No U-turn: How autonomous vehicles will reshape our cities

How autonomous vehicles will reshape our cities

The autonomous era will result in competing pressures towards continued urban sprawl along freeway corridors and urban consolidation within inner and middle ring suburbs. Policy makers must act now to safeguard the liveability, sustainability and productivity of our cities.

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Orange electric car in a city

For centuries, the dominant mode of transport has shaped our cities. We are now on the verge of a shift to a new dominant mode – the autonomous electric vehicle. More than any other single factor, this shift will define our cities’ development for decades to come.

If we respond pro-actively, autonomous ride sourcing has the potential to catalyse urban regeneration. If we do nothing, we risk exacerbating urban sprawl and endemic congestion. The difference between these scenarios is not inconsequential – the liveability, sustainability and productivity of our cities is at stake.

How transport shapes our cities

Throughout the history of cities, most urban dwellers have preferred to live within a short travel time from the urban core allowing them to take advantage of the diverse opportunities our cities offer.

Re-making Melbourne

The primary transport mode for Melburnians in the mid 19th century included walking, horses and carriages. Urban development in 1855 was therefore huddled within a short distance of Melbourne CBD.

After the industrial revolution trams and trains allowed the city to expand as development stretched along these new corridors enabling the development of Melbourne’s inner suburbs as we know them today.

The post-World War II era saw the rise of automobiles as the dominant transport mode. New highways and freeways enabled Melbourne to expand outwards again into new, low-density suburbs.

The autonomous era will result in competing pressures towards continued urban sprawl along freeways whilst at the same time leading to urban consolidation in inner and middle suburbs.

Urban sprawl along freeway corridors

The autonomous era will increase the attractiveness of urban development along Melbourne’s long distance road corridors as autonomous vehicles make long distance travel easier, cheaper and safer. By communicating with each other and/or the road infrastructure itself, autonomous vehicles will maximise vehicle speed and flow. When all vehicles are autonomous, the capacity and speed of long distance freeway travel will increase markedly.1

Inner city densification

With car sharing and ride sourcing, the fixed costs of car ownership are distributed among a large pool of users. Currently, these advantages are offset by the cost of a driver (ride sourcing), or the inconvenience of finding, booking and walking to a vehicle (car sharing). In the autonomous era, these disadvantages will no longer exist, indeed KPMG analysis suggests that an autonomous ride sourcing service could cut the annual cost of vehicle travel by nearly half.2

For residents who choose to forego car ownership in the autonomous era, many will choose to live in the inner suburbs to optimise autonomous ride sourcing fares.

How should we respond?

Governments must begin taking action now to safeguard the liveability and productivity of our cities in the autonomous era. KPMG recommends the following actions to policy makers.

  • Review existing planning schemes and controls to ensure they support urban consolidation that is appropriate from a societal perspective.
  • Provide affordable housing in the inner and middle suburbs to encourage densification and take-up of ride sourcing services.
  • Assess development plans to ensure new developments are consistent with the implications of the autonomous era.
  • Invest in decision making tools for understanding the impact of autonomous and electric vehicles on land use. This can be achieved with land use transport interaction (LUTI) models.
  • Implement road pricing reform as a matter of priority to manage demand for car travel, and as a policy lever to encourage ride sharing.
  • Encourage an eventual transition from private ownership to ride sourcing and car sharing for daily travel through enabling policy and regulatory settings. This includes facilitating business models that provide these services. Governments must also ensure high quality alternatives to car travel are available, including public transport, walking and cycling.


  1. Eno Centre for Transportation, 2013. Preparing a Nation for Autonomous Vehicles – opportunities, barriers and policy recommendations, Washington D.C.: Eno Centre for Transportation.
  2. Thakur, P., Kinghorn, R. & Grace, R., 2016. Urban form and function in the autonomous era, Melbourne: Australasian Transport Research Forum 2016 Proceedings.

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