According to KPMG analysis¹, investing in roads and public transport is no longer enough to meet Melbourne’s growing travel needs.

KPMG undertook a detailed analysis of the impact of autonomous and zero emission vehicles on Greater Melbourne’s transport network. While the analysis focused on Greater Melbourne, key insights and policy implications could be equally relevant to other cities and regions.

New vehicle technologies such as autonomous and zero emission vehicles present opportunities to better utilise existing transport infrastructure and enhance our economic, social, environmental outcomes. However, as with all new technologies, their benefits are not guaranteed and without the right evidence base to inform the policies and infrastructure decisions, there could be unintended consequences.

Traditional approaches to transport modelling don’t allow us to properly assess the impact of new technologies on the wider transport network. With our cities growing at historic levels we urgently need new approaches that can model the impacts of changing citizen preferences as new technologies are adopted. Once we have better data on the impacts we can develop smarter policies to maximise their benefits and minimise their downsides.

As a first step to unlocking the benefits of new transport technologies, KPMG and Infrastructure Victoria worked together to develop modelling and analysis for the introduction of three key new vehicle technologies in Melbourne:

1. Zero emission vehicles
2. Automated vehicles (i.e. driverless cars) and 
3. On-demand automated vehicles (i.e. driverless taxis).

KPMG used the KPMG Melbourne Activity and Agent Based Model (MABM), along with financial and energy market impact analysis to shed light on the impacts of new vehicle technologies.

Without new transport technologies, there is only so much we can do in order to accommodate population growth on our transport system.

Figure 1 shows some projected results about Melbourne’s transport system if we don’t introduce any new vehicle technologies.

• By 2046, Melbourne is projected to have 65 percent more people and 52.5 percent more cars.
• By 2046, 19 percent of all trips will be taken on public transport (compared to 10 percent now).
• Trains will experience particularly high growth to 2.6 million train boardings per day by 2046.
• Walking distance per person rises to 2.1 km per day as people shift from car to public transport.
• Due to population growth, total car travel is still on the rise.
• Still, the average car is used only 4.8 percent of the time by 2046.
• Average network speed is similar in 2046 as the present day due to investment in new roads, but cars lose 8 percent of their speed during peak hour by 2046.

1. Zero emission vehicles (electric or hydrogen cell vehicles) help the environment but worsen congestion.

Zero emission vehicles (ZEVs) are cars that use electricity or hydrogen instead of petrol. Electric vehicles in particular are cheaper to run and both electric and hydrogen cell vehicles are much friendlier to the environment than traditional cars.

For the purpose of this analysis, we’ll be focusing on electric cars.

Not only are electric cars easier on the environment, they could also be easier on the wallet. Even with today’s technology, the running cost of electric vehicles is around 5 cents per km compared to about 18 cents per km for petrol vehicles, and new technologies could bring the cost down even further in future. The reduction in the cost of driving could lead to a modest shift from public transport to road transport, and an associated increase in congestion.

2. Private automated vehicles (AVs) travel closer together and take up less space on roads, but their convenience and ability to drive empty can clog up key roads.

Automated vehicles (AVs) are cars that can drive on roads without a human driver (or even a passenger). AVs can also 'platoon' on the road, meaning they can drive closer together and coordinate their starts and stops to use road space more efficiently.

Travel in a private AV is cheaper than a traditional car (if it’s electric), more convenient (because it’s driverless) and more universally accessible (because anyone can use one).

3. On-demand AVs dramatically reduce congestion, as well as the number of cars needed in Melbourne to service the same level of demand. But fares discourage people from using the on-demand AVs, which lowers accessibility.

On-demand AVs are AVs that are used as taxis, rather than private vehicles. Without a driver, taxi services are significantly cheaper and may become attractive as a replacement for privately owned vehicles. On-demand AVs could save Melburnians money, by sharing the costs of vehicle ownership (purchase cost, vehicle insurance, maintenance etc.) across a larger group of people.

The replacement of private AVs with on-demand AVs almost eliminates road congestion across the network. Average network delays across the day are reduced by 90 percent, while morning peak delays are reduced by 93 percent compared to Dead end. On average, peak time speeds increase by 74 percent across the network.

Figure 2 summarises some key transport outcomes in 2046, when traditional cars are replaced with electric vehicles, private AVs or on-demand AVs. Some of the key effects of introducing these technologies are summarised below:

• Private AVs shift 5 percent of trips from public transport to cars, because they take up less space on the roads (due to platooning) and are more convenient to use than traditional cars.
• On-demand vehicles result in 9 percent increase in trips on public transport due to waiting times and fares.
• Using on-demand vehicles rather than private cars reduces the need for people to own cars by more than 93 percent (i.e. overall fleet of cars in Greater Melbourne declines). This is because cars are shared among individual users, rather than privately owned, so each car can be used more in a typical day.
• Walking distance is higher when more people use public transport.
• Electric cars encourage slightly more car travel because they are cheaper, while private AVs considerably add to the demand for car travel, because they are more convenient.

It should be noted that this analysis is based on a scenario where all cars across Greater Melbourne are replaced with each of these technologies by 2046, and that the vehicle types do not co-exist.

Our analysis so far has involved replacing traditional cars with a fleet of one particular new technology, but in reality it’s more likely that our future involves a mix of traditional cars, human-driven electric cars, private AVs and on-demand AVs.

• Melbourne needs 2.2 million cars, compared to 3.5 million with traditional cars or 265,000 with all on-demand AVs.
• 22 percent of trips occur on public transport, compared to just 14 percent if all cars are private AVs and 28 percent with all on-demand cars.
• Average speeds are projected to increase by 52 percent across the day and almost double during the morning peak (89 percent increase). Average delays in the morning peak are 99.5 percent reduced compared to when traditional cars are on the road. The network congestion improvements occur across the network, but are seen most strongly in the inner city.

A few of our recommended solutions to maximise the upsides and minimise the downsides of new vehicle technologies are summarised below.

• Pricing or regulating empty running: AVs help with congestion, but not if we send them home or just let them drive by itself on roads empty to avoid parking fees. Without regulating empty trips, Melbourne could face serious congestion. Discouraging people from empty running to avoid parking fees would help avoid this problem, especially in the inner city.
• Encourage people to use on-demand AVs: It’s critical to find ways to minimise waiting times, particularly in outer suburbs so that more people choose to use on-demand AVs. The more we use on-demand AVs, the more benefits we can unlock for our existing road infrastructure.
• Ongoing investment in public transport: KPMG’s analysis found that no matter what new vehicle technologies are introduced, public transport is key to ensuring growing populations can access employment, health, education and other services. Access to areas with high capacity modes like rail is crucial to Melbourne’s knowledge economy and continued economic growth. Providing appealing public transport options also encourages use of on-demand AVs, with all the benefits described above.

Transport technology is critical for protecting Melbourne’s liveability. But the impacts of autonomous and zero emission vehicles summarised above are not unique to Melbourne. Any city in Australia and beyond can use key insights from KPMG’s analysis to help inform their transport plans and policies.