Autonomous vehicles: The public policy imperatives

Autonomous vehicle: The public policy imperatives

Five areas where AVs will have significant implications for public policy and service | 🕒 5-min read.


Key contacts

Related content

It is 2025 and autonomous vehicles (AVs) are a fact of life. Many drivers are still behind the wheel of their “classic cars” but the switch rate to autonomous is much faster than predicted. Indeed those still driving are feeling embarrassed by their choice, because society is increasingly intolerant of any road accident, particularly those involving injury or fatality1.

Personal mobility has soared in the AV world, with the young, old and disabled rapidly taking advantage of their new freedom2 and working on the move has become second nature. The country is experiencing an economic boom from the resulting rise in productivity3, polls show social happiness has increased from the advent of what is widely known as “stress-free AV”, and there has been a small but noticeable improvement in public health, reducing strain on healthcare services.

This is not a controversial scenario to propose. Spending on technological investment in AV is now huge4, and the potential benefits self-evident to all except the most ardent motorhead.

In any event it is pointless debating the merits of AVs, because they will happen. The only uncertainty is precisely how long it will take before AVs make up the majority of vehicles on our roads. Estimates vary, but in nearly all cases suggest less than 20 years5.

What does this mean for policymakers at national, state and city level, for city transit authorities and national road authorities? They need to recognize the huge ramifications for how cities and countries will work, and their ability to influence some of that destiny for a better outcome for society.

There is an imperative to act now across a broad range of public policy design and implementation issues. Act now, so our countries and cities are AV-ready in time. Act now to ensure that investment decisions in our public realm and transport infrastructure anticipate the benefits that AV will bring. 

There are five areas in particular where AVs have significant implications for public policy and service: 

  1. Transport infrastructure investment decisions: Accountability for taxpayers’ money demands that our public investment decisions are founded on robust cost-benefit analysis. The cost is incurred now but the benefit is typically appraised over a 30 to 50-year period. It is a certainty that AVs will have changed our society within these timeframes. So value for money analysis on transport schemes today should already be based on an AV world.

    This will affect decisions on which schemes are the highest priorities, and for those schemes which progress, it will change their design and hence their cost. As an example, an AV road is unlikely to need crash barriers or hard shoulders of today and the lanes could be much closer together, saving significant land use and cost.
  2. Licensing and road traffic regulations: In an AV world, there are no drivers. So ultimately no need for driver licensing. However in many countries driving licences also operate as citizen ID. So the implications of withdrawal need to be thought through. Timing is also a consideration.

    In the initial years of AV adoption, it is likely most countries will continue to require that a licensed driver can take back control of the vehicle. But eventually trust in the technology should mature so that is no longer necessary. Then there is the licensing of vehicles. Will that still be necessary? From a safety point of view, would it not suffice to put the onus on manufacturers to produce safe products, as is the case for nearly every other consumer good, rather than have a regular testing regime? But vehicle registration may continue to be needed as the basis of revenue raising from AV use. Finally traffic regulations will need to be adapted, and in a pure AV world replaced by connectivity standards, operating like internet protocols.
  3. Revenue: AVs will still need roads on which to travel, and expensive investment in digital technology to provide the bandwidth for vehicle-to-vehicle and vehicle-to-infrastructure communications. Cities are likely to want to establish control centers so they can intervene to minimize congestion.

    The AV revolution creates an opportunity for governments to rethink and improve the funding model for road infrastructure. There is a choice as to whether that infrastructure should be built and maintained by the public or private sector – perhaps all the communication systems, for example, should be left to the market to provide. But where the public sector is paying then new forms of vehicle or usage tax will be needed to replace the loss of taxes from fossil fuels6.
  4. Spatial planning: AVs offer not just a revolution in transport, but how we live. Mobility on demand without the need to own a vehicle means accessibility for all, a huge increase in vehicle miles7 travelled but potentially much higher levels of vehicle utilization8.

    We may need fewer vehicles, and if we don’t own that vehicle, we don’t need to park it. In dense urban environments, garages and hard standings may become a thing of the past. AVs will also be able to pass much closer, so many roads could be narrower. Residential streets could serve both AVs and pedestrians in the same space without the need for curbs. We will face new choices about how we shape our urban environments, and how we use the huge amount of space that could be released.
  5. Security: In a world of AVs we put our lives in the hands of the systems which control them. We will expect assurance that those systems are failsafe and safe from malicious attack. Governments will need to establish regulations for the systems, and regular testing regimes.

    Accident rates will reduce dramatically, and if combined with reduced levels of personal vehicle ownership, will transform the car insurance industry9. Personal data security will also be a concern as AV payment systems are likely to rely on detailed knowledge of where we travel.

Public authorities need to start planning now to navigate through these myriad issues, and ensure that our AV dominated world is one designed to maximize social and economic benefit. 

In upcoming @gov features we will explore the key issues in more detail, helping authorities to start to envision a blueprint for the design and implementation of an AV-powered community of the future.

The potential benefits of AV are huge; let’s start planning together now to make them a reality. 

@gov mailing list callout

The public policy imperatives article series


1Automobile insurance in the era of autonomous vehicles, KPMG in the US, June 2015, suggests accident frequency could drop by 80 percent.

2The Clockspeed Dilemma, KPMG International, January 2016.

3Robotenomics Reference US, Canada and UK economic benefit forecasts

4Autonomous Driving: Question is When, Not IF, IHS Automotive, updated January, 2015.

5IHS Autonomous sales forecast, IHS Automotive, December 2014.

6US Motor Tax Fuel Revenue, 1977-2013, Tax Policy Center; Tax and NIC receipts: statistics table, HMRC Tax Receipts and National Insurance Contributions in the UK, HM Revenue & Customs, October 2013.

7The Clockspeed Dilemma, KPMG International, January 2016

8Autonomous Vehicle Implementation Predictions, Implications for Transport Planning, Victoria Transport Policy Institute, August 2013.

9Automobile insurance in the era of autonomous vehicles, KPMG in the US, June 2015, estimates that the personal car insurance market could fall to 40 per cent of its current size.

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today

Sign up today