greyhound shut down and subsidies for rural bus operations declined. In the long term, my high-speed rail network — connecting places like Kitchener, and building hubs like London and Windsor — would let us better serve the regions around them, and create more demand from the rest of the country and Ontario to come visit our beautiful lakefront and tourist towns. Then there’s the legacy rail network, currently owned by CN and CP. I think one of the greatest crimes in our history was selling off the land under those corridors, which has limited our ability to decide what public uses they serve. We’ve just started restoring the Northlander service to Timmins. I’d like us to look at running rail through Northern Ontario — say from North Bay to Sudbury, connected even to Thunder Bay. It wouldn’t be fast initially, but there are overnight and daytime services some people would certainly take. People don’t appreciate how many rail lines still exist to serve the mining industry up north. So there’s an opportunity to run service networks to these places — as long as we figure out what happens once you arrive locally. For some of these smaller Northern centres, it’s also about helping them diversify out of the boom-and-bust cycle and attract more kinds of people who want to live and work there, and connectivity matters for that.

Here’s the controversial part. We need to be deliberate about identifying the corridors we want to be public, or at least to have public priority on, that CN and CP own today. To get them to the table, we’ll need to be much bolder. I’ve worked in M&A for years, and sometimes you have to put a bold line on the table and recognize that you hold more cards than you think. So if CN and CP won’t come to the table on amicable use and prioritization — with consistent expectations and standards — for the passenger services I’d like to restore, then we’ll use, or threaten to use, the power of eminent domain. They’ll have the choice: an amicable agreement where they keep ownership, or potentially lose it entirely and go figure out with their investors what matters to them. Unless we’re willing to go there, they have no reason to work with us. So I’m willing to go quite far to make sure these corridors — which are ultimately a public good for trade — can do what our outcomes require.

AM: I’ve worked in a small way with the Canadian Class I railways, CN and CPKC — Canadian Pacific Kansas City, or whatever they’ve rebranded themselves to. Their attitude is, “Oh, your country was founded in 1867? We’re older than that. Back off, punk.” So you’ll need to bring a similar swagger to those negotiations to succeed. And there’s a lot to what you say. As I’ve written before, you really can’t run freight and passenger rail on the same corridor; they’re at odds. A central problem of mobility is that different uses on the same infrastructure always creates friction. There are ways to resolve it, but the easiest is different uses on different infrastructure. There aren’t many corridors where you can run passenger rail on abandoned rights-of-way; the first-best solution is to acquire the corridor, get it up to a higher-speed standard, and run it.

EL: For Northern Ontario, I don’t have all the answers about the viability of sharing the freight corridors. It’s not the ideal long-term solution, but we want the right to build on them, so that where we need separated sections to manage traffic, we can. These are long distances, and rebuilding everything wouldn’t be viable at the cost, so sometimes you accept the trade-offs. If we value keeping the North connected, this is one way to do it, alongside additional passenger service.

One more thing: our Northern highways are quite dangerous, because most are winding, with one lane in each direction. There are about 1,700 kilometres of the Trans-Canada like that, and you see dramatic numbers of deaths in winter, and closures that last a long time, with a lot of freight on the corridor. We’ve debated twinning the entire corridor for a long time, which is expensive, and there’s merit in it. But the first thing is to make it a national goal — a long-term program — and to recognize that on some segments, other options make sense, like “two-plus-one” designs with alternating passing lanes and some separation, so winter driving is far less dangerous. Funny enough, even though that’s only one less lane, it costs about five times less. So you can deliver better connectivity and safer driving for Northern Ontario faster and far more cheaply than going for perfect. We need to work with the federal government on that.

Energy and Nuclear

AM: Before we wrap up, I can’t resist throwing you one more question. Don’t give me the full pitch, but what’s the short version of your vision for Ontario’s energy economy?

EL: We should be producing — and consuming — the most electricity per capita anywhere in the world. The way to get there is to think about energy development as a system too. I’m very inspired by how the French built their nuclear advantage: they set nuclear incentives, identified plenty of future sites, did the permitting and environmental review, chose one reactor design, and copied and pasted it to bring down the capital cost. I’d have the province take responsibility for the capital cost of baseload power, which should be nuclear and hydro, and let the private sector handle variable demand — renewables and battery storage, which have a pricing mechanism built in. I’d bring the permitting for all of this up to the provincial level. Right now, to permit a battery-storage site you go through the municipal process, and everyone reinvents the wheel. I want one provincial system for rapid permitting, with pre-identified sites, so the private sector has a clear signal of where it can move, and quickly — which also reduces risk. That’s the generation side.

Then there’s consumption. We spend too much time telling people to save energy and not enough telling them to consume more. In a city — Ottawa, where I am today, or Toronto, where I live, or many others — about 90% of emissions come from heating buildings and moving people and goods. The alternatives are electric heating and cooling, and electric mobility, and both need a lot more electricity. If you own a home built in the 1980s, you might have only a 100-amp connection. Say you want an electric vehicle, a heat pump instead of your furnace, and to convert it into a multiplex — you’ll likely need a 400-amp connection. If the transformer on your street isn’t upgraded, the utility says, “You’re making us do this upgrade; give us $100,000 so we can provide that power,” and your neighbours won’t have to pay for the incremental upgrade — they’ll just apply and pay the $5,000–10,000 for their own increased connection. I’d like a clear mechanism to amortize those infrastructure upgrades over time through higher consumption, so our utilities have a clear incentive: when they upgrade a neighbourhood, they tell people, “Your neighbourhood has been upgraded — and here’s how you can consume more electricity. You’re ready, and here’s how.” We should be conditioning people to think about increasing consumption, not the other way around.

The last piece is managing the transmission infrastructure itself. If you’ve followed Ontario politics, the energy sector has talked about the “smart grid” for as long as I’ve been alive — and it’s still not that smart. That means we use a lot of grid infrastructure at very low utilization, because we don’t know its overall health. Going forward, the Ontario Energy Board needs a mandate to put smart monitoring on all of it, so we can move a transformer from, say, 30% capacity to 60%. Then we’ll know where the points of failure are and where the priorities for upgrades are, and we can sweat the assets we already have, which brings down the cost of what we’ve already built. There are a lot of components to electricity, but it all matters, because electricity will be the most important economic and environmental input of the future by far — and it’s an area where Ontario has a tremendous potential comparative advantage. We can’t miss the boat on getting it right.

In Conclusion

AM: A future of abundant electricity, abundant mobility, and abundant housing — I’m all for it. Our time has to come to a close, so let me throw you a more fanciful question. Say you somehow become premier tomorrow, and you get to do one mobility or transport thing in your first year. What is it? To give you time to think, I’ll tell you mine: I’d come up with some neutral way to classify what a higher-order transit system is, and then classify every higher-order transit stop, and then say that if you’re constructing a building such that the front door is 300 metres or less from an access point to that station, there are no more height limits — by fiat of the province. Let the market decide how much housing there should be next to a higher-order transit stop. Admittedly fanciful, but what’s yours?

EL: It’s funny, because you mentioned land use — and if it weren’t transport-specific, that would probably be my answer too. But for me it’s not glamorous: it’s the institutional reform to change how we build. If you get that right, and can build at globally competitive cost and to higher standards, it doesn’t much matter what you decide to build next. If you don’t fix that fundamental problem, nothing else matters. So I want the institutional reform. Get how we build right, and “what we build” just means building more.

Share

AM: In other words — abundance. Building abundantly. That’s an exit line if ever I heard one. Eric Lombardi, thank you very much for your time today.

EL: Thank you. And for everyone listening and reading: stay tuned to my campaign. If you’re in Ontario, sign up as a member of the Ontario Liberal Party — it’s free, and you can vote in November. And when the campaign launches, if you’re open to it, consider a donation, because what I’m doing here is challenging, and it isn’t free.

Thank you so much for your time, Andrew. It was a pleasure.

Long-time readers will note that Changing Lanes usually publishes longform work on Tuesdays and Off-Ramps on Thursdays, but this week we’re switching it up. I am confident you will find Thursday’s piece exciting and interesting, but to accommodate its subject, I am holding off on it for two days. When you read it, you will understand why.

Hard Fork revisits Interesting Times

Earlier this year I appeared on the New York Times podcast “Interesting Times with Ross Douthat” to discuss the state of driving automation in 2026 and where the field is going. I’m flattered that the team at Hard Fork, the NYT’s biweekly tech podcast, liked that conversation so much that they rebroadcast it under their own banner.

If you’ve already listened to my appearance with Ross, this won’t be new, but on the off chance you missed it, please enjoy it now, in a new format.

The Hub: Toronto Gets It Wrong, Again, This Time on Waymo

I wrote in The Hub yesterday on Toronto’s double standard on Waymo: the city is willing to let robotaxis in, but—as per the mayor’s press secretary—only if the firm proves that no jobs will be lost, no jobs will pay less wages than they do now, and no jobs become more precarious.

That’s a ridiculous standard to hold, as applying it consistently would mean that any innovation affecting any labour market would be subject to a veto by the workers it displaces.

For more, read the whole thing.

Investment Wars: Planning and Investing for an Automated World

On the most recent episode of the Investment Wars podcast, I joined host Joe Halpern to discuss a key problem for capital allocators: in a world where automation is clearly going to transform how we move people and goods, how should planners and investors prepare for change? How should they hedge against it? And what are some ways that air, rail, marine, and truck travel are likely to improve in future?

This was a good talk, and I hope that you enjoy it. It is available on Spotify, Apple Podcasts, and YouTube.

Radio New Zealand: How New Zealand should think about driving automation

I was pleased to appear on Radio New Zealand on the drivetime programme Afternoons with Jesse Mulligan to discuss how, specifically, New Zealand’s regulators and citizens should think about driving automation; the distinction between Tesla and Waymo; why Wellington and Christchurch are going to benefit from the technology first; and other matters.

Driving automation is a global technology, and it’s useful to think about how it will apply differently in places that aren’t North America or China, so I was grateful to Jesse for the chance to speak with him about how New Zealand specifically should prepare.

This went out over terrestrial radio, but a recording of our interview is available here.

Upcoming Events at Changing Lanes

Finally, two upcoming items.

Firstly, our next livestream! On Wednesday, 24 June at 1200h ET, my guest will be the foremost American authority on regulating automated driving: Professor Bryant Walker Smith of the University of South Carolina. Smith helped develop the SAE’s “five levels” of driving-automation taxonomy, and earlier this year he testified to Congress on how the United States should regulate self-driving. Subscribers are notified when we go live; you can also sign up here.

Second, our upcoming price change! The subscription rate for Changing Lanes goes up next week on Tuesday, 16 June, rising from the current rate of US$10/month or US$100/year to US$13/130. This means that now is the best time to change your subscription from free or monthly to annual, since switching now locks in a full year of content at the best possible rate. It’s as easy as clicking this button:

Subscribe now

Firstly: this Wednesday, 24 June at 1200h EST, you are invited to attend the second Changing Lanes livestream! My guest this time will be the United States’ foremost authority on regulating automated driving: Professor Bryant Walker Smith of the University of South Carolina. Smith contributed to the development of the SAE’s famous ‘five levels’ of driving automation taxonomy, and earlier this year testified to Congress about how to regulate self-driving in the US. Subscribers will be notified when we go live, but you may also sign up here.

Secondly: a reminder that in two weeks—specifically, Tuesday, 16 June—the price of a subscription will go up. The current rate of US$10/month or US$100/year ends; from that date, new subscriptions will be US$13/month or US$130/year. If you want to lock in a year of access to subscriber-only content, the time to do so is now, since annual subscriptions taken today get it at today’s lower rate.

In 2021, distraction was a factor in 29% of Canada’s road deaths, up from 19% at the turn of the century. The US is about the same, once its figures are corrected for under-coding.1 The behaviour is climbing on both sides of the border.

In response, authorities are taking action. This week, on 5 June 2026, Pennsylvania’s ‘Paul Miller’s Law’ takes effect: a driver caught with a phone in hand faces, on first conviction, a fine… of $50.

Paul Miller’s Law is the newest of the handheld bans on the books in every Canadian province and 33 US states. This regime has been spreading steadily since 2007, but the problem it aims to combat is getting worse, not better.

This mild and tremulous response is vexing. We know that distracted driving kills, and we know it is on the rise. The situation calls for decisive action, but we should be thoughtful about what kind of action. Changing Lanes is a techno-optimist newsletter: if there’s a problem, we don’t expect to fix it by hoping for a change in human nature. Instead, we expect to fix it with structural change. Given this, the token fines and thin enforcement are galling. But what is more contemptible is that a structural fix already exists—one that requires neither criminal nor civil penalties, that doesn’t require us to punish anyone, that is mandated on new cars across the European Union—and that we have declined to require it.

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In other words, we have decided to tolerate the deaths caused by distracted driving because fixing it would be inconvenient.

Why Drunk Driving Was Solvable…

To start to understand the matter, it’s helpful to begin by considering a parallel problem: drunk driving.

Between 1980 and 1997, US drunk-driving fatalities fell from around 21,000 a year to around 17,000. That’s a substantial decline—19 percent—and strong evidence that, if we resolve to, we can make progress on reducing road deaths stemming from a particular cause.

The drop in drunk-driving deaths was the product of a bundled series of policies. Specifically, we set per-se blood-alcohol thresholds; set minimum legal drinking ages; established zero-tolerance laws for drunken drivers under 21; and permitted the police to revoke licences at the roadside, independent of the courts.2

Enforcement was not the whole story, because drunk driving also lost a long cultural argument: Mothers Against Drunk Driving made it shameful in a way distracted driving still is not. So why has no comparable stigma attached to the phone? It’s partly because nearly every driver offends in this way, at least some of the time, and a near-universal act is hard to shame. It’s also because it cannot be reliably seen: a phone held at lap level is invisible outside of the vehicle. Even so, a stigma campaign is worth attempting; I’ve urged such approaches to solve other problems, and Families for Safe Streets is trying just such a move.3 I doubt it will be enough on its own. We will need enforcement as well.

Notice that enforcing rules against drunk driving depended on a single question: can police establish that a driver they have pulled over is over the limit? If they can, the anti-drunk-driving policy suite is sound. But if they can’t, blood-alcohol thresholds, minimum drinking ages, zero-tolerance regimes, and license revocation are useless.

Thankfully, the police do have a way to do this: the Breathalyzer, invented in 1954. Courtesy of the Breathalyzer, police can quickly and cheaply test a driver’s blood-alcohol level at the roadside, enabling the rest of the policy bundle to bite.

…But Distracted Driving Isn’t

So is there a Breathalyzer for distracted driving, a simple technology that can quickly and definitively establish a driver is not paying attention behind the wheel?

Right away, we can see that it’s a hard problem. Intoxication is a state; it persists even after a driver pulls the car over and turns off the engine. Distracted driving is an activity.

As such, it is hard to detect, because it can stop at any time. As soon as a police officer puts on their lights and sirens, the driver is no longer distracted. So the crime must be established by the traces it leaves behind, or by some record taken at the moment it is happening.

Establishing it by its traces is legally challenging. The place to look is on the distracting device itself, i.e., the driver’s phone, and we have the means to do so. The ‘textalyzer’—a device that reads recent phone activity post-crash—has been proposed in several US states and adopted in none, stalled by privacy and Fourth Amendment objections. The grounds for this were established in State v. Dunbar (Connecticut, 2016), which says the police cannot interfere with someone’s phone absent proof beyond a reasonable doubt that the driver was engaged in a call. Simply having a phone in hand is not enough.

I am dubious about the legal doctrine here; it seems to me that a policy may establish, as a reasonable standard, that holding one’s phone while driving is illegitimate, which would be grounds for a ‘search’ of that phone to establish its use. I will grant that permission for state inspection of our digital lives and devices must meet a high standard, given the privacy implications, but we seem to have set the bar so high that honouring it has given us a basically-nonfunctioning enforcement regime.

"Distracted driving" by Mike Skoropad is licensed under Creative Commons. Image courtesy of utires.com.

Set the matter aside. If we cannot establish distracted driving after the fact, we must instead establish it at the time of occurrence. The simplest way to do that would be to use some kind of device that can detect it in real time and make an immediate record.

We have such devices: cameras.

New South Wales (NSW) in Australia has operated AI-powered mobile-phone detection cameras since 2019. (Since from the ground one cannot see whether a driver has a phone in their lap, they are mounted to elevated positions near the roadway.) As a consequence, detected-illegal-use there fell from ‘one vehicle in 82’ to ‘one vehicle in 597’ in under four years, a reduction of approximately 86 percent.

Findings like these reinforce my conviction, stated more than once, that public surveillance offers great advantages that we should pursue.

But set this aside as well; I am in the minority on this point. Most voters deplore the idea of cameras being ubiquitous in public spaces, and a single jurisdiction’s results are not yet enough to lean on, though NSW road fatalities caused specifically by distraction have continued to fall.

It follows, then, that if we can’t put cameras on the roadside, we must instead…

Read more

• Bern’s history in the transportation field

• The pick-up-and-drop-off problem and why cities have to solve it

• My doubts about Bern’s view of the problem, and his responses

• Questions from the audience

I hope you enjoy it!

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It has not: we are live right now, here: https://changinglanesnewsletter.substack.com/publish/live-stream/219612

Please join us!

Welcome, dear reader, to Off-Ramps, that occasional miscellany of intelligence, carefully gathered in these pages of Changing Lanes, for the discerning subscriber. Upon this occasion I beg leave to lay before you three matters of some urgency.

1. Mr. Bern Grush, in Person, at Noontide

Upon this day, at the hour of noon (by Eastern reckoning), I shall have the honour of opening the Changing Lanes Substack Live series of colloquies with Mr. Bern Grush.

Mr. Grush is a co-author of my volume The End of Driving. We will discourse upon the subject of the future of urban mobility, as well as the new commercial enterprise he has founded in pursuit of that future. I give fair warning that Mr. Grush and I are not in perfect accord upon this subject, and we shall probe our disagreements with some vigour. I expect it will prove a spirited exchange.

Pray make a note in your diary and join us, here. The discussion shall be open, and I shall be entertaining questions; and so I do beg you to bring your own.

2. The Roots of Progress Fellowship Closes upon the 1st of June 2026

To any reader who writes, or who aspires to do so, this notice is deserving of your attention, all the more so given how little time now remains.

The Roots of Progress 2026 Blog-Building Intensive (BBI) Fellowship is a course of ten weeks — part-time, conducted at a distance, and free of any charge whatsoever. It pairs a programme of instruction in the long-form explanatory essay with the benefit of professional editing and counsel. Besides these, it offers its members a fellowship of some thirty kindred spirits, not to mention that the Fellows shall be brought into the company of the foremost thinkers in the study of progress and the policy of abundance.

This intake is the fourth cohort of the BBI. I myself was a member of the second, and the experience has altered the course of my life. The BBI furnished me with the implements, the camaraderie, the encouragement, and the confidence I required to set down my thoughts in public. Should these be the things you yourself require, that you might advocate for a better world, then by all means you ought to apply.

The final day for application is the 1st of June; pray, then, apply here, and without delay.

3. A Word Concerning the Subscription

Changing Lanes owes its existence to the fact that I take pleasure in writing as an independent man, unbeholden to the editorial line of any single publication. Yet it must flourish sustainably, given the cost in foregone labour that its writing exacts. And so, by way of reminder, upon Tuesday, the 16th of June, the price of a subscription shall be raised.

The present rate of ten American dollars per month, or one hundred per annum, will be discontinued; from that date, new subscriptions shall be thirteen dollars per month, or one hundred and thirty per annum. Those presently subscribing on an annual basis shall retain their current rate until the date of renewal, whilst monthly subscribers shall be moved to the new rate upon the first occasion of their being billed (subsequent to the sixteenth of June).

The implication is that the prudent reader who has been contemplating subscription would do well to act now, for annual subscriptions taken at today's rate shall be secured for a full twelvemonth.

Before we get to that, though, two reminders:

Firstly: this Thursday, 28 May at 1200h EST, you are invited to attend the first Changing Lanes livestream! My first guest will be Bern Grush, a co-author of my book The End of Driving, on the future of urban mobility, and the start-up he’s founded to build that future. Fair warning: Bern and I have some disagreements on this subject, which we will probe. I think it will be a fun conversation! Subscribers will be notified when we go live, but you may also sign up here.

Secondly: a reminder that in three weeks—specifically, Tuesday, 16 June—the price of a subscription will go up. The current rate of US$10/month or US$100/year ends; from that date, new subscriptions will be US$13/month or US$130/year. Existing annual subscribers keep their current rate until renewal, while monthly subscribers move to the new rate on the first billing cycle after 16 June. What that means is, if you’ve been thinking about subscribing, now’s the time, since annual subscriptions taken at today’s rate will be locked in for a full year.

Alto, Canada’s putative high-speed rail (HSR) project, has a published business case. It also has consultation FAQs (which cover 50 topics, including winter resilience and Indigenous collaboration), a Transport Canada environmental and economic assessment, and published testimony from its CEO to the Senate of Canada.

Nowhere in any of these documents is any treatment of automated vehicles (AVs) as a demand risk to the project. There is no spirited engagement with AVs; nor a hedged acknowledgment of them; not even a dismissal. There is no treatment of AVs at all.

That’s remarkable, because Alto is an infrastructure project, projected to cost $60–$90 billion CAD. Bear in mind that driverless freeway service and driverless intercity trucking are both already in commercial operation, meaning that it’s reasonable to expect highway-and-urban AV, privately owned and/or available for hire, by 2035, before Alto’s first segment is scheduled to carry a fare-paying passenger.

In other words, Canada seems poised to build a massive infrastructure project through the heart of Quebec and Ontario, at massive cost, even though its value proposition may be superseded before the first train runs.

It has happened before. Consider the St. Lawrence Seaway.

The Seaway opened in 1959, a joint Canadian and American project that gave ocean-going vessels the ability to travel 3,700 kilometres inland, as far as Duluth and Thunder Bay. It was one of the great engineering achievements of the postwar era.

That may sound like success. It is, but unfortunately a heavily qualified one. The Seaway reached its peak in 1977, and today carries two-thirds of the cargo it did then, fifty years ago. It ships bulk commodities, mostly grain and ore, and essentially no container traffic.

Alto is on course to become the Seaway of our era: a project that construes a problem, and solves it at immense cost, even as the world changes such that the problem recedes in importance. Canada’s embrace of it suggests that, once again, the country will skate to where the puck has been and ignore where it is going.

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Why the Seaway Underperformed

The St. Lawrence Seaway was a genuine achievement.

Grlakes lawrence map-blank.svg, CC BY-SA 4.0, via Wikimedia Commons

The problem it was trying to solve is immediately evident upon consultation of a map. The St. Lawrence River drains the vast inland seas of the Great Lakes. The St. Lawrence narrows beyond Montreal, which was not an accident; Montreal grew up where it did precisely because that was as far as ocean-going vessels of the pre-industrial age could reach. But after 300km of intermittently tight and sloped stretches, the river widens out into Lake Ontario. It was clear from Canada’s early days that the construction of locks along the Montreal-to-Kingston segment could permit Atlantic vessels to reach Toronto; further upgrades to the Welland Canal would grant access to Detroit; and further work beyond would open up the remainder of the Great Lakes, bringing ships as far inland as Chicago, Thunder Bay, and Duluth.

Canada had urged construction since the early 1900s, but opposition from American railways and ports blocked it for decades (they didn’t want competition). The deadlock broke in the early 1950s, when post-war anxieties about iron-ore supply for the U.S. steel industry gave the project the national-security framing it needed. Enabling legislation passed in 1954; construction took just under five years, with the formal opening in June 1959. It cost about $460 million CAD, with the Canadian government paying slightly more than two-thirds; Canada spent a further $300 million enlarging the Welland Canal. The Seaway came in on time, within authorized budgets, and has been continuously operational for sixty-five years and counting.

The Seaway was a success, at first. Cargo volumes rose through the 1960s to peak at just over 57 million tonnes in 1977. Since then, it’s been in slow decline: today the Seaway moves roughly 37 million tonnes, of which three-quarters is still iron ore and grain (almost no consumer goods).¹

What happened? Why did the Seaway become only a modest success?

In a word: containerization.

The containerization revolution is well known. By shipping goods of all sorts in a standard container (eight feet wide, eight and a half tall, twenty or forty long) that could be moved en bloc from ship to railcar to warehouse, the costs—in transshipment, in security, in protection—of goods movement dropped, enabling the globalized economy we enjoy today. Containerization kicked off when the converted T-2 tanker, the Ideal-X, carried 58 thirty-five-foot containers from Newark to Houston in April 1956. Within fifteen years, the container had remade global shipping, a revolution the Seaway missed entirely; today it moves virtually no containers.

Why? For two reasons.

The first is structural. The Seaway’s locks are sized to match the existing locks on the Welland Canal. Containerization encouraged the emergence of bigger ships with deeper drafts, rated Suezmax or Panamax (the maximum size that could be accommodated by the Suez and Panama Canals). The Welland is too small, limiting competition and capacity.

But so what? Why didn’t smaller container vessels, sized to fit the Welland locks, emerge? That was because of the second reason: economics. Bulk cargo like the Seaway was built to handle, grain, ore, and coal, tolerates slow, seasonal, low-cost transit because the goods are low-value-per-tonne and inventory carrying costs are low. A shipload of iron ore can sit in transit for weeks without straining anyone’s balance sheet. But containers are not like that. Containerization collapsed the time and labour cost of port-to-port transfer. Removal of that bottleneck changed the game, creating a new market: carriage of high-value goods on tight delivery schedules in supply chains designed around just-in-time inventory. Bulk cargo shipping continued to compete on cost over distance, but containerization introduced a new higher-value market competing on speed.

The Seaway was built for the former, not the latter; shipping by the Seaway was and is slow. The full Seaway run from Duluth to Montreal runs five to seven days, with the Welland Canal alone taking roughly twelve hours to transit. Compare that to travel time from the Port of New York and New Jersey, the ‘must-call’ container hub for the U.S. Northeast. From there, a truck can reach most of the Great Lakes industrial heartland, i.e. the Seaway’s terminal point, inside twenty-four hours. (Rail can do it within forty-eight.) The Seaway’s structural disadvantage on container time-to-market is roughly an order of magnitude.2

In the decades since containerization came to dominate global shipping, the Great Lakes ports have tried to adapt the Seaway to the new world, but in vain. Sea3, sponsored by the Hamilton Port Authority, began container feeder service to Montreal and Toronto in July 2009 and was terminated within roughly a year. The Great Lakes Feeder Line began service from Halifax to Montreal and Great Lakes interior ports in July 2008 and lasted about as long. It’s notable those were both Canadian operators, eager to find alternative routes to market; no U.S. operator has attempted a Seaway container feeder service at all.

This was, and is, the Seaway’s problem: it is infrastructure built well for a paradigm that was already fading at the moment of construction. The Seaway asked “how do we move bulk cargo from inland to the sea?” just as a new question, “how do we connect North American industry to global container trade?” was about to emerge. The Seaway is a good answer to the first and no answer to the second.

Canadian Transfer, Niels Johannes, CC BY-SA 4.0, via Wikimedia Commons

And yet, I come to praise the Seaway, not to bury it. An informed observer in 1954 would not have encountered any mention of commercial container service in trade-press summaries of cargo handling. The Ideal-X did not sail until 26 April 1956, almost two years after the Seaway’s inception. The first cellular ships (i.e., purpose-built to accommodate stackable containers) were not constructed until 1968. Canada’s first container terminal opened in Halifax in 1971, twelve years after the Seaway did. In 1954, the question “will containerization replace bulk handling?” had never been asked.

Which prompts us to wonder, has Alto missed anything important about the future movement of people?

It certainly seems that it has.

Why Alto Will Underperform

Stipulate that Alto succeeds if, once in operation, its fares exceed its operating costs; we will set aside its high-eleven-figure capital cost. We’re being generous in so doing, since any reasonable cost-benefit test would not set capital costs aside; indeed the project’s own business case does not. But it gives us a reasonable definition of ‘failure’, under which the AV question is fair game: a paradigm shift that suppresses ridership is a direct threat to the operating-revenue line. This is not a stringent test. The Tokaido Shinkansen passes it; so does Paris–Lyon. Where high-speed rail is well sited, fares cover operations and then some.

Today, in 2026, Waymo runs commercial driverless freeway service across Phoenix, San Francisco, Los Angeles, and Austin. Aurora has been running fully driverless freight trucks between Dallas and Houston, a corridor roughly the length of Alto’s first segment, since April 2025, with a second corridor (Fort Worth to El Paso, six hundred miles) added in Q3. The trajectory is unambiguous: driving automation is moving from urban geofences onto highways and from fleet to private-sale offerings. But Alto’s planners have not factored it into their plans.

So let’s do it for them, and consider: what are the likely consequences of automated driving, capable of both urban and highway travel, available at scale?

Alto’s business case projects 24 million annual trips by the 2050s, rising to 43 million by the 2080s. Those numbers assume intercity travel demand in the 2040s and beyond will look roughly as it does now: trips between fixed downtown nodes, on schedules, by people choosing rail over driving or flying. We only have one independent stated-preference study of demand on Alto’s corridor, courtesy of McGill University’s TRAM Lab. It reaches the much lower figure of ~16 million riders at Year 15 of operation, rising to 22 million by Year 50. The TRAM survey of 6,738 corridor residents found that one in three would take HSR at least once a year. Lead author Ahmed El-Geneidy has called even this estimate generous: “We gave them the benefit of the doubt [that] the demand is going to be really, really increasing very much.”

The TRAM analysis is bottom-up, built from stated preference, where Alto’s is top-down, built from a modal-share assumption that rail’s share of Toronto-Montreal trips will quadruple from 10 per cent to 40 per cent. Top-down HSR modal-share forecasts have a documented optimism bias; Bent Flyvbjerg’s survey of 210 projects in fourteen countries found that ridership forecasts systematically exceed delivered ridership.

So there is a problem: TRAM runs well below Alto at both horizons—about 15 million against Alto’s 24 million around 2050, and 21 million against 43 million by the 2080s—a shortfall that widens from a third to roughly half as the forecast runs out. Even before any AV consideration enters the picture, Alto’s investment case is teetering. And then driving automation (which, importantly, is not a factor in TRAM’s analysis either) gives the pillar another blow.

Specific predictions about the future of driving automation are a fool’s errand: there are too many unknowns to say what technology and services will exist decades from now. So let’s confine ourselves to general predictions, and imagine that there will be vehicles that can complete a roughly four-hundred-kilometre trip, without a human driver, on highways and metropolitan roads, and available for hire or purchase.

We can see such an outcome emerging, on two different trajectories. The robotaxi geofence keeps expanding: Waymo’s San Francisco service area, which started in part of the city’s eastern half, now covers roughly 260 square miles including SFO and the freeways into it. Robotaxi service starts in the dense urban core and steadily expands outward, picking up highway segments along the way. In parallel, privately-owned AVs are arriving: Tesla aims to sell vehicles without steering wheels to private buyers, and other manufacturers are developing comparable offerings. Either of these on its own delivers a viable intercity competitor; both happening at once is a likelier outcome than the planning case assumes.

That competitor won’t win on speed, but speed has never been the only axis that mattered. As I have noted before, HSR itself doesn’t win on speed; “high-speed” compares to other rail, not to commercial air, which wins by a wide margin. In its markets, HSR thrives anyway, because air’s terminal-to-terminal advantage is partly absorbed by airports being twenty to forty kilometres outside city centres, security screening adding half an hour, and baggage adding more. So against commercial air, HSR loses on speed but wins on overall trip time… if downtown is where the passenger is going. Similarly, AVs lose to HSR on speed but win on access, at trip end and beginning, since they are door-to-door and on no schedule.

Recall that the Seaway lost, even though it continued to beat container shipping on cost-per-tonne, because the relevant axis of competition shifted to speed-at-hubs. Similarly, an intercity AV (whether owned or hired) shifts competition from speed to convenience: AV solves the list of frustrations a rail or air traveller is asked to tolerate. These include getting to the station, getting from the station, travelling on a schedule, carrying luggage, sharing space with strangers, going through airport security (if flying), and on and on. None of those costs are large in isolation, but together they make foregoing them attractive.

An AV will incur none of these costs. It arrives where the passenger is and leaves them where they want to go. It runs on the road network that already exists and serves every destination in the country. As such it’s attractive for the very large share of trips that neither begin nor end in the downtown core, but somewhere in the metropolitan sprawl around it. For the rail passenger whose origin and destination happen to be downtown, the rail terminal is a convenience. For everyone else, it is the first inconvenience of the trip.

Will everyone take this option? Certainly not; a trip from Toronto to Montreal by Alto will take two to three hours less than by AV, meaning that rail wins on trips that require speed (but air will continue to beat rail on that metric). Similarly, the AV trip won’t be cheap. Long intercity trips are the hardest use case for shared-fleet economics: a four-hundred-kilometre haul ties up the vehicle for hours, and may require a deadhead return, which is the hardest pill to swallow. (Private vehicles dodge the deadhead cost, but only for those who own one.) But the question is not whether everyone will take this option, but whether enough will to imperil Alto’s business case. Business-class airfares run four to six times coach, and the cabins fill up; people pay for what they value, and what they value at the long end of the travel-comfort spectrum is freedom from terminals, schedules, queues, and other passengers. AVs offer a kind of intercity convenience that no rail product can.

Let’s make a defensible estimate for mass-market intercity AV capability — that is, a commercially-available vehicle that can complete a 400-kilometre highway trip without a human driver: let’s say it arrives by 2040. That is roughly the time we might expect Alto’s first phase to open, with the Ottawa–Montreal segment expected to carry fare-paying passengers in the late 2030s at the earliest. The full Toronto–Quebec City corridor has no published completion date, and Alto’s own FAQ says each construction phase takes seven to ten years.

I can’t say that AVs will absorb Alto’s ridership; predictions are hard. But I can say that Alto’s published case does not address this question at all. California’s HSR project has its share of failures, but at least mentioned AVs and ride-hailing in its 2018 business plan. Alto, authorized in 2025–2026, with Waymo on the freeway, does not.

What Alto Owes Us

The “Seaway question” survives the optimistic scenario for Alto: even if the project appoints excellent leadership, picks the right stations, reforms its process, and reaches its own ridership projections, the question remains. Was this the right problem to solve at this scale, with this technology on the horizon, at this moment?

I am dubious. I cannot prove Alto will fail; nobody can prove a project will fail 30 years before it opens. But I can say that Alto has not done the work to prove it won’t. A country committing somewhere between $60 and $90 billion to fixed-corridor infrastructure should be able to explain why distributed AI-driven mobility doesn’t make its bet obsolete before the first train runs.

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I would love to see an Alto business case that explicitly stress-tests ridership against a 2040 Level 4 highway scenario. If the case holds even with aggressive AV adoption assumptions, my objections here lose their force. I hope that Alto’s planners engage this question seriously, and prove that I’m wrong. Until they do, here is the bet I’ll make. At TRAM Lab’s 15-million-rider scenario—itself two-thirds of Alto’s headline number—TRAM models a $1.28-billion annual operating subsidy, with the system not turning operationally profitable until Year 44. A meaningful AV haircut on TRAM’s already-conservative figure takes operating breakeven out of reach within the concession horizon. That is the specific risk Alto’s planners owe their public a serious treatment of. Until they provide one, I expect Alto to need indefinite operating support — exactly the structural pattern the Seaway settled into when Parliament wrote off its capital debt in 1977.

The Seaway opened in 1959 and almost immediately found itself in the wrong shipping era. Alto will break ground in 2029. The chance to ask whether it is being built for the right travel era is now, before paper is turned into cement.

Respect to for comments on an earlier draft of this piece.

1. Bern Grush, live, next Thursday

On Thursday, 28 May at 12:00 p.m. ET (noon Eastern), I’m opening the Changing Lanes Substack Live interview series with Bern Grush.

As you may know, Bern is one of my co-authors on the second edition of The End of Driving. He’s also the executive director of the Urban Robotics Foundation, and the lead drafter of the ISO standards that will govern how automated vehicles deal with curbs and sidewalks. He’s also the founder and CEO of a new venture, PudoCity, which will be the subject of our conversation.

I can’t speak for Bern, but I think his elevator pitch goes like this.

Most of the robotaxi debate is about the vehicle, but the hard problem is actually the curb. Once a city fills up with driverless vehicles, where will they all actually stop to pick you up and drop you off? It’s a hard problem, made harder because many of these places that have never managed their curb space well to begin with.

For my part, I agree there is a real matter of concern here, but I have questions about whether Bern’s proposed solution can hold up as a business. Come watch me ask those questions, and decide for yourself.

Set a reminder and join us live here. It’s live, the chat will be open, and I’ll be taking questions, so please bring yours!

2. The Roots of Progress fellowship deadline is 1 June 2026

If you are a writer, or an aspiring one, this item is worth your attention, given how little time remains.

The Roots of Progress 2026 Blog-Building Intensive (BBI) Fellowship is a ten-week, part-time, online, and free programme (27 July to 2 October) for writers and bloggers excited about progress. It pairs a writing course focused on long-form, explanatory essays with professional editing and feedback, plus a cohort of roughly thirty like-minded peers. Fellows will meet leading thinkers in progress studies and abundance policy, along with experts in this year’s optional deep-dive tracks: human talent and potential, and security and resilience.

This intake is for the fourth cohort of the BBI. I was a member of the second cohort, and it’s no exaggeration to say that it has changed my life. The BBI gave me the tools, the community, the support, and the confidence I needed to write in public. If these are the things you need to advocate for a better world, you should certainly apply!

If that was not enough, Fellows who complete the programme receive a free ticket to the invitation-only Progress Conference in Berkeley this October, featuring—among others—the co-CEO of Waymo, two Nobel laureates, and other luminaries (including me!). The final deadline is 1 June, so apply here soon!

3. A note on pricing

Changing Lanes exists because I like writing independently, outside any single publication’s editorial line. And I’ve been successful at it: over the past year, the number of subscribers to this newsletter has more than doubled, from 700 readers then to 1,800 today (helped along by my appearance earlier this spring on Ross Douthat’s New York Times podcast “Interesting Times”). Changing Lanes is growing!

But it needs to be sustainable too, given the opportunity cost of writing it. So, as a reminder, in four weeks—specifically, Tuesday, 16 June—the price of a subscription will go up. The current rate of US$10/month or US$100/year ends; from that date, new subscriptions will be US$13/month or US$130/year. Existing annual subscribers keep their current rate until renewal, while monthly subscribers move to the new rate on the first billing cycle after 16 June. What that means is, if you’ve been thinking about subscribing, now’s the time, especially as annual subscriptions taken at today’s rate will be locked in for a full year.

In concrete terms, paid subscribers get two things that free subscribers don’t: a paywalled issue each month, and direct engagement from me in the comments. But equally importantly, they receive my gratitude for keeping Changing Lanes alive: reader support is what keeps it going.

As a reminder, then: the price of a subscription goes up on Tuesday, 16 June, but until then, the current rate holds: US$10/month or US$100/year. If you’ve been meaning to upgrade to paid — or to switch from monthly to annual — doing it before 16 June locks in the current rate. And if you’re already a paying subscriber: nothing changes for you today. You keep your current rate through your next renewal.

4. And finally, the memes

I often post memes to Substack Notes to illustrate posts I have written, the contretemps du jour, or just random thoughts I have had. For the benefit of readers who aren’t on Substack Notes, here they are: no explanation, no context, and no apologies. Enjoy!

I’m pleased to report that last week, the Washington Post published my argument that no one likes back-to-back meetings, but that there is a simple solution to the problem: a calendar setting everyone has access to, meaning you can solve this problem with two clicks.

If that op-ed is how you found Changing Lanes, welcome! Changing Lanes is a weekly newsletter on mobility innovation, covering everything from vehicle automation and transit policy to the platform economics of Uber. Recent pieces have covered California Forever’s mobility vision; why ghost kitchens failed; the structural reasons why air travel is unpleasant; and how to think about robotaxi liability.

As for me, I’m a transportation professional active full-time in the field, and a freelance writer who, in the past six months, has published in outlets as diverse as the Wall Street Journal, the Globe and Mail, American Affairs, the New York Post, and Asterisk.

You may wonder why Changing Lanes exists, given the other opportunities I have to publish my work, and the demands on my time. The reason is that I like writing independently, outside any single publication’s editorial line. And I’ve been successful at it: over the past year, the number of subscribers to this newsletter has more than doubled, from 700 readers then to 1,800 today (helped along by my appearance earlier this spring on Ross Douthat’s New York Times podcast “Interesting Times”). Changing Lanes is growing!

But it needs to be sustainable too, given the opportunity cost of writing it. That’s why, in four weeks—specifically, Tuesday, 16 June—the price of a subscription will go up. The current rate of US$10/month or US$100/year ends; from that date, new subscriptions will be US$13/month or US$130/year. Existing annual subscribers keep their current rate until renewal, while monthly subscribers move to the new rate on the first billing cycle after 16 June. What that means is, if you’ve been thinking about subscribing, now’s the time, especially as annual subscriptions taken at today’s rate will be locked in for a full year.

In concrete terms, paid subscribers get two things that free subscribers don’t: a paywalled issue each month, and direct engagement from me in the comments. But equally importantly, they receive my gratitude for keeping Changing Lanes alive: reader support is what keeps it going.

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recently catalogued seven beliefs that cluster among low-trust, populist voters. It’s so good that I want to quote it at length.

• There are no positive-sum trades. In every exchange, someone is winning and the other person is losing. Profit is usually a sign that someone’s been harmed.

• Every trade-off is a trick. Anything harmful cannot be made up for by other unrelated positive effects. If someone tells you we need to make a trade-off, they’re hiding a much better solution where everyone’s better off and nothing bad happens.

• Big, global institutions are always way less trustworthy than small, local institutions. The real political axis is the virtuous, authentic, everyday, rooted people vs. the unrooted powerful cabals who run society.

• It’s very important that all resources be spent on your specific value system and vision of the good life. Pluralism is a trick. Other people pursuing very different values are basically always a threat, because there are no positive-sum trades.

• The world is getting irrevocably worse. Technological progress is always just a march toward something worse.

• Individual humans are magic. Any implication that things humans do can be truly replicated by machines is an attack on human dignity.

• Some form of a folk labor theory of value is true. The value of a good is determined by how much thoughtful human labor has gone into making it.

Reading this list, my immediate thought was that the same cluster shows up in opposition to driving automation.1

Masley introduces this framework to discuss popular objection to data centres, which is real and increasing everywhere, including Canada. It’s a useful exercise in helping to separate object-level from subject-level thinking, and recognizing how a great deal of opposition to data centres stems from blanket pattern-matching.

In my view, the same separation is worth doing for automated vehicles (AVs).

Where the framework travels

No positive-sum trades. This is a standard move. On this view, every Waymo ride steals work: from a cab driver, or a ride-hail driver, or the local transit system. (This image, and all subsequent ones, link out to the original.)

On this view, benefits accrue entirely to one party, harms entirely to another, with no overlap. The possibility that a cheaper, safer transport service might leave working people better off as riders, even as it displaces some of them as drivers, is ruled out by the framing.

Every trade-off is a trick. This is clearest on safety.

Waymo’s per-mile injury rates in the cities where it operates are meaningfully below human-driven baselines. The beginner-level move is to not engage with this data, arguing that safety is unproven without addressing the existence of evidence to the contrary. The impressive master-level move is to argue that robotaxis are a complex and foolish kludge, and that the obvious better move is to simply retrofit all cities such that cars are unnecessary.

Big global institutions are less trustworthy than small local ones. This one travels strongly.

The idea here is that piloting transportation technology on public streets, where it will be used, is illegitimate, because it’s big companies based far away that are doing it. It’s easy to pair with the implication that any city councillor who lets AVs operate has been captured. As with data centres, when a national or global firm like Waymo or Tesla wants to operate locally, their bigness makes them suspect, and the actual question of whether the operation is net good for the community is skipped. (I have seen this dynamic in operation up close and personally).

Pluralism is a trick. On this view, if anyone doesn’t want a robotaxi on their street, then no robotaxis should be permitted anywhere in the city at all.

It’s reasonable for a city to consider where and on what terms AVs should operate, but on this view the only question is whether they should be present, full stop. The idea that the city should accommodate the desire of consenting adults to use the service while addressing externalities that arise does not appear.

The world is getting irrevocably worse. Hello, Black Mirror:

On this view, robotaxis are a step toward a colder world: algorithms piloting machines, workers displaced, and public streets converted into a private revenue stream for tech firms that do not answer to anyone local.

On another view, the actual dystopia is the status quo of roughly 40,000 annual U.S. road deaths because of poor human driving, and hundreds of thousands more worldwide. Driving automation is the most promising solution on offer to solving that problem; but because that problem already exists, it is generally taken as a neutral baseline rather than as a catastrophe to be urgently addressed.

Individual humans are magic. I think robotaxis surface this claim even more strongly than data centres do.

This move, from ‘some rides involve genuine human contact’ to ‘human connection is the essence of what a taxi is’ is precisely what Masley is pointing at.

Folk labour theory of value. Put one way, this is just the previous objection in different words: a ride is only really worth something when a human has provided it.

Put another way, it’s an economic claim: AV firms are extracting value they haven’t earned. None of the deployed capital, the research and development, the data infrastructure, the years of testing counts as the kind of investment that legitimates a return. Real value, on this view, comes from human effort applied directly to a task, and anything else is rent. From this, the conclusion follows that AV profits should be heavily taxed and redistributed to displaced drivers, and that the appropriate posture toward an AV firm is suspicion of rent extraction rather than recognition of value creation.

This objection, and the previous one, measure the worth of a transport service by its inputs, specifically human input to operation, rather than the outputs, i.e., what the rider gets out of it. A trip provided by a person is categorically different from a trip provided by software, irrespective of the rider’s experience or cost.

While this summary has teased out the individual objections, it’s usually the case that they travel in packs. San Francisco Supervisor Jackie Fielder manages here to hit all of them at once:

What lies beneath

This framework’s value is in identifying the style of opposition, which is real and prevalent. That’s a useful contribution, but let’s respect its limits; it would be a misuse of the framework to conclude that all the objections here are without merit, merely because of the way they are articulated. Robotaxis do pose several policy difficulties that deserve serious consideration, irrespective of who points them out or how they are phrased.

Robotaxis operate in shared public space, and as such can offer physical risk to non-users. ‘Let consenting adults transact’ is not an answer here the way it is for a data centre. It’s reasonable to ask for safe operation to be demonstrated before permitting widespread rollout… but of course there is no regulator nor robotaxi firm that asserts otherwise.

It’s true that the populist view that there are no positive-sum trades is wrong on its face. If a robust robotaxi system makes travel cheaper, more trips will be taken; because travel is expensive, there are some trips people would like to take but don’t because of cost, and robotaxis would allow those trips to happen. This is induced demand at work: just as new highway lanes encourage more trips to be made, so too will cheap robotaxi networks. More trips means more people are better off.

Artist’s conception

But it won’t all be positive-sum. Human-driver ridehail companies will face direct competition from a service with a structurally-lower cost base, and transit agencies will bleed users to a cheap alternative that offers private and direct trips. There is a genuine trade-off here; some parties are going to be worse off. Waving away concern about this as folk Marxism is no way to win hearts and minds.

Similarly, induced demand bites as hard with robotaxis as it does with new highway lanes; we may expect both to generate congestion. Ironically, the solution here, road pricing, is politically difficult to deploy in most North American cities because of the very same populist hostility.

The ‘humans are magic’ claim in its strong form is silly, but a weaker version has merit. The populist version is wrong: there is no metaphysical link between a taxi driver and a patron, and only rarely a moment of profound human connection. Most customers, in practice, spend their taxi or ridehail trips scrolling their phones in silence, and it’s the bored driver who wants to make small talk (Uber has its ‘request a quiet driver’ feature for a reason).

But human operators of taxis, rideshares, and buses really do perform functions beyond piloting: answering patron questions, handling medical emergencies, and deterring antisocial behaviour. Robotaxis (and, one day, automated transit buses) will have to handle these too, through fleet response, dispatched staff, in-vehicle communications, and a redesigned operating model. The duties don’t disappear with the driver, but will instead be relocated, and a thoughtful AV policy framework will have to ensure they have been relocated competently.

Given these real policy issues, we can’t just point out a populist move and then dismiss the speaker, tempting as it may be.

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On one side, there are genuine concerns about shared public space, congestion, and the fortunes of the vulnerable (not only ridehail drivers, but everyone who depends on a flourishing public transit system) that tend to be expressed in this register. On the other, everyone gets to vote, which means that widely-articulated views must be met with argument, not sneering. Robotaxi advocates must shoulder the burden of demonstrating safe operation in shared streets; pricing the externalities that automation will amplify; and using some of the profits of the winners to reduce the pain of the losers.

We had best take this seriously, or we will spend the next decade winning the argument but losing the politics.

It consists of five questions that will take about two minutes to answer. The goal is to help me better understand you, the primary audience for Changing Lanes, and what you find most useful about the newsletter. That information will shape both what I write…

Read more

Firstly, I’m pleased that the New York Post solicited a guest column from me on how to fix the TSA. If that whets your appetite, I go into more detail here in Changing Lanes, in “Airports Are Too Safe”.

Secondly, yesterday the Washington Post published an opinion piece of mine on an unexpected topic: how to efficiently organize your calendar. If you are a knowledge worker, I think you will benefit from taking the advice I offer there.

Finally, I’d like to invite you to the first Changing Lanes livestream! I’ve published some interviews as transcripts in the past; the time has come to do some live in real time. My first guest will be , a co-author of my book The End of Driving, on the future of urban mobility, and the start-up he’s founded to build that future. Fair warning: Bern and I have some disagreements on this subject, which we will probe. I think it will be a fun conversation!

Tune in on Thursday, 28 May at 1200h EST. Subscribers will be notified when we go live, but you may also sign up here.

The only rational way to allocate scarce road capacity is price. William Vickrey worked out why in the 1960s: every car on a congested road imposes a small delay on every other car, without paying for it. Charge drivers an amount that offsets the cost they impose on everyone else, and the incentive to avoid peak hours sharpens; demand adjusts; trips get faster.

In North America, we have implemented road pricing in a few ways. There’s the congestion charge levied on vehicles entering southern Manhattan. There are some toll roads, like Ontario’s 407 ETR or the Pennsylvania Turnpike. The congestion charge is unique here, and toll roads, due to their unpopularity, are rare. Far more common is the managed lane.

A managed lane is a new lane built on an existing road, which is only accessible to people willing to pay to do so. That price isn’t fixed; it’s a dynamic charge that reflects demand, rising as more people use the lane and falling as fewer do, ensuring that the lane is always moving.

Managed lanes are one of the more successful transport innovations of the past thirty years. Drivers who need a fast, reliable trip can pay for it; drivers who are indifferent or cash-constrained can still use the free lanes to reach their destination. On the other side, the operator of the lane makes good money. Fitch, the ratings agency, has either upgraded or placed a Positive Outlook on eight managed lane facilities in the past thirteen months. Scott Monroe, Fitch’s senior director, calls managed lanes “the fastest-growing sector in ground transportation,” with appeal “across the ideological spectrum.”

So managed lanes work, under the right conditions. Unfortunately, there is a way that they can go very wrong. There is a vulnerability in the model that hinges on one clause, or rather the absence of one clause, in the concession contract. Given that some of these contracts run for ninety-nine years, getting the clause wrong has long-lasting consequences.

The vulnerability has a name: jam and harvest.

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Changing Lanes covers all aspects of mobility. See, for example:

• The Iron Law of Air Travel

• The Case for Transit Fare Enforcement

• Whatever Happened to the Uber Bezzle?

Today’s issue is about driving automation, and specifically a question Ross and I explored in our podcast conversation: who should pay when a self-driving car causes harm?

On 1 August 2025, Tesla lost $243 million because a court found its Autopilot to be defective.

The case was Benavides v. Tesla. In 2019, in Key Largo, Florida, George McGee, running his Tesla Model S on Autopilot, drove through a flashing red and a stop sign at roughly sixty miles an hour, killing Naibel Benavides and severely injuring Dillon Angulo. Under the Florida regime that applied at the time of incident, McGee was found 67% liable and Tesla 33%, which means that of the $129M in compensatory damages the jury awarded, Tesla’s share came to roughly $42.5 million. Bad enough; but the jury also awarded the plaintiffs $200M in punitive damages, which at the tame were not apportioned in Florida, but fell only on the party found to have engaged in the conduct warranting them, meaning Tesla bears them alone.1 Judge Beth Bloom denied Tesla’s post-trial motions on 19 February 2026. At time of writing, Tesla’s team has made no notice of appeal.

Tesla didn’t have to lose this much. Waymo, which has run more automated miles than any other operator, has never lost a verdict like this: not because it has avoided crashes, but because it has accepted in advance that operational liability for its driving system is its own.

How an automated-vehicle (AV) firm treats liability is telling, because liability is a hard, fast, and cheap sorting mechanism for distinguishing firms that are truly ready for public deployment from those that are bluffing. A manufacturer confident that its automated driving system (ADS) is safe will be willing to accept liability for incidents under that system’s control. A manufacturer that isn’t has reasons not to. Outsiders may lack the engineering sophistication to measure these vehicles directly. But anyone, including a regulator, can notice when a manufacturer won’t accept responsibility for its product.

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Waymo Accepts, Tesla Hides, Mercedes Pretends

For an example of what I mean, let’s look at three firms that make advanced driver-assist and automated-driving systems (ADAS and ADS, respectively) available to consumers.

Waymo offers customers rides in their own fleet of ADS-equipped vehicles. Its approach to liability is clear: it accepts operational liability, and acts as the legal operator in every market it deploys in. Even in Austin and Atlanta, where it acts in partnership with Uber and the latter firm handles all fleet logistics, Waymo retains responsibility for the “Waymo Driver”, i.e., the firm’s ADS. In all cases, riders will deal with one defendant if something goes wrong: the one that built the autonomy stack.

The track record matches this posture. Waymo’s most recent safety update, on 19 March 2026, reports a 92 percent reduction in serious-injury-or-worse crashes, an 83 percent reduction in airbag-deployment crashes, and an 82 percent reduction in any-injury crashes. That’s across 170.7 million rider-only miles through December 2025, against same-city human benchmarks. This is broadly consistent with earlier, peer-reviewed work (like Kusano and Schorr, Traffic Injury Prevention 2024 or Swiss Re/Waymo, Heliyon 2024), and the magnitudes are robust. It is the strongest safety evidence currently in hand for any commercially-operating ADS.

Waymo’s safety record isn’t spotless. I wrote earlier this year about the concerning incident in Santa Monica where a Waymo struck a child near a school. Separately, in Austin, the school district has documented at least twenty-five violations during the 2025–26 school year of Waymo vehicles passing stopped school buses with red lights flashing and stop arms extended. Waymo patched the software (in the language of automobile product safety, a ‘voluntary recall’) in December 2025, but violations continued through January 2026, with another in March.

The fact that we know as much about these incidents shows that the system works. Waymo reports promptly, the incident reports aren’t redacted, and bad code is getting patched through the recall mechanism. None of it is hidden.

Waymo makes its way to D.C. by Rob Pegoraro is licensed under CC BY-NC-SA 2.0

Meanwhile, Tesla pushes liability outward at every layer it can. The firm’s FSD (Supervised) owner’s manual reads, in operative part: “You are responsible for the speed and control of your vehicle at all times, whether FSD (Supervised) is enabled or not.” Under other circumstances, I wouldn’t object: an ADAS system is supposed to be a driver-assist feature, it’s right there in the name. Unfortunately FSD stands for Full Self Driving, and that name implies the vehicle doesn’t require a human’s input; the Benevides verdict depended in part on this confusion.

It gets worse. The Tesla vehicle purchase agreement imposes binding arbitration and a class-action waiver that seems designed to keep any customer claim out of a jury box. For Tesla’s Austin robotaxi service, which uses the firm’s ADS Full Self Driving (Unsupervised), Tesla has not publicly disclosed the structure of its commercial coverage.

The results are what one might expect from that posture: the firm is under pressure from regulators, and it seems less than cooperative with them. Leaving aside the Benavides verdict, NHTSA (the national USA regulator responsible for ensuring safety on American roads) upgraded its investigation into FSD behaviour in low-visibility conditions to a full Engineering Analysis on 18 March 2026, one step short of a recall demand. (I have written about this set of incidents for Asterisk.) A separate Preliminary Evaluation (PE25012) on FSD traffic-safety violations covers another 2.9 million. NHTSA has made an information request to Tesla to support that evaluation; Tesla has secured at least two deadline extensions on providing answers.

Meanwhile, in Austin, the firm’s robotaxi rollout is marred by incident after incident. AV and ADAS operators in the USA must follow NHTSA’s Standing General Order 2021-01 (hereafter SGO) a requirement to disclose crashes within set windows. Through mid-March 2026, the SGO records 15 reported crashes against approximately 800,000 cumulative paid-Robotaxi miles. Breaking that out, that’s about one crash per 57,000 miles, against Tesla’s own claimed human benchmark of one minor collision per 229K miles. This means that the Tesla service is crashing about four times higher than the human-driver benchmark Tesla itself sets.

In response to questions about that four-times-worse-than-humans framing, Tesla’s CEO, Elon Musk, has said only that the unsupervised program has recorded “no accident or injury… to date“. I suppose we’ll have to take his word for it, since all fifteen crash narratives are redacted as Confidential Business Information; unlike all other major AV operators, Tesla fully redacts its SGO narratives.

Finally, I used to cite Mercedes-Benz as an exemplar in this area, as a firm that has accepted liability for autonomous operation while its ADAS, DRIVE PILOT, is engaged. The framing came from a wave of trade-press coverage in March 2022, after Mercedes executives told Road & Track the firm would accept legal responsibility for what the car did under DRIVE PILOT. Road & Track‘s own gloss, which was “Once you engage Drive Pilot, you are no longer legally liable for the car’s operation until it disengages,” was what we all took at face value, myself included. Respect to for teaching us all otherwise, in his September 2023 piece “No, Mercedes-Benz will NOT take the blame for a Drive Pilot crash“. There, he noted that what Mercedes had actually committed to was product-defect liability (which statute imposes anyway) and not the tort liability that would matter in a wrongful-death suit.

What we all should have done was read the contract. The MBUSA DRIVE PILOT Subscription Terms (last updated 5 March 2024) leave the driver as the “fallback-ready user,” responsible at all times for their own actions, and limit MBUSA liability across “all claims, including, without limitation, claims in contract and tort (such as negligence, product liability and strict liability).” The customer’s insurance pays first; subrogation is waived; binding arbitration is required; participation in class-action suits is waived.

So Mercedes accepts product-defect liability, which it has anyway by statute, and not the tort liability that would matter in a wrongful-death suit. Koopman calls this a “moral crumple zone strategy,” borrowing the framing from Madeleine Clare Elish’s 2016 paper of the same name: the manufacturer reserves the option to blame the human driver for operational failures while accepting only the product-defect liability that statute already imposes.

Three firms, three postures, three different answers to the same question: when something goes wrong, who is on the hook? Engineering confidence is the cheapest hypothesis a regulator can test. This suggests a good way to proceed, namely making approval of a self-driving permit conditional on accepting full liability.

Don’t Liability Rules Favour Incumbents?

So far, so straightforward: an AV operator should accept liability for incidents under its system’s control, and a regulator should refuse to permit operators that won’t. Waymo demonstrates that the rule is workable at commercial scale; the rest of the industry demonstrates what happens when it isn’t applied. One might think that the case for an operators-pay rule writes itself.

Not everyone thinks so. The most academically serious counter-argument comes from Gary Marchant and Rachel Lindor’s 2012 article in the Santa Clara Law Review, “The Coming Collision Between Autonomous Vehicles and the Liability System”: strict manufacturer liability could make AV deployment uninsurable for smaller operators, entrenching incumbents and slowing beneficial deployment. The concern has force at the full-city ADS robotaxi tier, where AV insurance markets are thin and specialty underwriters dominate. The underwriting structure of the largest fleets is not public, which means that Marchant and Lindor’s concern may have force here.

There are two reasons to think that it does not. Firstly, history cuts against it. As one thinker we admire here at Changing Lanes, Prof. Bryant Walker Smith, has noted, in 1993 the received wisdom that advanced vehicle control systems, like adaptive cruise control, would be uninsurable without statutory limits on tort liability, but 25 years of subsequent rollouts of just such systems falsified the claim. Tort liability has proven flexible enough to permit innovation by manufacturers of all market capitalizations and sophistication.

Secondly, while I am sympathetic to the idea that strict regulation might serve as a barrier to entry, I think that in this case the relevant comparison is not between operators-pay and no-rule-at-all, but instead between two kinds of liability. Predictable, ex ante, contractually-defined manufacturer liability—what Waymo accepts in contract, and what Geistfeld and Abraham/Rabin have argued for in the law reviews—channels exposure into commercial insurance markets and lets entrants underwrite their risk. Unpredictable, ex post, jury-determined liability—what we might call the Benavides mechanism—does the opposite. A litigation lottery in which any operator might face $243M USD verdicts if a jury so chooses is worse for small operators, not better.

To be clear, there will always be a moat: it’s reasonable to think that a $200M punitive verdict would be fatal for a small firm, whether anticipated or not. But putting that liability upfront into insurance markets seems more likely to encourage competition than the alternative.

The States Must Lead

The rule itself is straightforward. If a manufacturer or operator claims its automated driving system is safe, it accepts 100 percent of liability for incidents occurring under that system’s control. Burden is later allocable to suppliers, sub-system manufacturers, or others if appropriate; that is a question between the operator and its supply chain, not the injured party’s problem. The injured party deals with one defendant.

In my view, the operative mechanism should be a state DMV permitting condition: a manufacturer applying for a deployment permit must accept liability for ADS-controlled operation as a condition of the permit, or will not receive that permit.2 [2] Tying the rule to a permitting decision avoids the Mercedes problem: a manufacturer cannot evade the rule by drafting subscription terms that disclaim the liability.

This argument has academic backing — Geistfeld in the California Law Review (2017), Abraham and Rabin in the Virginia Law Review (2019), and the IATR’s 2023 model framework which I have previously written about—but no jurisdiction has formally adopted it.

The near-term opportunity is in Texas. The state’s new Autonomous Vehicle Operation Permit regime under SB 2807 takes full effect on 28 May 2026; applications are open through the Motor Carrier Credentialing System. The certification requirements address operational compliance and minimal-risk capability—registration, insurance or self-insurance, federal compliance, a recording device, a first-responder interaction plan—but do not include an express liability-allocation condition. That is the gap an operators-pay rule would fill. The Texas DMV has authority under §545.453 to add such a condition by rule, without further legislation. Tesla holds a transitional Texas permit through August 2026; a DMV decision on Tesla’s renewal would be the most informative event of the year. It would show us a state regulator deciding, in writing, whether Tesla’s posture is acceptable.

In one sense, this may seem a great deal of fuss over nothing. Thanks to the Benavides decision, it’s clear that if an AV firm’s products are responsible for harm, the firm will be responsible for that liability; despite its attempts to evade accountability, Tesla will pay. The question is how AV firms will pay. Will it be predictably, contractually, up front, in exchange for procedural protections; or unpredictably, by jury verdict, in exchange for nothing?

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As I wrote in the very first issue of Changing Lanes, the posture firms take matters. Each redaction of a safety report; any disclaimer that fails to bind a third-party plaintiff; and every nine-figure fine that reads as a manufacturer made to pay against its will; all are fuel for backlash that will not stop at the bad operator. The technology has survived the Benavides verdict, and it has survived the death of a major firm (like Cruise).3 But it is not clear it can survive widespread conviction that the firms deploying it are taking sides against the public.

Confident manufacturers reveal themselves by accepting responsibility, as Waymo does. Unconfident manufacturers reveal themselves by refusing to accept it. They will discover, as Tesla did in Benavides, that their attempts to escape responsibility won’t save them. The best outcome is for AV firms to be smart and accept that liability up front.

If they won’t, our regulators should impose it.

The subject of today’s piece is California Forever. I met the firm’s CEO, Jan Sramek, at Progress Conference 2025, where the seeds of today’s piece were planted. I’m pleased to report that I will be attending Progress Conference 2026 in October, where I will be speaking on driving automation, alongside fellow speakers Dmitri Dolgov, the co-CEO of Waymo, and Ryan Oksenhorn, co-founder of Zipline. (Other speakers include two Nobel laureates and various other luminaries who don’t work on transport, but we won’t hold that against them.) There is no place like Progress Conference to learn about the future we deserve, and meet the builders who are making it happen. Attendance is by invitation; apply for one here.

My investigation When Was Peak Book?, formerly paywalled, is now available to all subscribers. I hope you enjoy it!

In the spring of 1947, William Levitt broke ground on 1,200 acres of Long Island potato farmland, with the aim of building cheap houses, fast, for returning veterans who needed somewhere to live. The resulting community, Levittown, had 17,000 homes on wide residential streets; it immediately became the template for how Americans built greenfield housing, and remains so today.

Levitt was not making a statement about the ideal type of urban form. His aim was only to build what people wanted as quickly and cheaply as he could. Since automobiles were omnipresent and land was cheap, he settled on curvilinear streets on generous lots, with no provision for walkable density.

That was three generations ago, but the legacy lives on. Nassau County, where Levittown was built, today remains almost entirely car-dependent, since its physical form does not permit sufficient transit for car-free living. On the scale of a human lifetime, the choices Levitt made were irreversible. So are the choices made by the innumerable developers who followed Levitt’s pattern.

On 15,000 acres of Solano County, California, roughly midway between Sacramento and San Francisco, Jan Sramek and his team are making their own irreversible choices today.

The company is called California Forever. Its CEO is Jan Sramek, a former Goldman Sachs trader and education entrepreneur who spent the better part of a decade assembling the land and the political coalition necessary for the project. Originally proposed as a new community, through the entitlement process, the city has now become an expansion of an existing city, Suisun (pronounced SOO-soon). A truly new American city, rather than a suburban master-planned community; a city built from bare ground on its own logic; that hasn’t happened at this scale in living memory, which makes it interesting indeed.

The project is complex and contested. It has its advocates (I am one) and its detractors (there are many), who clash over the impact of the project and the value it can add to California and the USA.

None of that is what this piece is about. This piece is about mobility.

Readers may know that I am one of the very few people who has been employed on a project to build a new neighbourhood, with the explicit responsibility of thinking through the mobility elements that would make it up, and how they should interact with housing and urban form. I have written about the conclusions I reached, and the experience of reaching them, before. So I am one of the very few who has parallel experience to what Sramek and company are doing now. Even so, my experience is a loose fit with what is happening in Suisun, because the Quayside project that I worked on featured roads, sewers, and much of its other infrastructure before we began to plan. In many cases we had to colour within the lines, but California Forever is much less constrained. Given that freedom, how bold will the vision be?

To answer that question, earlier this year, I sat down with Sramek to discuss, with the aim of understanding what sort of mobility system the California Forever team wants the Suisun Expansion to have, and whether its approach can bear scrutiny.

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Locking In the Right Form

New post-war American development locked in car dependency from the start, by designing for the car as the primary mobility mode. Putting the car at the top of the hierarchy means that many other choices are made immediately. These included wide arterials that tried to accommodate both throughput and access, and largely failed at both; surface parking lots that separated buildings from the street; and setbacks that made walking unpleasant.

These decisions cast the city in amber, or rather, in concrete. Changing any of these after the fact, assuming one could find the political support to do so, would require the physical reconstruction of billions of dollars of infrastructure. This has meant, in effect, that doing anything differently is impossible.

The decisions made at a city’s inception are more-or-less permanent. This means that the decisions California Forever makes about Suisun Expansion now, before construction, will be irreversible. And the first of these irreversible decisions is: the Expansion’s streets will be public realm first, and transport infrastructure second. “Fundamentally, we treat streets first as places for people to spend time in,” Sramek told me, “and second as places where mobility happens.”

The Specific Plan that governs the Expansion’s development encodes this into the physical fabric, with narrow rights-of-way (residential slow streets run as narrow as 20 feet), fine-grain block structure with parcel frontages of 16 to 25 feet, frequent building entries, and back alleys absorbing service functions. Designing this way is a deliberate foreclosure of car-centric possibilities, now and in the future.

The second irreversible commitment is the rapid-transit lane network. The Specific Plan mandates dedicated and physically-separated transit lanes, with stops every quarter-mile, on lines spaced half-a-mile apart, meaning that the Expansion residents and visitors will always be within walking distance of a good higher-order transit option.

Planners use a heuristic that people are willing to walk as far as 300m to a bus stop but 700m to a subway stop; put another way, the better the transit, the farther patrons are willing to walk to reach it. Whatever the technology, rapid transit in its own right-of-way is closer to a subway than to a city bus, so the Expansion placing lines a quarter-mile apart (just over 400m) seems like excellent provision to me.

When I first read up on California Forever, the network was going to consist of Bus Rapid Transit (BRT) lanes; as a former BRT network planner, I approved of this decision. When I learned these were being renamed as “RT” lanes, I worried; BRT remains, in my view, the best way to build cheap, effective urban rapid transit, but suffers from prejudice against the bus as a transport mode. Was California Forever giving in to irrationalism?

That concern turns out to be unfounded. The renaming indicates agnosticism on the California Forever team’s part on what mode should run in that lane; it will likely be shuttles in the early days, buses as the city grows, with possible conversion to a rail-based solution later (the lanes are being constructed to accommodate such a conversion in the future.)

The critical priority, as per Sramek, was reserving the space in the right-of-way; the technology that fills it is secondary. The first buses may be automated shuttles, which certainly caught my attention (more on this shortly). As the city grows and demand warrants it, those corridors can carry higher-capacity vehicles. The key thing, the irreversible decision, is to build protected rights-of-way first. Everything else is adjustable.

The third decision is the Expansion’s density. The Specific Plan sets a minimum residential density of 30 dwelling units per net acre. The reason for that figure is that it represents the minimum below which neighborhood retail struggles, and the passenger volumes don’t exist to sustain viable public transit at a frequent schedule. (It’s also the rough density of San Francisco at its urban core.) Locking in the right density floor before the first parcel sells should keep that floor constant in the future, ensuring that transit always has enough people nearby to support it, a policy I have advocated for in the past.

The final structural decision California Forever is making upfront is keeping the parking at the edges. Suisun Expansion will welcome cars at the city’s edges, in public garages at the city’s boundaries. Access to these will be priced dynamically at all hours, with the revenue directed toward funding the city’s transit and cycling infrastructure. By making the core inhospitable to parking, and using parking revenue to cross-subsidize other modes, the Expansion will permit car use but create strong and permanent incentives toward transit and active transportation.

Illustrative rendering of a Suisun Expansion block, from p. 72 of the Suisun Expansion Specific Plan.

Sramek exudes confidence that the choices the team is making are the right ones. His brio rests on a straightforward historical argument, which is that humans have had cities for thousands of years but the car for only twelve decades, meaning that building streets for people, not vehicles, is the more-respectable assumption to make. Cities built on the pre-car model remain, in his word, “beloved”, and so too will new ones.

None of this guarantees the outcome. Locking in good physical form is necessary but not sufficient. Density minimums and protected lanes create only some of the preconditions for transit-oriented urbanism.

That means the rest of the Expansion’s mobility strategy must furnish the remaining ones.

Escaping the Cold-Start Problem

Most people only change their travel habits when they move to a new residence, or change jobs. A brand new community, whether a new city or a new neighbourhood, therefore faces a stark problem:

A) If there is not a robust transit option for people to use when they arrive, they will simply drive everywhere. If transit arrives later, their habits will be set, and they won’t use it

B) If there is a robust transit option for people to use when they arrive, it will be hideously expensive to build and operate, because there will be initially very few users to provide offsetting fare revenue; this typically means that the transit provider can’t sustain the service

Most new neighbourhoods, given this set of circumstances, choose a third option:

C) Run a transit option, but a minimal service: long trips to the nearest hub, or low frequencies, or both. This is cheap to offer, but is not useful, so most people opt to drive, and low ridership numbers never support the case to build new service.

This is another manifestation of the Endless Emergency.

The obvious way to solve this problem is to choose B), and bite the bullet: pre-commit to running good service in advance of construction, as long as it takes and as much as it costs, to bootstrap the new line into viability.

It’s much easier said than done. Toronto has a ‘transit first’ policy on the books that amounts to this approach, but despite decades of new development along the city’s eastern waterfront, has never run better service than a few sad buses.1 All the residents and students who live and study there have therefore made the rational choice to drive.

Another way to finesse the difficulty of B) would be to foreclose the driving option by deliberately not providing driving infrastructure, like parking facilities or multi-lane roads. This would ensure a customer base for early transit and forego the immense cost of auto-centric infrastructure.

This is also much easier said than done: almost every place in North America requires a car to get to, so denying easy auto access to a new urban area seems like a concession that new residents would never accept.

Despite the difficulties, the Expansion is taking B), and using both approaches: pre-committing to transit, and imposing friction on private car use.

This is a heroic approach, but they are being smart about it. California Forever is designing the Expansion’s first neighbourhood to be one where everything is available without transit. When everything in the area is available on foot or by bike, a bus network is initially superfluous to a safe, legible pedestrian and cycling environment. That’s what the Specific Plan’s greenway network and fine-grain block structure aim to provide.

Later, as more neighbourhoods are built, it is the transit grid that will connect them. Sramek showed me a map of the planned network: a grid structure that allows any resident to reach anywhere in the city via a two-seat ride, moving along one axis and transferring to complete the trip on the other.

The Suisun Expansion’s planned transit network. Coloured lines indicate transit routes. Figure 4.38 (p. 115) of the Suisun Expansion Specific Plan.

At first glance, this may seem an obviously sensible approach. At second glance, though, concerns arise. The classic objection to grid networks is that most trips require the patron to board a vehicle, alight, wait, and board a different vehicle. This friction, which transport planners call the transfer penalty, is something that riders hate, so much so that on the margin it discourages transit trips in favour of direct rides, which transport planners call a one-seat ride. The obvious way to obtain one is by hiring a vehicle: yesterday a taxi, today an Uber, tomorrow a Waymo.

California Forever addresses this problem by tackling the transfer penalty directly and indirectly.

The direct approach is simply to keep frequency high. Transport planners measure frequency through headways, the amount of time that passes at a stop between the presence of two vehicles running the same route. The Specific Plan mandates 15-minute peak headways as a floor, which will mean a transfer wait averaging under eight minutes. Sramek cited Zurich and Tokyo as reference models here; both run grid-adjacent networks at high frequency, and neither has a meaningful transfer-penalty problem. A grid with frequent service works like an intersection with a well-calibrated traffic signal: the wait is predictable, so it is tolerable.

The indirect way to address the transfer penalty is by running a high-quality service. Riders consistently overestimate how long they will have to wait when they transfer, which seems to be a fixed feature of human cognition, and one that can’t be remedied. But another such feature which can be remedied is this: the worse the conditions in which passengers must wait—too cold or hot, dazzlingly bright or dark, dirty and/or vandalized—the worse their overestimations. By providing high-quality vehicles and shelters, with good wayfinding, rider discomfort will be reduced, and so will the transfer penalty.

One of the ways the vehicles will be high-quality is that they will, if possible, be automated.

Sramek believes that the Expansion’s initial transit shuttles will very likely be self-driving. (He didn’t mention it specifically, but the form factor and range of Tesla’s Robovan make it an obvious candidate.) Early embrace of shuttle automation is less about reducing the transfer penalty, though doubtless that will be welcome, and more about keeping costs low. By the time California Forever is ready to deploy them to the Suisun Expansion, automated shuttles should have a high capital cost but a low per-kilometre operating cost. In the Expansion’s early, low-density and low-ridership phases, sustainable operating costs will enable the frequent service that is prerequisite to success.

Not Car-Free, but Car-Optional

Suisun Expansion will not be a car-free city.

Sramek is explicit about this, and the Specific Plan reflects it. The goal is not a city where cars are excluded, but a city where transit and active transport options are sufficiently good that most residents choose them, most of the time. The obvious contribution here is the wall of perimeter garages. Cars are welcomed at the edges, parked in shared facilities, and residents complete their last-mile journey by transit, or perhaps by bike or foot.

This is how walkable pre-car cities used to function. The early Nero Wolfe novels, set in 1930s New York City, are perhaps the most accessible illustration of this today: on the (rare) occasions when Wolfe wants to take a car trip, his factotum Archie Goodwin must first walk a few blocks to a garage, pick up the car, and then drive it back to Wolfe’s brownstone. Goodwin, when he wants to travel through New York, simply walks. In the later novels, written after 1945, Goodwin simply parks the car right in front of the brownstone, and walks less. The difference is the friction of the intervening few blocks. A car in a garage adds just enough inconvenience to make travel alternatives attractive without removing the car’s utility altogether.

Suisun Expansion’s residents may have access to an amenity unavailable a century before: an automated car that can be remotely summoned to the residence. This feature would preserve the utility while maintaining the friction, which is the optimal arrangement. Perimeter parking is doing good work here.

Nonetheless Sramek is realistic, and expects that most residents will use their cars when taking trips outside of the Suisun Expansion, at least in the early and medium term. “The majority of people will drive,” he told me, “because they are in Northern California and that’s how people get around, even in existing cities. If people mostly walk, bike, and use transit within the Expansion, we still will have made a massive contribution to the region in terms of walkability and transit.”

I think he’s right about all of this; as much as Suisun Expansion is being designed to make car-free travel genuinely practical, it can’t change the fact that many residents will want to travel elsewhere in the region. For those trips, many (most?) people will drive. All the same, Suisun Expansion can help, and is considering how to do so. Options under discussion include running shuttles to the Suisun-Fairfield Amtrak station, San Francisco’s Transbay Terminal, nearby BART stations, and the Vallejo Ferry. Speaking only for myself, I think the private intercity bus market, which responds quickly to demonstrated demand, will be happy to help serve these destinations as well.2

Two Gaps to Fill

For all the good work that Sramek and California Forever have done, the transportation problems are not yet completely solved. I can see two gaps that need to be filled.

Firstly, goods delivery is unsolved, a fact that Sramek acknowledges. Last-mile delivery will be structurally difficult in a low-car environment. Conventional urban neighbourhoods can accommodate cube trucks and delivery vans, though in a clumsy and unsafe fashion: there are driveways, curb spaces, and sometimes wide lanes. In the Expansion’s narrow-street, high-pedestrian environment, such vehicles will have nowhere to go, meaning that deliveries don’t get made… or that the public realm will be obstructed.

There are a few paths forward. Delivery companies serving Suisun Expansion will be forced toward smaller vehicles, much as they do in old-world environments like Barcelona’s Gothic Quarter: vans rather than trucks. The Expansion can go further by requiring sufficient provision for freight in the building code, namely dedicated pick-up-and-drop-off zones for larger buildings, and/or adequate loading docks, optimized for easy entry and exit by vans. They can do the same for delivery drones on building roofs. The Specific Plan has some references to this, but more will be needed.

Failing this, they should talk early to entrepreneurs who want to help them deliver micro-hubs that would replace delivery to individual buildings within a block with delivery to a single touchpoint. Readers of Changing Lanes will remember my interview with freight expert Sandra Rothbard, who also worked with me at Sidewalk Labs, on the various ways new developments can accommodate freight delivery in an affordable and sustainable fashion; all apply very well to what California Forever is aiming to do.

The team is also thinking about commercial and industrial goods movement. A historic right-of-way running through the site—the old Sacramento Northern corridor, partially intact—offers the possibility for freight service from the Foundry and Shipyard, the new city’s industrial sectors, to the main line.

Secondly, the physical plan is ahead of the operational plan. The Specific Plan is detailed and serious on built form; it is less developed on the governance and financial architecture of transit operations. What the transit agency will look like in practice, how it will be funded at scale, and what triggers determine when routes are added and frequencies increased, are all underdeveloped.

This is not unusual for a project at this stage of development; design decisions must come first. But I note that it is matters like these that will determine whether transit-oriented design produces transit-oriented behaviour. Physical form creates the preconditions, but operational architecture is what activates them. Fortunately, the Specific Plan is doing the harder of the two jobs. The job ahead is easier. The TMA model is a promising first step, but it depends on employer and resident participation. A step in the right direction would be to require that all employers and residents join the TMA, much as college students are obliged to pay dues to the student society.

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Just as the residents of Levittown today live with the consequences of choices made in 1947, by people who are long dead, California Forever’s choices this year will outlast everyone making them. A resident of Suisun in 2075 will live in a physical environment shaped by the decisions Jan Sramek and his colleagues are making today. To their credit, they understand the opportunity before them, and their plan reflects it. They are moving decisively to lock in the preconditions for transit-oriented urbanism into the Expansion’s infrastructure.

You may think that Suisun Expansion, as described here, is not a place that you would like to live; that you’d prefer an auto-centric suburb, with wide lots, wide roads, and no friction to driving. That’s a reasonable preference, and one that deserves to be satisfied. Fortunately, it’s easy to satisfy: the choices Levitt made in 1947 have dominated for decades, and remain available to every developer breaking ground today.

Suisun Expansion is one of the few American projects in generations to make it differently, and allow people with a different set of preferences an affordable opportunity to live a rich, full life without needing a car.

I hope that, in its own way, it is as influential on our future as Levittown has been on our past.

Respect to for feedback on earlier drafts.

In August 2000, Intel was the most valuable company in the world, with a market capitalization of roughly $509 billion. It made that money by selling the chips inside almost every PC in the world. “Intel Inside” was both a marketing sticker and a description of the entire industry’s architecture: one company’s processor, running billions of machines, invisible to end users but indispensable to everyone who built for them. Intel’s dominance seemed self-reinforcing, because the more machines ran on Intel, the more software was optimized for Intel, and the harder it became for customers to leave.

But, gradually and then suddenly, the biggest customers left anyway. ARM captured mobile; Intel cancelled its Atom mobile programme after spending an estimated $10 billion in OEM subsidies to capture roughly 1% of the market, formally walking away in April 2016. Apple announced its move to custom ARM chips in June 2020 and completed the transition when it discontinued its last Intel Mac in June 2023. Amazon, Google, and Microsoft have all built their own ARM-based server chips; by 2025, more than half of all new CPU capacity added to AWS runs on Amazon’s own Graviton silicon. Intel’s market capitalization is less than half today what it was at peak.

In April 2026, the most valuable company in the world is NVIDIA. It has the same kind of dominance, which is the same kind of trap.

Chart courtesy of Claude

NVIDIA is so valuable because its core product, the GPU—originally designed to render video-game graphics—is exceptionally well-suited to training large AI models. That’s why NVIDIA, in our moment, is unavoidable: not just for AI, but also for AV.

To function, AVs need a robust and constantly-updating model of the world around them, which they gather from continuous streams of sensor data: cameras, lidar, radar, and more. They then need to fuse that data into a world model. Based on that model, they must make ongoing decisions, sometimes at a fraction of a second, to ensure the vehicle operates safely and appropriately. And they must do this reliably over millions of miles.

This is, or should be, an AI problem, and NVIDIA makes the hardware the AI industry runs on. It therefore seems reasonable to expect that NVIDIA is just as relevant to the future growth and profits of AV as it is to AI. Jensen Huang, NVIDIA’s CEO, certainly wants us to think that: he has described an AV as a robot that needs a brain, and claimed that NVIDIA is the natural supplier of that brain. And he’s got announcements to back his claims up. NVIDIA has partnered with Mercedes-Benz, Volvo, BYD, Jaguar Land Rover, and other manufacturers, and has disclosed automotive revenue of $2.3 billion in fiscal 2026.

It’s tempting to think that NVIDIA will be to the self-driving car what Intel was to the personal computer: the provider of the infrastructure inside everything, the platform the whole industry runs on.

I’m not so sure.

The analogy holds insofar as NVIDIA today doesn’t build its own AVs but instead provides the infrastructure for those of other firms. Relying on NVIDIA makes sense for companies that don’t own their full technology stack, but as and I have written, owning your own stack is a prerequisite for success, and the biggest companies know it.

The companies who have had the most success in this space are those who believe that their competitive advantage requires tight hardware-software co-design, and accordingly have all built their own silicon. This means that, despite its prominence in the AI sector generally, NVIDIA’s position in driving automation is specific: indispensable to the industry’s middle, unsuitable for companies that need to own the whole stack.

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NVIDIA Was King of ADAS

The most important product in NVIDIA’s automotive business is a chip called DRIVE Orin.

DRIVE Orin is a ‘system-on-chip’, i.e., a single piece of silicon that combines a GPU, a dedicated AI inference accelerator, and an image signal processor, designed to run the trained neural networks that parse camera and sensor feeds in real time. Unlike a data-centre GPU, which is built to train models at scale, Orin is optimized for inference: fast, efficient, and cool enough to operate inside a car. Reliability is important here because automotive functional safety is governed by stringent standards, specifically ISO 26262, an international specification that classifies components on a scale from ASIL-A (lowest) to ASIL-D (highest). NVIDIA had DRIVE Orin certified to meet ASIL-D systematic requirements, the level required for systems that could cause serious injury if they fail.

Earning that certification is not straightforward. The process requires years of design documentation, formal hazard analysis, and a third-party audit. In the most detailed public case, the certifying body reported that the process took a supplier more than four years. The engineering overhead alone is estimated to add 30% to standard chip-development costs. General-purpose chipmakers see no reason to undertake this safety certification because none of their other markets demand it. But NVIDIA took it on and dug itself a meaningful moat in the process. A rival chip that matches Orin’s raw compute but lacks ASIL-D certification cannot be legally deployed in a production vehicle in most major markets. The certification is part of what NVIDIA is selling.

NVIDIA didn’t stop at the chip. It built ‘DRIVE Sim’, a simulation environment for training and testing autonomous systems before they touch a real road, and ‘DriveOS’, the software layer that manages how Orin’s hardware resources are allocated. It also published a reference architecture, called Hyperion, that showed Tier 1 automotive suppliers exactly how to build a production system around Orin. The effect was to reduce the work an automaker had to do itself. If an automobile is indeed a robot that needs a brain, NVIDIA sells not only the brain, but the robot’s DNA, the instruction manual for the whole body.

The standard measure of chip throughput is ‘tera operations per second’, or TOPS; i.e., how many operations the chip can perform per second, measured in trillions. At launch, Orin boasted 254 TOPS, easily outpacing its closest competitors. Mobileye, the Israeli chip designer, offered its EyeQ5, which delivered only around 17.6 TOPS, while San-Diego-based Qualcomm’s Snapdragon Ride product, targeting the same applications, had a mid-range SKU at approximately 100 TOPS.1

NVIDIA’s investment paid off. Between roughly 2022 and 2025, DRIVE Orin became the dominant AI chip for advanced driver assistance (ADAS) across the Chinese electric vehicle market. More than ten Chinese OEMs shipped consumer vehicles running Orin during this period. BYD, the world’s largest EV manufacturer by volume, equipped more than one million vehicles with its NVIDIA-powered “God’s Eye” driver-assistance system by mid-2025. Other Chinese automakers like NIO, XPeng, Li Auto, Zeekr, and Xiaomi were scaling from basic cruise control to ADAS fast at this time, and NVIDIA had what they needed: a production-ready chip with the right performance, the right safety credentials, and a complete development package that allowed them to make the transition right away rather than build their own chips, or simulation environments, or vehicle-chip integration systems.

NVIDIA had competition in the Chinese market from Mobileye and Qualcomm, but not serious competition: only NVIDIA could deliver so much quality at such a scale, which meant it could charge a significant premium. NIO CEO William Li stated on the firm’s Q3 2025 earnings call that switching to its own chip delivered “approximately 10,000 yuan ($1,420) in cost optimization per vehicle,” a figure that illustrates how much profit NVIDIA gets from Orin.

Undoubtedly, some of NVIDIA’s customers would prefer to take their business elsewhere, but doing so is difficult. Finding a new supplier would mean re-earning safety certifications from scratch, establishing new sets of relationships with parts manufacturers, replacing software toolchains, and retraining engineering teams. Bringing chip-making in-house incurs all these difficulties and more.

But it might be worse than the alternative. NIO VP Wang Qiyan put the underlying logic plainly: “Leaving our fate in the hands of suppliers is terrifying.” That’s why, despite the cost and challenge, NIO ultimately switched to an in-house chip, a move that required over 600 engineers and more than 140 million dollars, taking four years from project start to deployment (2021 to March 2025).

Whether the implications of NIO’s switch were good or bad for NVIDIA depends on your perspective. It shows that reliance on NVIDIA’s product (what an economist might call its installed base) has become a moat, and that crossing it to make one’s own chips requires immense time, expense, and inconvenience. But it also shows that if the economic case for leaving becomes strong enough, NVIDIA’s customers that can do so will power through to switch, as NIO did.

The Frontier Built Its Own Silicon

Some notable names are absent from NVIDIA’s customer list. Waymo isn’t there, nor are Tesla and Zoox; none of the companies most associated with the frontier of genuine driverless capability. That’s because none of these companies adopted NVIDIA’s automotive platform— not Orin, not DriveOS, not the Hyperion reference architecture—even as a transitional step.

To understand why, it helps to look at how the most capable AV systems are built.

In self-driving cars built this decade, what separates the frontier companies is not a better chip, but rather their co-design loop, in which sensors, compute, and software are developed together, each constraining and enabling the others. The chip shapes the models; the models shape the chip; the sensors constrain both. Designing all three together, each informing the others, learning quickly how to improve and deploying those improvements is the key to success in this domain. Co-design permits a faster, more power-efficient, and ultimately cheaper unit than anything assembled from off-the-shelf parts could be.

This is why Waymo builds everything from scratch.2 Waymo operates more than 3,000 robotaxis across ten American cities, completes 500,000 paid rides every week, and has logged more than 200 million fully-automated miles. Its sixth-generation system, which began fully autonomous operations in February 2026, uses custom chips designed entirely in-house. Waymo didn’t adopt NVIDIA’s automotive platform at any stage of its development. From the start (as far as outsiders can tell), the company concluded that the hardware-software design loop was too important to hand off to an outside supplier.

The same pattern holds across every company that has reached genuine scale in full autonomy. Tesla has designed its own AI chips since 2019, and before its robotaxi programme shut down, Cruise had a 750-person hardware team and began developing four custom chips. Its head of hardware, Carl Jenkins, told Reuters that NVIDIA’s pricing was simply unsustainable: “There is no negotiation because we’re tiny volume”.3^[3]

There is one exception to the case, namely Aurora, the first company to operate a commercial driverless Class 8 trucking service. Aurora launched that service in April 2025. It operates on U.S. highways and had logged more than 250,000 driverless miles by January 2026. And it uses NVIDIA chips.

Aurora’s reliance on NVIDIA may seem to suggest that NVIDIA will be a major player in frontier AV after all, but the conclusion doesn’t follow. Waymo’s system is the product of a tightly-integrated sensor suite—13 cameras, four lidar units, six radar units, all custom-designed and built in California—combined with a custom compute stack and proprietary software developed together from the start; its performance depends on that integration at every layer, which is why controlling the hardware matters. Tesla and Zoox are going even further, building their own vehicles and integrating their sensor suites into them. Aurora’s strategy is the opposite: it aims to build a strong standalone driving-automation suite, the Aurora Driver, and deploy it across OEM platforms it doesn’t control and cannot customize. This means that for Aurora, NVIDIA’s off-the-shelf, safety-certified hardware is the cheapest and best solution to their needs.

That structural logic makes Aurora a different kind of test case: not whether NVIDIA’s platform survives frontier defection—Aurora does not, at present, have motive to defect—but whether NVIDIA can support a full-autonomy deployment at production scale without triggering the cost pressures that will drive Aurora toward custom silicon, as it did to NIO and Cruise. The 2027 deployment will begin to answer that.

At this point, one may wonder whether this is the AV equivalent of Apple vs. Android: a premium integrated tier and a larger “good enough” platform, both of which can coexist indefinitely. I think it’s unlikely to be the case. The mobile-phone sector sustained that bifurcation because each offered its own standardized platform on which others could sell software. In driving automation, the competitive advantage is the hardware-software stack itself. There is no equivalent of a ‘better app’ that runs on general-purpose compute and outperforms tight co-design.

So NVIDIA doesn’t have Waymo nor Tesla, but they do have Aurora, and more besides. It’s tempting to think that NVIDIA doesn’t need Waymo or Tesla, nor any American self-driving firm, given that NVIDIA’s strength in driving automation is in supplying the Chinese ADAS market, which is a strong foundation.

But that foundation is eroding.

Artist’s conception.

As I mentioned, NIO has migrated its main vehicle lineup to an in-house chip. Meanwhile, XPeng’s in-house Turing chip claims roughly three times the processing capacity of a single Orin unit. Horizon Robotics, a Chinese startup competing directly with NVIDIA in the automotive AI chip market, now commands approximately 50% of the Chinese domestic driver-assistance chip market by volume. The same pressures that push full-autonomy companies toward custom hardware—managing costs, controlling their own supply chains, and the painful inability to specify power consumption or performance—are now pushing on the Chinese manufacturers that have gotten big enough to go it alone, as NIO did. (It certainly doesn’t help that in September 2025, the Chinese government issued an advisory explicitly discouraging Chinese OEMs from purchasing NVIDIA chips, but that directive seems less like a sudden break and more like pushing on an open door.)

Outside China, NVIDIA’s position looks intact for now. Aurora has committed to the company’s next-generation chip, DRIVE Thor, which delivers roughly four times the processing capacity of a single Orin unit, with a 2027 deployment target. DRIVE Thor has more than 15 announced adopters across passenger vehicles, trucks, and robotaxis, and its product timeline appears to be proceeding normally. So NVIDIA seems safe, for so long as no Western OEM reaches the volume threshold that would make going in-house compelling.

Intel’s Present Is NVIDIA’s Future

NVIDIA is a supplier of silicon infrastructure to companies that don’t need to own the whole stack. Most of the companies building driver-assistance systems today are not Waymo or Tesla; they lack the engineering depth, the production volume, and the competitive logic that would make custom chips worth building. For them, NVIDIA’s complete package is the rational choice. And NVIDIA’s contribution is real: it enabled an entire category of companies to deploy sophisticated driver-assistance systems faster than they could have independently. That enables safer driving technology to reach ordinary drivers more quickly, and it deserves credit for it.

What NVIDIA hasn’t managed, and what the evidence suggests it structurally can’t, is to become the foundational platform for the companies at the frontier of full autonomy. The firms defining what genuinely driverless vehicles will look like have all concluded that owning their own compute is non-negotiable.

Aurora’s planned 2027 deployment on DRIVE Thor is the clearest near-term test of whether that conclusion has exceptions: perhaps Aurora will deliver commercial Level 4 freight autonomy at production scale on NVIDIA hardware and report that the cost and capabilities hold up as volumes grow. If we saw that, and/or a major Western OEM reversing course on a planned in-house chip programme and committing to Thor at volume (absent geopolitical pressure), I’d update my views. The first outcome would suggest that NVIDIA’s ecosystem can underpin full autonomy rather than just ADAS; the second would suggest the ecosystem moat is deeper than current evidence suggests.

But absent those developments, it’s fair to say that NVIDIA built the tools that let most of the industry move faster than it could have on its own. However, its fastest-growing customers are leaving it behind, and the firms that are furthest ahead never used it in the first place.

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Intel’s story didn’t end with its displacement. It remains a large and profitable business, selling chips into markets that don’t require custom silicon. NVIDIA’s story in driving automation may follow a similar arc: indispensable to the many, bypassed by the few who get large enough to need something built precisely for them. The parallel is to Intel-in-2018, not Intel-in-2024: the frontier defections have started, but the displacement is not yet irreversible.4 Whether NVIDIA escapes the trap is the question the next hardware generation will begin to answer.

The same dynamic that overtook Intel—frontier defection, followed by volume compounding among customers that reached the scale threshold—is already visible in NVIDIA’s automotive business. Whether it plays out over five years or fifteen depends on how quickly the Western ADAS market matures, but I think the direction is not in question.

Respect to , and for comments on earlier drafts.

For the first time ever, we couldn’t get a seat at the bar. The Long Branch Social House was packed, as full as we’d ever seen it. Instead of sitting in our usual place, we found an available table (one of only two) and settled in.

Our server T came over, and we asked him, in all innocence, what was happening tonight that had brought in a crowd.

He gave a forced smile. “You haven’t heard? We’re closing tomorrow. This is our last night in business.”1

I moved to Long Branch in southwestern Toronto four years ago and began exploring the neighbourhood. Back then, a different bar operated in that space, which I found unimpressive. Nothing was wrong with it; the food, the service, the atmosphere were all fair but not good. After my first visit I left with no intention of going back. When I found out later that it had closed, I was unsurprised.

Later my girlfriend, now my wife, moved in with me. She uses Instagram, where she follows local businesses, and learned that the site had new management. It was now operating as the Long Branch Social House, and she thought we should try it out. I don’t remember when exactly that was, but I suppose it was about two-and-a-half years ago, shortly after it opened. Coloured by my previous experience, I was skeptical, but willing to give it a try.

It’s funny, now, to realize that I don’t remember that first visit of ours, given how important it was. But that’s because all our visits ran together; for the last two and a half years, my wife and I went there at least once, and sometimes twice, pretty much every week.

The sociologist Ray Oldenburg spent most of his career thinking about places like the Social House. In The Great Good Place, published in 1989, he coined the term ‘third place’, meaning the informal gathering spaces that exist outside home and work: the café, the barbershop, the pub. Home is the first place. Work is the second. The third is where you go when you don’t want to be in the first two.

Oldenburg identified several qualities that define a genuine third place. It is neutral ground, with no one playing host. It’s socially levelled, with no hierarchies. It has a core of regulars who set the tone, who by example teach newcomers how to behave in the space, and who help those newcomers feel included. And it provides what Oldenburg called “a home away from home”: the same feelings of warmth and belonging, but without the obligations.

My wife has had locals before, and has lost them. She has learned to hold them loosely, knowing they may not last. I had no such experience: this was my first local, and my first time losing one.

And so I wasn’t prepared for how much it stung.

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My wife and I sat, and took in the crowd, and nursed our drinks. They were our usual order: T hadn’t needed to ask, only to confirm (a glass of Sauvignon Blanc for her, an Old Fashioned for me). And, to my own surprise, I grieved, just as I have when a loved one has died. I asked myself, what am I grieving? What have I lost here? I thought about third places. Oldenburg wrote that “nothing contributes to a sense of belonging in a community as much as membership in a third place”. And that was what it was. We had lost a small part of who we were.

C owned and ran the Social House with M. We saw her more often than him, as they also ran another establishment nearby where he spent the bulk of his time. T, a jolly hockey dad, and D with her dazzling smile, were the people we saw most often behind the bar. K was occasionally working a shift when were there, but we saw her more often as a fellow patron; she liked the place enough to spend time there off-shift. We saw less of A and the other wait staff, as they managed the dining area and we preferred the bar, but we always shared smiles and waves, and often a brief chat.

The principal attraction was the food, all of which was made in-house and was consistently great, much better than typical pub fare. When I was hungry, I often ordered the burger, with its side, a mountain of crisp-but-not-oily French fries. When I just wanted a bite, the fish tacos were consistently great. And I always checked the seasonal menu… its greatest hits included the shrimp scampi and the Scotch egg. I pleaded for those items to make the permanent menu, and was assured that they would come back (famous last words).

There was often live music, which ranged from ‘merely pleasant’ to ‘quite good’. Many of the patrons there on the last night were musicians who had graced the Social House’s stage, and had more to mourn than I did: the loss of a venue, of which there are fewer all the time, where they could get paid to perform. When the music wasn’t live, the sound system seemed to play only the greatest pop hits of the 1980s. I was aware that I was being pandered to, that this playlist—Prince, Madonna, Springsteen, Michael Jackson—had been calibrated for people of my age and demographic. I didn’t care. When you’re home, people cater to you, and the playlist meant I was where I belonged.

It was a working-class place; the patrons tended to jeans, baseball caps, and sports jerseys. There were multiple TVs. Some showed pub trivia, others showed compilations of equal parts ‘sinking a basket, at midcourt, while looking away from the net’ athletic feats, and ‘guy in the gym hits himself in the crotch with a free weight’ follies. The TV in the dining room wasn’t visible from where we usually sat but always seemed to be showing Gordon Ramsey’s Hell’s Kitchen on loop. No matter where one sat, there was always a visible TV showing a sports match.

But the Social House also had a huge disco ball in the open area in front of the stage. It hosted drag shows on Sunday afternoons in the summer; we attended a few, and had hoped to attend more. I have almost no interest in sports, but enjoy the company of people who have great interest and let it show. The place was a big tent, and contained multitudes. It never felt like a caricature of itself, like Cheers; or maybe it’s more accurate to say that, while I was there, I never felt like Frasier Crane.

Our visits began to run together. The Social House stopped being somewhere we decided to go and became somewhere we simply went, the way we go down to the lake on Saturday mornings, without discussing it. That’s how a good local works; you don’t notice it. It becomes part of the background, of the texture of your life.

On those Saturday visits to the lake shore, we would occasionally see C from a distance, exercising his dogs. He lives in the neighbourhood, as we do; the Social House was operated by local people for the benefit of same. I keep returning to the fact that some of the staff liked to socialize there when not on shift; it wasn’t just part of the community, it was a community.

I don't know, but I suspect, that the Social House closed because its landlord raised the rent, with an increase steep enough that running the place no longer pencilled out.

In Canada, there are no limits on commercial rent increases. A landlord may raise rent by any amount at lease renewal, with no obligation of reasonableness and no recourse for the tenant. Some urbanists think a truly open market like this one promotes better outcomes in the long run. Others think that commercial tenants, like residential ones, should be entitled to limits on rent increases, in order to permit long-term planning and encourage stability of occupancy. I haven’t studied the matter in sufficient depth to hold a position. But I do shake my head at the short-sightedness of a landlord who prefers an ultimatum to a negotiation.

I suppose that the landlord made a take-it-or-leave-it offer, and I suppose that the Social House chose to leave it. That means that the staff have lost their jobs, the musicians have lost their bookings, the party-goers (and there were a lot of them, retirement parties and 50^th birthdays and fundraisers) have lost their venue.

But the landlord has lost the rent. The building will now, in all likelihood, sit empty through the summer, which is precisely the season when a patio operation in Toronto generates revenue. It’s baffling to me that the owner would rather kill an existing business that was doing well, and better all the time, than take the chance that a new tenant, saddled with even higher rent, will take a gamble on setting something up there.

I don’t know the details. The landlord, whoever they may be, may be in the perverse situation that describes, where their financial position is better off with a high rent on paper, even if no one’s paying it. Or perhaps they are simply looking for an exit. Lakeshore Boulevard is under sustained development pressure: a few steps away from the Social House, just down the block, a retail strip is about to be replaced by a 43-storey condo tower. Perhaps such a redevelopment is in the Social House’s future; it does have an unusually deep lot, both for the area and for its particular block.

If that happened, it might be a good thing. The Social House is walking distance from a transit hub, home to both the Long Branch commuter-rail station and the terminal stop of the Lake Shore streetcar. I know that because on some evenings my wife would take transit from her office and walk over to the Social House to meet me there. A transit-rich area falling within Toronto’s boundaries, like this one, should be denser, and it seems that the market believes that too.

I agree with that we urbanists should honour the past we have lost without ceasing to build the future. But today I’m more in the mood for the former.

Robin Dunbar is an Oxford anthropologist who has studied what British pubs do for the people who spend time in them. He has found that people with a local pub have larger social networks, feel more socially engaged, and are more likely to trust their neighbours. Those without one have significantly smaller networks. That matters, because our social networks “provide us with the single most important buffer against mental and physical illness”.

A local pub is part of that buffer, which is why it is concerning that we’re losing so many of them.

Three minutes’ walk away from the Social House, just one block over, there used to be a beer-and-chicken-wings place, Sloppy Joe’s. It closed in March 2025 after 54 years of operation by two generations of the same family. The operators’ final statement read “Our father opened this business in April of 1971, driven by the dream of creating a neighbourhood gathering place that felt like home.” Sloppy Joe’s is one of the more than 5,000 bars and nightclubs that Canada has lost in the past twenty-five years.

In the year 2000, the country had almost 9,000 such establishments. Today there are fewer than 4,000.

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There are many causes for the change, and they stack. The pandemic ban on going out was more than many places could handle. Since it ended, we’ve had rampant cost inflation. Meanwhile, social drinking has been on the decline for decades, while the Internet has been on the rise. I mention the Internet because it’s the most obvious contributor to the broad and ongoing social trend to stay in rather than go out. A guest writer on Derek Thompson’s Substack described this recently as “toxic solitude”. In Canada, a 2024 survey found that 60% of Canadians feel disconnected from their community, and 36% report having no third place at all.

We don’t go out to third places, so they struggle and close, so it’s harder to find a third place, so we don’t go out, and the vicious cycle turns.

Friday night, we settled our bill. We said our goodbyes. The crowd was thinning now; the hard core would remain for a few more hours, but others had already begun to leave, and it was our turn. We walked out and went home.

Love songs sound saccharine, until you fall in love. Breakup songs seem overwrought, until you’ve been dumped. And if you’ve never had a local, this line seems trite: that sometimes you want to go where everybody knows your name.

But it turns out to be true.

So does this:

Every new beginning comes from some other beginning’s end.

Bets are a tax on bullshit.

I use that term deliberately, even though it’s coarse, because it has a specific meaning, one that nonsense or lies or malarkey doesn’t convey. As per the philosopher Harry Frankfurt, bullshit has a precise definition: it is speech produced without regard to its truth or falsity. It doesn’t intend to track reality, but to persuade, impress, or signal some quality in the speaker. Whereas liars aim to conceal the truth, bullshitters are indifferent to it. They are playing a different game.

Bullshit is everywhere, and it makes it hard to understand the world. This is a problem, and a bet is one solution to it, because a bet clearly aligns speech with belief. Someone might say that he’s sure Canada will win a gold medal in shot put at the next Olympics. Does this person really believe that? He might be bullshitting, saying words that don’t correspond to anything about what will happen at the Olympics, but instead correspond to how much he loves the country… or wants us to think he loves the country. Ask him to wager $100 on whether Canada wins a gold medal at shot put, and his incentives change: now, his claim must rest on what he actually thinks will happen, not what he wants us to think about him. If he declines the bet, you have learned something about what he really thinks.

Prediction markets are an attempt to scale up this insight.

Polymarket hosts well over a hundred open markets on innovative mobility, and their prices are telling. In the Tesla-adjacent markets—which dominate the platform, in our domain at least—a large portion of the crowd is systematically pricing technology risk when it should be pricing regulatory risk, and the result is a consistent overestimate of near-term Tesla delivery.

How Prediction Markets Work

As per Scott Alexander, who made the case at length in his Prediction Market FAQ, a price on a prediction market represents the collective judgment of everyone willing to put money behind their beliefs. If the market underestimates the probability of something, anyone with better information can profit by betting Yes, and in doing so, move the price toward accuracy. Any persistent mispricing is a standing invitation for someone who knows better to make money.

This self-correcting mechanism is what makes prediction markets, at their best, epistemically useful: they reward people for being right, and penalize them for using speech as performance.1 In that spirit, here is what I think the markets are getting wrong, and why.

Before I tell you that, though, let me say a few things as clearly and strongly as I can:

● I cannot trade on Polymarket; Ontario law prohibits me from doing so

● Even if it didn’t, I wouldn’t; I don’t hold mobility-related equities, because I don’t want my analytical work to be influenced by my portfolio

● There is no financial upside for me in the following analysis

● NONE OF THIS IS ADVICE TO YOU ON HOW TO GAMBLE, and if you do, I disclaim all responsibility

You may think that my own lack of skin in the game gives you good reason to discount everything I’m about to say. The only response I can make is that I do care about the truth for its own sake, and that perspective informs all my work at Changing Lanes.

Another thing: the markets never stop moving, but text is frozen in time. My analysis reflects the analysis at time of drafting this piece, which accounts for any difference in the price I discuss and the market you see.

Five Open Markets

Will Tesla launch driverless robotaxis in California by June 30? (17% chance)

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Firstly, I’d like to direct your attention to two op/ed pieces of mine published last week, both having to do with the tragic crash of an Air Canada flight at LaGuardia.

• In the New York Post, I argue that the hidden contributing factor to the crash was lack of airport capacity in North America, and the corresponding imperative to start building airports again

• In the Globe and Mail, I argue that while it’s deplorable that the CEO of Air Canada spoke only two words of French in his message of condolence, it’s indefensible that only one air carrier is expected to abide by Canada’s Official Languages Act

I hope you find both to be of interest.

Secondly, this issue of Changing Lanes is co-written with , who writes the newsletter (which you should certainly subscribe to!). Jannik covers European innovation policy and technology while I cover innovative mobility. We divided the work accordingly; I took the driving-automation material, he took the broader German industrial story. We’ve wanted to work together on something for a while, and this felt like the right subject.

In September 2025, Mercedes-Benz CEO Ola Källenius said on a podcast that his company was “at the front” of automated driving. Listeners would be forgiven for finding the claim persuasive. After all, as he pointed out, Mercedes had 30 years of experience in developing and deploying driver-assistance systems. Not only that, Mercedes was the first manufacturer to certify an advanced driver-assistance system capable of handling all driving tasks under very specific conditions (what the SAE refers to as a Level 3 automated-driving system) in Germany. It was the first non-Chinese OEM to obtain an automated-driving permit in China as well. “Every new Mercedes has the technology and the onboard computer to drive autonomously,” Källenius said.

Four months later, in January 2026, Mercedes killed the system.

Mercedes confirmed that month that Drive Pilot would be dropped from the facelifted S-Class and EQS, the avowed reason being that Luminar, the LiDAR supplier Mercedes had depended on, had failed to meet its contractual requirements (Luminar subsequently filed for bankruptcy in December 2025). A few weeks later, BMW followed by scrapping its own “Personal Pilot” from the 7 Series facelift.

With no German manufacturer publicly selling a car with a Level 3 automated system (as per the SAE), German AVs seem, for all practical purposes, dead.

The choices that Mercedes has made are not unique, but part of a pattern, one that extends well beyond one model line or one company. Germany built the first automated cars. It holds every conceivable advantage, including engineering talent, manufacturing scale, regulatory influence, and established brands; and yet it is poised to license the automotive future from companies in California and Beijing, leaving the 716,000 workers in Germany’s automotive sector at the mercy of decisions taken elsewhere.

The reason for this surprising forfeit is that German OEMs lack the capability to train and scale an AI system that perceives an unpredictable environment and makes real-time driving decisions. This stack improves through more data, more compute, and more iteration cycles. German OEMs are increasingly absent from this stack as original developers.

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Understanding why this is happening requires looking not at what Germany failed to do, but at what kind of industrial economy it has, and the different kind that the twenty-first century requires.

A Huge Lead, Squandered

Germany beat everyone else to driving automation. As long ago as 1986, Ernst Dickmanns at the Bundeswehr University Munich began outfitting Mercedes vehicles with cameras and custom processors to teach them to read the road. By 1994, his twin automated sedans were driving themselves on European highways at 130 km/h in normal traffic. A year later, a modified S-Class completed a Munich-to-Denmark run at speeds reaching 175 km/h, with the system in control for 95% of the journey. The Eureka Prometheus program that funded this work included Daimler-Benz and every other major European automaker.

Germany presided over the birth of automated driving, but left rearing the child to others. There was no commercial pull, no institutional equivalent of DARPA’s Grand Challenges to force the technology out of the lab and onto the road, and Europe’s capability dispersed.

Källenius blamed regulation, not capability, for the slow rollout: “If you develop a product you’re not allowed to sell, no market emerges.” But that can’t be the whole story. China and the USA permitted automated fleets years ago. Waymo, Tesla, Baidu Apollo Go, and WeRide already offer Level-4 automated rides in cities like Beijing and San Francisco. According to Källenius himself, Mercedes was the first non-Chinese manufacturer to get a permit operating AVs in China.

The reason Mercedes and other German manufacturers fail in yet another transformative technology is not regulation.

German manufacturers remain world-class at what one might call the ‘carrier layer’ of automated vehicles: platform construction, crash safety, powertrain integration, supplier management, regulatory certification, and manufacturing quality at scale. Mercedes was among the first manufacturers to sell a car that could parallel-park itself without the driver touching the steering wheel, a feature that struck buyers in the mid-2000s as either impossible or magic; its remote-parking feature is equally impressive. Mercedes’s automated valet parking system, approved commercially in a Stuttgart parking garage in 2022, demonstrated genuine Level-4 capability in a structured environment. Drive Pilot itself is a legitimate engineering achievement: 35+ sensors including LiDAR, redundant steering and braking, centimetre-accurate positioning, and the world’s first series-production Level 3 certification. Germany knows how to build safe, well-integrated vehicles and how to navigate the most demanding regulatory regimes on earth.

But as strong as German OEM capability is, their weakness, namely their inability to build an AI sophisticated enough to automate the driving task, more than offsets it.

That weakness may not be obvious at first glance, given the course Mercedes is taking. The firm is pursuing a bifurcated approach. In the US and Europe, its new MB.Drive Assist Pro system runs on Nvidia’s computing architecture and AI software stack—a Level 2++ system that works in city traffic, on highways, and in parking scenarios. In China, Mercedes has partnered with Momenta, a Chinese AI startup, for the same capability. BMW and Audi have made the same choice: BMW has also partnered with Momenta for China-tailored driver assistance on its Neue Klasse vehicles, and with Qualcomm for broader markets. Audi uses Momenta for its new EV line developed with SAIC, and Huawei’s Qiankun system for its legacy gasoline models.

These partnerships are impressive, but point to a common frailty. All three German luxury brands have licensed core driving intelligence from the same Chinese startup for the same market for the same reason: they cannot match what domestic Chinese competitors are shipping.

The trainable driving stack—the system that perceives, predicts, and plans—is the component most likely to generate compounding returns through data accumulation and algorithmic improvement. One caveat worth noting is that robotaxi economics have not yet been proven at scale, and German OEMs still earn substantial margins selling vehicles. But the evidence that we have is suggestive: Waymo, Baidu Apollo Go, and Tesla are each building fleets or datasets that improve their systems with every kilometre driven. The value of the driving stack compounds, but the value of the vehicle platform does not. A manufacturer that licenses the former while owning only the latter is positioning itself as a supplier to whoever controls the learning system. And not only do suppliers earn lower margins than platform owners, they have no leverage: Nvidia or Momenta can put their driving stack into a different manufacturer’s cars more easily than Mercedes can build their own driving stack. The dependency runs one way.

By licensing the autonomy stack rather than building it themselves, German OEMs are surrendering the future.

An Engineering Economy, Not a Platform Economy

The reason German OEMs do not build their own full-stack autonomy systems lies less in technical incompetence than in a structural mismatch between two types of economy. Engineering economies reward precision, pre-validation, exhaustive testing, and incremental improvement. Platform economies reward aggressive data collection, rapid iteration, high risk tolerance, and network effects. The German industrial system is optimized for the first type, and produces excellent component suppliers and integrators.

It does not produce AI-native platform developers.

Volkswagen’s experience makes the structural point most bluntly. Its in-house software unit, CARIAD, spent years attempting to build an integrated software stack and largely failed, prompting what the Financial Times described as a complete reset, a pivot from indigenous development to integrating partner technology. VW had also co-funded Argo AI, a full-stack autonomy venture with Ford; when Argo shut down in 2022, VW’s response was to partner more, not invest more.

The pattern across German OEMs is consistent: when internal development falls behind, the response is to lease capability rather than build it.

The contrast with American technology companies is instructive (let us stipulate that Tesla is one of these; it has much more in common with them than with Ford or GM). General Motors shut down Cruise, and Ford killed Argo AI; one might cite either retreat as evidence that full-stack autonomy is difficult, and no one has an edge. But those were OEM-backed moonshots. Waymo continues to expand its commercial driverless service in multiple US cities, while Tesla’s effort to build a truly Unsupervised Full Self-Driving system accumulates training data from millions of vehicles on the road every day. It’s true that the American OEMs retreated, but American technology companies did not. Germany, not having the latter, needs to rely on the former.

None of this would matter much if automated driving remained a niche feature for early adopters, but the trajectory of automotive technology suggests it won’t. Power steering, anti-lock brakes, and power windows each arrived first as a luxury add-on and became a baseline expectation within a generation; backup cameras and Bluetooth links to a driver’s mobile phone are following that path now. We have every reason to expect that driving automation will do the same. The consumer paying six figures for a Mercedes in 2030 will expect the car to drive itself, at least in some circumstances; the one paying low-five figures for a compact will expect it by 2040. At that point, every car Mercedes sells will carry a software licensing cost to Nvidia or Momenta; a rent extracted from every unit, in perpetuity, by whoever owns the learning stack.

German manufacturers, among all players, should know this the best, and should be fighting the hardest to avoid losing the next battle over a market-defining technology. They have found no answer to Chinese dominance in electric vehicles. Instead, they are lobbying to delay the combustion phase-out, advocating for a slower transition. They are fighting to preserve a capability that their customers will abandon, while ceding to their Chinese competitors the capability everyone will want. Given those circumstances, the fixation on regulation is understandable: German OEMs can’t build competitive EVs, and they can’t make consumers not want to buy EVs, but they can push back against EU regulations that promote EVs. Faced with a difficult problem, they are pulling on the only lever they can reach, and that move is shaping their responses to other problems.

That over-reliance on what they know best is hampering them in other ways beyond technology development. American and Chinese automated-driving leaders are building business models around fleet operations: Waymo runs robotaxis, Baidu’s Apollo Go has reached per-vehicle profitability in Wuhan, and Chinese firms are expanding into the Middle East and Southeast Asia. The logic is to accumulate driving data, improve the system, and monetize through transportation-as-a-service. Meanwhile, German OEMs remain focused on selling vehicles and earning margins per unit.

One might reply that specialization is rational. If Nvidia and Momenta are better at automated-driving AI, why shouldn’t Mercedes license driving ‘software’ from them, while focusing on what they and their workers are best at, namely building the ‘hardware’? Carmakers haven’t been completely vertically integrated since the early days of the industry, and insisting they should become so integrated now seems foolish.

The rejoinder is that automakers have indeed always outsourced certain elements of their vehicles… but never the basis of their brand value. Mercedes commands a price premium because its brand makes a claim about engineering: these cars are built to exacting tolerances by engineers who know how to build them better than anyone else. That claim will remain true of the physical platform, but it will not be true of the software that increasingly defines what the car does. A Mercedes whose driving intelligence comes from Santa Clara and Beijing is not making the same brand claim as the one that justified its price premium in the past. Certainly, the marginal improvements that will make a 2035 Mercedes more desirable than its rivals—meaning the ones consumers will actually pay for—are almost certainly software improvements, not mechanical ones.

When the dominant monetization model shifts from unit sales to fleet-based data services, being an excellent vehicle manufacturer positions you first as a supplier to the platform, not the platform owner. Ultimately, an automaker’s brand value rests on the claim that ‘we know how to build these things and we can iterate the next generation.’

Increasingly, Germany can only assert the first part.

More Than an Automotive Problem

Källenius’s September rhetoric pointed to regulation as the binding constraint: “What we need in Europe is a considered, thoughtful discussion to bring more of this technology to the road.” Germany’s 2021 Autonomous Driving Act does impose strict requirements: Level 4/5 vehicles are permitted only in approved operational areas, require a technical supervisor, and must undergo extensive certification. The US system, by contrast, allows relatively easy testing permits across multiple states. China has issued over 16,000 test licences and opened 32,000 kilometres of roads for automated-vehicle testing.

But the regulatory argument has a fatal flaw: Mercedes itself chose to retreat from Level 3 not because regulation prevented it, but because the commercial case didn’t work. And the system it is replacing Drive Pilot with—MB.Drive Assist Pro—will launch first in China, then in the US, and only later in Europe. If European regulation were the primary bottleneck, one would expect firms to be pushing hardest for regulatory reform. Instead, the entire European public discourse revolves around stopping the EU’s combustion-engine phaseout mandated after 2035.

Germany has no equivalent of Waymo, no full-stack automated-driving developer, and no AI platform champion in any domain. The German Mittelstand produces excellent components, middleware, and specialized tools (sensor companies, simulation providers, remote-driving solutions).1 It’s telling that Momenta has opened a research centre in Stuttgart. The Chinese firm is recruiting German engineering talent to work in Germany, but on Chinese autonomy systems. The Fraunhofer system produces world-class applied research, and German universities train outstanding engineers, yet the value chain consistently terminates before it reaches the platform layer.

And it isn’t just automotive that’s struggling. For example, Germany played a major role in developing the software foundations of modern robotics, particularly through research institutions such as the German Research Centre for Artificial Intelligence and the Fraunhofer Society. Since the early 2000s, these institutes have pioneered robot perception, machine vision, sensor fusion, and human-robot collaboration. Their work enabled robots to interpret visual data, map environments, and safely interact with humans, so today’s warehouses can be automated, factories inspected, and robots do logistics and manufacturing for us. Only, not really in Germany.

While Germany advanced much of the underlying research, companies like NVIDIA built the core AI and simulation platforms used to train and deploy robots, while firms like Boston Dynamics and Amazon developed large-scale robotics systems and deployed them in real-world settings. Germany remains strong in industrial robotics hardware and automation engineering, but the scalable software stacks, AI ecosystems, and platform economics that now shape the robotics industry have largely been driven by US and Chinese technology companies.

A similar platform, pioneered in Germany and later lost to its industry, connected manufacturing to cloud services. The promise of ‘Industrie 4.0’ was that connecting factory machines to cloud platforms would allow manufacturers to pool operational data across entire production networks, use AI to predict equipment failures before they happen, optimize processes in real time, and continuously improve output. Whoever controlled that data layer would shape how the world’s factories run. German incumbents had every conceivable advantage in smart manufacturing: the world’s best machine tool builders, deep automation expertise, and anchor firms such as Siemens and Bosch. They blew it.

Siemens built MindSphere as a platform play, but refused to commoditize its own hardware. MindSphere was always biased toward Siemens equipment, which is exactly what prevented it from becoming the horizontal standard. AWS, Azure, and Google Cloud had no such conflict; they don’t sell factory machines, so they could be genuinely vendor-agnostic, which is what manufacturers actually wanted.

The broader German response, Gaia-X, was supposed to create a European cloud substrate; instead, it produced what one co-founder called “a crushing failure, a colossal waste of time” and what the CEO of Nextcloud described as “a paper monster” of standards documents with no working product. Today, MindSphere (quietly rebranded “Insights Hub”) runs on AWS and Azure infrastructure; the Mittelstand increasingly pipes its factory data through American cloud services; and only about four percent of global cloud capacity is European-owned.

Germany had the factory floors, saw the opportunity, defined the concept, built the machines, funded the research, created a national strategy with cabinet-level backing… and then watched American cloud companies capture the data platform.

The Carrier Layer Is Not Enough

Automotive is the hardest possible case for this thesis. In no other sector does Germany hold more of the traditional advantages: decades of engineering excellence, deep supplier networks, massive production capacity, global brand equity, and a domestic regulatory framework shaped around its own industry. If these advantages cannot produce an AI-native platform developer in automotive—the sector Germany has dominated for a century—there is little reason to expect one to emerge in domains where Germany has no comparable legacy position.

It would be good to be proven wrong. The argument would be falsified if a German OEM were to announce a full-stack automated-driving subsidiary—genuinely owned, not a majority-minority partnership with a foreign platform provider—backed with Waymo-scale capital and operating driverless miles on public roads. Such an announcement would be evidence of a structural shift. The Mercedes–Uber robotaxi collaboration, tentative as it is, is not that evidence.

The structural mismatch between Germany’s carrier economy and the platform economy goes deeper than capability. One major factor keeping German carmakers from investing in breakthrough R&D such as automated driving systems is the ruinous cost of failure. Restructuring is significantly costlier in Germany than in the US: estimates cited in a recent article for Works in Progress by Pieter Garicano put a German corporate restructuring at the equivalent of 31 months of salary per employee laid off, compared to just 7 months in the United States. High severance costs create a fundamental incentive for European businesses to “avoid innovative areas and concentrate on safe, unchanging ones.” This is not because Europeans are inherently more risk-averse, but because avoiding innovative bets is the rational response when the downside of failure is so much larger. Fixing it would require labour market reform; Garicano suggests, for example, allowing workers above the 90th percentile of income to opt out of employment protections entirely, which would make German services highly competitive with the American market.

The 716,000 German automotive workers are navigating a double transition—from combustion to electric, and from mechanical engineering to software-defined vehicles—with employers who are themselves becoming integrators of foreign capability rather than developers of their own. The carrier layer is not disappearing, but it is consolidating, automating, and generating less value per unit than the platform layer above it.

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Källenius told his podcast audience in September 2025 that Mercedes was “at the front” of driving automation. Four months later, that claim can’t be squared with the evidence. But of course, the problems didn’t emerge over those four months; they’ve been accumulating for thirty years. Germany’s genuine strengths in precision engineering, manufacturing quality, and systems integration are the skills that matter least in a competition decided by data accumulation and iteration speed. If the pattern established in automotive holds elsewhere, and there is evidence to suggest that it will, then Germany has a real problem.

It can rise to the occasion, or it can decide to keep doing what it did so well last century. If it chooses the latter, then Germany’s position in the next economy will be that of an excellent supplier, to platforms it does not own, in markets it does not control.

Respect to and for feedback on earlier drafts.

In 2020, Wendy’s and REEF Technology announced they would build 700 delivery kitchen locations across North America. These would not be restaurants, but just kitchens, sited in parking lots and operated entirely for delivery. It was a confident bet about a new way fast-food brands could make money. Not with dining rooms, drive-throughs, and a real-estate premium, but with just the food, dispatched to wherever the customer happened to be.

Less than two years later, Wendy’s CEO told investors the company no longer saw delivery kitchens as part of its growth trajectory. The target, which had already fallen from 700 to 150, fell to zero. Why the pivot? Because average annual revenues at REEF locations had come in below $500,000, or less than a third of what a typical Wendy’s restaurant generates. The REEF locations disappeared, and the parking lots went back to storing cars.

Ghost kitchens, commercial kitchens with no dine-in option that prepare food solely for delivery, were supposed to transform urban food service. A recent edition of Brian Potter’s Construction Physics newsletter, “Is the Future ‘AWS for Everything’?”, is worth reading for its main argument about economies of scale; right at the end, he uses ghost kitchens as a quick illustration of how those economies don’t always pan out, then moves on. Potter’s piece reminded me that five years ago, I was quite bullish on ghost kitchens as the future, before I set the matter aside to think about other things. Looking into it, I was surprised to learn that my analysis back then was dead wrong.

The evidence shows that ghost kitchens have indeed failed. But the emerging narrative about why—pandemic buzz around food delivery, venture capital poured in, post-pandemic consumers returned to restaurants, concept collapsed—is a poor explanation.

Here’s a better account. The ghost kitchen concept bundled two distinct, legitimate claims—a real estate thesis about urban land arbitrage and a mobility thesis about the structural shift to off-premises dining—and both were borne out. But there was a third, hidden claim about who would capture the value generated by those kitchens, and that assumption proved spectacularly false.

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Two Good Ideas…

Ghost kitchens were delivering on two claims at once.

The real estate thesis said: urban land near residential density has value that traditional restaurants aren’t capturing.

At minimum, a good foodservice operation of any kind requires quality ingredients and a capable kitchen, by which I mean not only the physical capital of stoves and ovens, but also the human capital to use it.

A traditional restaurant needs these, but also much more. It needs a ‘front of house’: hosts, servers, and others who deal with customers. It needs premises functional enough to serve patrons and attractive enough to make them comfortable: not only tables, chairs, cutlery, and so forth, but square footage to feature them all. It needs to be reachable, meaning it needs adequate parking, decent transit access, or both. It needs to be in a part of the city that patrons will find to be safe and appealing. And it needs to be close enough to where people live and work that the trip doesn’t feel onerous. Taken together, these requirements mean that the restaurant must be itself, and be in a place, that is desirable, accessible, and visible.

That combination costs money. The rent or mortgage a restaurant must be able to cover imposes a floor on the revenue it needs to generate.

The appeal of a ghost kitchen was that it could shed most of this. Forgoing front-of-house staff would cut operational costs, but more importantly, it would cut capital costs. It could do that in two ways: not only would the ghost kitchen not need to devote space to customer areas, it wouldn’t need to site itself on expensive land at all. It could locate itself in an unappealing part of the city, where land was cheap; even, at the smallest scale, in a retrofitted shipping container in a low-volume parking garage.

But that didn’t mean it could set itself up anywhere. Instead of needing to be somewhere customers would be willing to travel, it would need to be close enough to where enough customers lived that their meals could arrive in a timely fashion, and where delivery costs wouldn’t break the value proposition. Last-mile delivery cost and speed depend heavily on proximity to the people being served, a mechanism that readers of Changing Lanes will recognize also applies to transit and freight.

That was the real estate thesis: that there was enough commercial land unsuitable for a traditional restaurant, but near enough to dense clusters of people, to support this new business model… and that the market hadn’t yet priced this value in, meaning there would be arbitrage opportunities by moving quickly.

The mobility thesis said: restaurants built around sit-down service are poorly designed to also offer delivery service.

This claim follows from how restaurants are built. Their layouts are organized around the dining room: the kitchen is sized to feed the tables, not to maximize throughput. Their equipment and workflows are all calibrated for food that travels ten metres to a table, not ten minutes in an insulated bag. Their ingress points are not optimized for courier access; their front entrances are easy to reach, but courier vehicles would then be taking up space for patrons, and patrons don’t like it when delivery trade is happening in their space. Couriers might instead use back entrances and not disturb patrons, but those areas are deliberately hard to reach, and often can’t be accessed quickly, which delivery couriers require.

This awkwardness supposedly gave ghost kitchens an edge. For the delivery market, a purpose-built production kitchen, designed from the start around delivery—optimized for throughput, packaging, and dispatch rather than ambience and table turns—would in theory outperform a retrofitted dine-in operation on every dimension that mattered.

All of this is true a priori, but was meaningless until quite recently, because food delivery was a niche business. Younger people may not believe it, but well into living memory, the only food one could readily order and have delivered to one’s door was pizza (and, in some markets, Chinese food). The advent of the mobile Internet changed this by making delivery platforms feasible. Once it was possible to order food from one’s couch via a phone's interface, DoorDash, Uber Eats, and SkipTheDishes emerged to aggregate demand and handle logistics. Before the pandemic, meal delivery was already becoming a broadly accepted substitute for going out, but Covid accelerated the trend by making it the only option: dining rooms closed, people stayed home, and delivery volume spiked.

The arrival of food delivery as a business sector made the gap between an existing restaurant's ability to serve delivery markets and a kitchen designed for that purpose apparent for the first time. That was the mobility thesis: that custom-built kitchens for the delivery market could outperform traditional restaurants in that market, and that there was a first-mover advantage to siting and building those kitchens where they could offer the most value.

These were different bets, about real estate and about the food-service market, but proponents bundled them into a single proposition: a commercial kitchen without a dining room. What connected them was a shared assumption that whoever controlled the production infrastructure would capture the value it generated.

That assumption, it turned out, was the load-bearing one.

…and One Bad Mistake

Before turning to where the analysis broke down, it’s worth being precise about what didn’t. Both underlying theses have proven valid.

Off-premises dining is not a pandemic blip that reverted when lockdowns ended. The demand that ghost kitchens were built to serve is real, growing, and profitable.

Data visualization courtesy of Claude, sourced from NRA, Euromonitor, and Uber

The centralized production logic is also sound, in contexts that match its requirements. Reports say that of kitchens serving caterers, meal prep businesses, packaged goods producers, and institutional clients, two-fifths are making a profit and another two-fifths are breaking even. Meanwhile, hospital and institutional food service has adopted centralized production, with meaningful budget savings. These aren’t ghost kitchens as anyone in venture capital imagined them, but they vindicate the underlying logic: high-volume, repetitive, centralized production serving known customers through predictable channels works.

So ghost kitchens had every opportunity to generate business. Unfortunately, what they didn’t have was an opportunity to make a profit on that business. The shared assumption—that controlling the production infrastructure meant capturing the value it generated—failed, and it failed on both theses separately.

The mobility thesis broke on the customer relationship. A purpose-built delivery kitchen, however superior on every production dimension, owns the production but does not thereby own the customer. That’s true for two reasons.

The first is trust. The National Restaurant Association found that 70% of consumers say it matters to them that their food comes from a restaurant with a physically-accessible location. Customers who discovered they had ordered from a major chain operating under a made-up virtual brand name—who had been, as they put it, “catfished”—were upset because they had been deceived about something they cared about, and insisted that such places had to explicitly disclose that that was what they were.

One reading of this preference is that people want the dining experience: the room, the occasion, the presence of other people eating around them. On this reading, takeout is a substitute for dining in, and a delivery partner that has no such option is no substitute at all.

That reading isn’t wrong, but it’s incomplete. We might imagine customers don’t want to order from ‘No-Name Burger Bar’, which lacks brand value or associations with an in-house dining experience; but they should, on this view, be perfectly happy to order from a ghost McDonald’s or ghost Burger King. The whole point of big burger chains like these is that their food is a commodity, prepared the same everywhere, and they have deep and broad brand association and value, meaning that such a facility should not face any trust problem at all.

And yet Wendy’s, whose collapse from 700 REEF locations I wrote about at the beginning of this piece, is the clearest illustration that this reading isn’t enough. Less than two years after the original deal, the unit economics had simply never materialized.

A Wendy’s ghost kitchen, image courtesy of of this Wendy’s press release from 2021

Why? The answer appears to be that consumers are being practical. They want accountability, someone to hold responsible when things go wrong. And as far as customers are concerned, a dine-in restaurant that one can visit has (or seems to have) feedback loops that will make the operators care about hygiene and food safety in ways that an anonymous industrial kitchen will not.

Whether or not this is rational, this is how customers seem to think, and the customer is always right.

The second reason was lack of customer loyalty. A restaurant with a physical presence earns returning customers passively: a good experience encourages repeat business. A virtual brand is not so fortunate, because it doesn’t sell experiences, just food as a commodity. Every customer therefore is a new prize to be won, from the beginning, every time, through a platform that charges for the privilege and has no stake in whether any particular brand survives. 41 of 71 restaurants across five CloudKitchens locations had closed within one year; a 58% annual failure rate, because customer acquisition was a permanent operating cost, not a compounding investment.

Lack of trust or loyalty are two faces of the same coin, namely that ghost kitchens have no independent relationship with their customers. The platform owned that relationship entirely.

So the mobility thesis did not hold. How about the real estate thesis?

Unfortunately, it broke too, and on a single, decisive point. The real estate thesis, you’ll recall, was that operating kitchens rather than restaurants, and on low-value land, would create a significant margin relative to incumbent food producers, and the ghost kitchens would capture that margin.

They reckoned without the delivery platforms. The platforms wanted that margin, and the ghost kitchens couldn’t stop them from taking it.

A restaurant using a delivery platform pays a commission on every order, and often additional fees for marketing placement and payment processing as well. At the time the ghost-kitchen investment cycle was spinning up, the pandemic had made food-delivery the only game in town for meals outside the home, and so multiple U.S. cities moved to cap them at around 30% of the order price. It was against that backdrop that ghost-kitchen investments were made, assuming those rates as a baseline.

Unfortunately low rates were an artifact of the pandemic, and began to rise as Covid receded. While some cities, like San Francisco and New York, attempted to make their caps permanent in 2021, the platforms pushed back in court, and by 2023, they had largely won. New York held out longest, but as of April 2025, even that city had compromised. The new framework there allows 15% for core delivery, 5% for basic marketing visibility, and 3% for payment processing, plus an “optional” enhanced services tier of an additional 20%, covering expanded delivery radius and promotional placement, for a potential total of 43%.

(And 43% is not really optional; operators who decline the enhanced tier are deprioritized in platform search rankings, meaning that the real choice is between paying 43% or being buried algorithmically.)

Certainly a conventional restaurant using a delivery platform pays a commission too, but this was not an existential risk for those businesses, since they only pay it on the portion of revenue that comes from delivery. For most full-service operators, that’s a minority of income. Most comes through the dining room, which the platform never touches. Since a ghost kitchen has no dining room, the commission that is manageable for a restaurant with tables is lethal for an operator without them.

In any case, the failures of the mobility and real-estate theses reduce to the same point, which is that they both assumed if the food producer could generate value, they could keep it. But that was wrong: in the delivery economy, the platform can seize that value, and will.

The Platform Takes the Margin

What remains is an opportunity that hasn’t materialized, and seems unlikely to, even though the two theses about their value are still true. Parking lots are still underused, dead retail is still everywhere, and cities still contain spaces that sit between the density that creates demand and the production infrastructure that could serve it. And it will always be the case that a restaurant optimized for serving in-house customers will find it difficult to serve the delivery market.

Given that, what would need to change for ghost kitchens as originally conceived to succeed? In my view, one of two things.

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One would be a substantial fall in delivery platform commission rates. That seems unlikely, given the direction of the NYC settlement and the platforms’ demonstrated willingness to litigate caps into the ground.

The other would be operators building direct-to-consumer channels that bypass platforms entirely. That seems equally unlikely: it requires exactly the kind of marketing investment and customer-acquisition infrastructure that the ghost kitchen model was designed to shed.

I think the old analysis is still correct; urban land near residential density has logistics value that is currently underused. But it was an error to assume that the value created by unlocking that land would accrue to the one who did the unlocking. It accrued, instead, to the one who controls access to the customer. In the delivery economy, that’s the platform.

This is a pattern that Changing Lanes has traced before. In January, writing about Uber, I argued that what Uber’s subsidy years bought wasn’t network effects, but market power. By the time Uber started charging riders more and paying drivers less, there was no competitor left to undercut it and no regulator with the will to stop it.

Ghost kitchens have been losing the same race. The delivery platforms that ghost kitchens depended on had spent years, and billions, acquiring the same kind of structural dominance. When ghost-kitchen operators tried to capture the margin their model had created, the platforms were already there, and better armed: with commission structures, algorithmic levers, and litigation budgets against regulators.

The question of who captures the surplus generated by urban-logistics infrastructure is the key question of platform urbanism. Ridehail and ghost kitchens are a case study in the answer to that question. The answer, so far, seems to be that the platform always wins.

Respect to for feedback on earlier drafts.

In 1994, France opened Haute-Picardie, a high-speed rail (HSR) station roughly equidistant from Amiens and Saint-Quentin, about 40 km from either. Shuttle buses link it to both cities, but there is no connecting conventional rail service. Locals call it la gare des betteraves, the beetroot station, because the fields surrounding it are full of beets, not people. Annual ridership peaks at around 400,000. For comparison, Arras, the next station in line, has 4 million annually; Lille-Flandres, the next stop the other way, has 80,000 passengers daily.1

The chief value Haute-Picardie station gives the world is serving as a cautionary tale of why we should build transit stations not where it’s cheap or politically convenient to construct them, but instead where passengers want to go.

I’m thinking about Haute-Picardie because I’m thinking about Alto, the putative high-speed rail link that will connect Toronto to Montreal via Ottawa.2 I’ve written about Alto twice before; once arguing that the project is structurally flawed from the outset, and once that the project depends on a regional rail network that doesn’t exist, setting it up as an inferior substitute to air travel. I remain skeptical about whether Alto should be built at all, but if it is to be built, and increasingly it looks like it might, then I want it to succeed… and its success will depend on where it places its stations.

The emerging picture is not encouraging.

Station placement is not a mere detail; choosing where the stations are is the decision point that will most determine the success or failure of the line. And in Canada’s two most important cities, the structural conditions already look more likely to produce the gare des betteraves than the Gare de Lyon.

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Station Placement First, Everything Else Second

Despite the name, high-speed rail’s value proposition is not about speed, but about door-to-door travel time. That may seem to be a fussy distinction without a difference, but it’s not. It’s the crux of the matter.

On pure speed, trains can’t compete with aircraft. The fastest HSR in the world, parts of Japan’s Shinkansen network, reaches around 300 kph, while a typical commercial airliner cruises at roughly 800 kph. Air wins on speed by a factor of nearly three, and that ratio will not change in rail’s favour.

Nonetheless, HSR consistently wins versus air on many corridors: Paris–Marseille, Madrid–Barcelona, and Tokyo–Osaka, to name a few. Why? In part because HSR does away with most of the security theatre surrounding air travel, meaning that travellers can arrive minutes before departure rather than hours… but also, and more importantly, because they arrive somewhere they want to be. Not at a facility optimized for aircraft, typically far from the city centre, but at a station in the urban core, walkable to many destinations and connected by transit to the rest.

The arithmetic is revealing. A careful Toronto–Montreal traveller flying today faces roughly 45 minutes getting to Pearson, a two-hour arrival buffer recommended by airlines and CATSA for domestic flights, an hour in the air, baggage claim and deplaning, and then 45 minutes or so into downtown Montreal: something under five hours door-to-door. Conversely, Alto promises a three-hour train journey. Add 30 minutes at each end for first/last mile travel to and from downtown stations, and the total is four hours, meaning that Alto wins. HSR’s victory is partly because it foregoes security theatre, but as I have argued elsewhere, that’s neither a necessary nor permanent advantage. What can never be taken away from HSR is the placement of its stations: HSR can deliver passengers into the city rather than to a facility outside of it.

Erase that advantage by putting one or both stations somewhere inconvenient, and the arithmetic shifts; one bad choice can make HSR’s win on travel time into a tie, or worse. The TGV from Paris to Marseille captures roughly two-thirds of all journeys between those cities, not because it’s faster than flying—it isn’t—but because Gare de Lyon in Paris and Saint-Charles in Marseille are both centrally located. The competitive advantage lives in the stations.

Alto Is Poised to Compromise

Alto plans roughly 1,000 km of new track between Toronto and Quebec City. That choice makes sense: high-speed trains can’t share track with the freight-optimized network VIA Rail currently uses, and dedicated infrastructure is a prerequisite for the speeds that justify the project’s existence.

But dedicated infrastructure needs somewhere to go, and in Canada’s two largest cities, the right places for it to go already seem to be out of bounds.

In Toronto, the obvious candidate is Union Station. It already serves as the intermodal hub linking the subway (TTC), the regional rail network (GO), and the intercity rail network (VIA), and anchors the city’s central business district, which is immediately accessible on foot, via two distinct networks: the surface-level streets and the underground PATH tunnels. This dense web of connections and accessibility makes Union Station Canada’s busiest transport hub, hosting 65 million passenger trips per year. It was no surprise when Alto’s CEO Martin Imbleau told the Senate transport committee that, with respect to Toronto, “the objective would be to have a station in the vicinity of Union Station”.

It was surprising, to me at least, when he immediately qualified that with “if it’s feasible and we can make it affordable… it needs to be economical”.

I can understand not arriving in Union itself. Despite recent, lengthy, and remarkably-expensive upgrades, the facility may be at or even over capacity. But an Alto stop being merely close by would be fine. One might imagine that Alto being in the vicinity of Union Station would mean something like how Toronto’s intercity bus terminal or air-rail link station are nearby.

One has to imagine, because Alto has not been more specific. The project’s consultation documents identify three candidate zones: one near Union, an eastern site, and a western site, but without details. The eastern site would be “close to public transit and the financial district”, and the western site “closer to attractions like the CN Tower and Rogers Centre”, but no more detail is available. Alto has stated it’s studying approaches “from the north or the east, using existing corridors or solutions such as tunnels or elevated tracks,” but where they imagine siting the station has not yet been revealed. Alto has also not released any information on tunnel lengths, engineering assessments, or cost estimates that would allow anyone to judge what it means by vicinity.

The most specific candidate to emerge from independent analysis is East Harbour, the mixed-use development planned for the former Unilever site near the mouth of the Don River. East Harbour has genuine transit credentials: the Ontario Line will serve it, and Metrolinx has long planned a major interchange there. In that sense, it satisfies Alto’s stated criterion of being “close to public transit.” But East Harbour sits roughly three kilometres east of Union Station; three kilometres away from everything that matters, but close to nothing important. A passenger arriving there and wanting to reach the central business district, or government precincts, or any tourist attraction still faces multiple transfers through local transit. The western candidates are worse: they draw tourists, not commuters, and the surrounding streets offer nothing approaching Union’s transit density.

The implicit benchmark Alto should be aiming for already exists, in the form of the two facilities directly across the street from Union. The Bay Street bus terminal is a distinct building, connected by a pedestrian bridge. The UP Express station at John Street is a covered walk away. Both are technically separate from Union Station, but neither feels that way, because passengers move between them on foot. That is the standard that we should hold vicinity to: not a twenty-minute transit trip, but a ten-minute indoor walk. Reaching that standard, in a corridor approaching downtown from the north or east, will almost certainly require a dedicated tunnel or elevated structure into the core of the city. That would incur an enormous cost, but the alternative is worse: building a terminal station in Canada’s largest city that no one wants to use.

Bad as the Toronto situation is, Montreal’s is even worse.

Alto’s current routing hypothesis is that HSR will reach downtown Montreal from the north. The obvious way into Montreal from the north is the pre-existing Mount Royal Tunnel and its access to the Gare Centrale. Unfortunately, to serve Montreal’s REM light metro, the tunnel was converted from heavy rail to automated light metro standards, installing REM-specific signalling and building two new underground stations within it. The REM runs automated driverless trains at headways as brief as 90 seconds, using technology that is incompatible with conventional or high-speed rail in every way: gauge assumptions, signalling, vehicle dimensions, and power systems. In other words, interoperability with the REM through the Mount Royal Tunnel “will not be possible“, meaning that Alto’s access to the Gare Centrale is unlikely.

Since the pre-existing downtown access route is unavailable, Alto proposes to build its own. It is studying a tunnel, perhaps as long as 10 km, under Mount Royal. Recent Canadian tunnel construction costs suggest a price of more than $1 billion (CAD) per kilometre, and if the project ends up paying that much, the Montreal access infrastructure would cost somewhere between $7 billion and $16 billion, so between 12% and 18% of the total project budget.

Nor is that all. Coming in from the north means that the Montreal tunnel, being built at great expense, will be a stub line; trains will arrive from the north, stop, then reverse back out to continue east toward Quebec City.

This may sound like a minor inconvenience, but it is not.

A commuter train terminating at a downtown station reverses as a matter of course; the train arrives and empties; sometimes the crew walks to the other-end cab, sometimes they stay where they are; and the train departs as a new outbound service. There is no time penalty, since the switchover is accomplished while passengers alight and new ones board. GO trains at Toronto’s Union Station work exactly this way, and they work fine.

But Alto’s Montreal station is not a terminus; it’s an intermediate stop on a Toronto–Quebec City corridor. Every train that serves Montreal must arrive, stop, and then continue in the opposite direction. That means every through-service is doing what GO does at Union, but in the middle of its journey, not at the end. The difficulties will compound quickly. HSR can’t be run from the back, with the locomotive pushing rather than pulling, as GO does; a mid-journey reversal requires the crew to walk the full length of the train and reconfigure safety systems for reverse-direction operation. A realistic estimate for a well-run reversal at an intermediate HSR station is ten-to-twenty minutes added to every schedule.

For commuter service, fifteen minutes is noise. For HSR service whose value proposition is compressing the Toronto–Quebec City journey to something competitive with flying, fifteen minutes is significant: a permanent tax on every through-journey for the life of the line. Worse, reverse running is a capacity constraint on the entire corridor: Alto will only run as many trains through the Montreal station per hour as it can complete reversals, which is far fewer than a through-station allows.

Italy has been living with this problem since the 1990s. The Florence station, Santa Maria Novella, sits in the middle of the Milan–Rome corridor, and every HSR service that serves the station must reverse there. The result is a systemic throughput ceiling that has constrained Italy’s primary HSR route for three decades. After twenty years of planning, Italy is currently spending €2.73 billion to build a 7 km underground bypass beneath Florence precisely to eliminate that reversal (construction began in 2023 and completion is still years away.)

The Florence high-speed rail bypass (Passante AV di Firenze) project location. This satellite map shows the relationship between Florence’s historic centre (Centro storico), the existing Firenze Santa Maria Novella terminal station, and the planned high-speed bypass infrastructure:

• The orange lines and box show the existing rail lines and station

• The red area marks the excavation site for the new underground Firenze Belfiore high-speed station

• The dotted yellow lines mark the alignment of new HSR-only tunnels that will allow high-speed trains to serve Florence without having to reverse3

The lesson is unambiguous: designing a reversal into your system from the outset is a foundational error and patching it will require extraordinary cost later. Alto’s current hypothesis for Montreal is making this error now.

The patterns of concern we see in Montreal and Toronto exist elsewhere. In Ottawa, the politically-preferred station option is the former Union Station at 2 Rideau Street. It’s convenient to downtown, but reaching it would require a new tunnel of approximately 4 km, and the original building is a stub-end terminal, meaning yet another reverse-run on the line. The operationally sensible option is the existing VIA Rail station on Tremblay Road, which has through-tracks, room for expansion, an on-site LRT station, and highway access… but is four LRT stops from downtown. Neither option is ideal.

The intervening stop between Ottawa and Toronto, Peterborough (population less than 100,000) is a gare des betteraves in the making. Trois-Rivières and Laval are not so obviously inappropriate, but the pattern persists: vague references to transit-connected sites without specifics, meaning all the intermediate cities are drifting toward the greenfield model that produces beetroot stations.

Not a real HSR station. Let’s keep it that way

What Alto Needs to Do

No one building HSR in a dense, expensive, mature city finds it to be easy. To pick only one example, HS2 in Britain is currently spending billions tunnelling into London’s Euston specifically because the alternative, terminating at Old Oak Common, was described by a government source as “pretty much the definition of a railway to nowhere“. I don’t fault Alto for taking its time to determine what its options are and how much they will cost.

But they do need to make their thinking public at some point. When they do, what would change my assessment of Alto’s prospects is a committed, publicly-announced station location in downtown Toronto with a specific site, a credible access plan, and an honest cost estimate; a solution to the reversal problems in Montreal and Ottawa; and a demonstrated understanding, at the project’s leadership level, that the station question is prior to all other questions. That is, station placement is the constraint around which everything else must be organized, not a consideration to be traded against others.

We live in hope of these things, but that hope is fading in the face of discouraging language: “the intent is to go downtown,” “it needs to be economical and affordable,” and it is “too early to speculate on locations”. These sound reasonable in isolation but alarming in accumulation.

They’re alarming because getting this right is fundamentally important.

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For Alto to succeed, downtown stations—walkable to many major destinations, connected by higher-order transit to the rest, and configured to permit through-running—are prerequisites. Without them, Canada will spend tens of billions of dollars (possibly more than a hundred billion by the end) on a project that cannot compete with the air links that already connect these cities. This would mean that upon completion, we would then need to spend even more to get something that actually works.

Constant readers know that, in my view, this project isn’t worth doing, and that the money would be better spent making air travel work better: more sustainably, and with fewer delays. But disagreeing with me to insist that Canada build HSR is defensible.

But it’s only defensible if you bite the bullet that we must spend whatever it takes to get the stations we need.

Believing we can build high-speed rail on the cheap is building half a bridge: spending too much money for something that won’t succeed. The obvious example of that failure mode is California HSR, which promised to connect Los Angeles and San Francisco, and may end up connecting only Bakersfield and Merced. The political logic that produced that outcome, namely putting off hard decisions and doing the easy things first, is precisely the logic that Alto’s official communications are beginning to replicate.

Alto will deliver the speed in high-speed rail; of that I have no doubt, because it’s the easy part of the project. The hard part, which will determine whether Alto only duplicates existing air service at vastly greater expense, is where the trains will stop.

On current evidence, we should all be concerned.

Respect to for feedback on earlier drafts.

In the early twentieth century, American streets were shared spaces. Pedestrians walked where they wanted, when they wanted to. Vendors plied their wares from the roadbed, next to children playing in the street. Scenes like this, still common in many parts of the world today, were the natural default, extensions of what streets had always been: mixed-use public space.

Then automobiles arrived, and the industry and its allies spent the better part of a decade working to redefine who owned them. At the time, jay was slang for a rube too dim to understand how to behave in a city, so the industry coined the term jaywalker for anyone who walked in the street without benefit of a signal. They went so far as to lobby newspapers to print the word without scare quotes, to show the term’s implicit claims made up the consensus view.

In 1925, responding to this effort, Los Angeles passed an ordinance that declared pedestrians had to cross at intersections, and only at intersections, and only if the light was green. The rapid adoption of similar laws across the country is evidence that the automakers’ campaign had triumphed: whereas only a few years before the question had been whether cars belonged in the streets, it was now whether pedestrians did.

"Don't Jay Walk — Watch Your Step" (1936 or 1937), Isadore Posoff. Library of Congress. Public domain.

This is the story of how ‘motordom’ became dominant in urban transport planning. Among urbanists, it is widely known, thanks to Peter Norton’s documentation of it in Fighting Traffic (2008), where he coined that term. Norton’s work has received wide currency because it fits naturally within what has become the dominant lens in progressive transportation discourse. In this framework, the first question one asks regarding a change is always whom it privileges, and whom it constrains. Who is assumed to own the street? Who must adapt? Who must yield?1

Let me be clear: motordom has done real damage to the city, and the pedestrian-priority framework is right to push back. Car-centric planning has caused genuine, lasting harm, in ways I won’t bother rehearsing here: clearance of urban neighbourhoods for expressways, Robert Moses, oversupply of street parking, subordination of pedestrians and cyclists to vehicle throughput, and so on. Motordom has made our cities uglier, more dangerous, and less equitable, and the people who bear the worst of it are consistently those with the least political power. Every urbanist knows this sorry tale.

But this itself has become a problem: every urbanist knows this sorry tale.

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As I will show below, they know it so well that it has calcified from a historical explanation into a reflex. As a result, whenever a new claim about vehicles, about pedestrians, about who is endangering whom appears, it is not examined on its own terms, but is instead pattern-matched to the motordom template. New things are classified as instances of the old Bad Thing and dismissed rather than engaged; the conclusion precedes the analysis.

Call this the Jaywalking Analogy. It is familiar and legible, which makes it persuasive. It assigns good guys and bad guys, which makes it seductive. And it is applied indiscriminately, which makes it an obstacle to thinking clearly about automated vehicles.

Analogies Aren’t Arguments

In August 2025, here in Changing Lanes, I argued that Robotaxis Have a Bullying Problem. The problem in question was that pedestrians in San Francisco had discovered that Waymo robotaxis would reliably stop if a person stepped in front of them, and were exploiting this behaviour by crossing in front of them when they had the right-of-way, knowing the Waymo would stop. I argued this was a genuine problem: that the behaviour would spread as it became known, that it created real inefficiencies in urban transport networks as a whole, and that, left unaddressed, it would make city-dwellers as a whole worse off, especially the most vulnerable.

Lots of people liked the piece. Lots of others didn’t.

Pushback came from many directions, mostly on social media and mostly in the form of short, dismissive, even abusive remarks. I won’t reward that sort of behaviour with attention, so I will focus here on ’s response at Carbon Upfront! It pains me to do so, because Alter, a sharp thinker and writer, actually put in the work by writing a full essay in response rather than merely making a snarky comment. I regret singling him out, since he took the highest and best approach toward writers with whom we disagree: not performative dunking for the crowds, but fully written-out rejoinders. But since he did the work, I want to highlight it here, because his response demonstrates the mechanism I’m describing clearly.

Alter’s essay is titled “Will self-driving cars and robotaxis bring us Jaywalking 2.0?” Why did he call it that? Because in his view, I was merely running the jaywalking playbook of a century ago, this time on behalf of automated vehicles. And in my view, he reached this conclusion not by examining the argument’s evidence, but by pattern-matching, as follows:

1. Here is a piece raising concerns about pedestrian behaviour near vehicles, and

2. It maps onto the motordom campaign of the 1920s, which means

3. It is a version of that campaign.

Alter goes on to predict that any policy response to robotaxi exploitation would inevitably turn authoritarian—pedestrians will be fenced off, criminalized, or surveilled—because “laws everywhere are designed to favour drivers and penalize people who walk or cycle”.2 He quotes Rebecca Solnit approvingly: “We don’t need new ways to use cars; we need new ways not to use them.”

Notice what the Jaywalking Analogy did here. Confronted with a specific, novel situation, namely pedestrians discovering they can exploit an automated vehicle’s safety programming, the essay classifies it as an instance of a known bad pattern before asking whether it actually fits that pattern. Consequently, none of the evidence in the newsletter needed to be engaged with, because the conclusion had already been reached.

The specific weaknesses in Alter’s analysis are worth pointing out, because they show how much gets skipped when the pattern fires early.

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