Liontrust: A sustainable view of autonomous driving
Autonomous vehicles are coming to a road near you, and they have the potential to impact our daily lives and change the way we travel.
The technology sits at the intersection of two of the largest environmental and social negative externalities created by the modern car: safety and pollution.
Autonomous vehicles, or AVs, are a strong net positive for society both socially and environmentally, and their presence on our roads creates opportunities and risks for investors.
We are on the precipice of this technology gaining traction, which we believe has a long runway across several modes of transport, including cars, taxis, trucking and buses.
Those living in London may have caught glimpses of Alphabet’s Waymo cars being tested on our roads over the past few months. Today’s adoption of this technology is concentrated in autonomous taxis operating in specific cities, while other vehicles like private vehicles, buses and large-scale autonomous trucking are in our view five years or more away as the technology scales and fleets turn over.
Even so, this shift is structural: over time, social, environmental and cost benefits should drive adoption.
Sustainability credentials
Across the world, the modern car contributes towards road accidents and deaths; for example, around 39,000 people died in US traffic incidents in 2024 and a NHTSA paper attributes 94% of crashes to human error. In the UK, this figure was 1,602 in 2024.
Couple this with ICE vehicles worsening local air pollution and contributing to global emissions. We recognise mobility as a social and economic good, but our exposure must be aligned with solutions which deliver that mobility as cleanly and safely as possible.
Innovation in the form of AVs can directly address the car’s twin negative externalities. Electric vehicles (EVs) improve the environmental credentials of the car by removing harmful exhaust emissions, while autonomous driving reduces accidents and deaths by displacing human error behind the wheel.
In other words, EVs address the environmental side and AVs address the safety side – together improving a flawed form of mobility.
Autonomy is tightly linked to electrification: AVs are typically designed into EV platforms, where advanced electronics, computing and software are already inbuilt into the EV architecture. This is often due to unit economics and technology design. This greatly strengthens the sustainability case for AVs.
Safety on the roads
There is a growing evidence base that AV systems – with the focus on Alphabet’s Waymo Level 4 automated driving system as it has the greatest data from miles driven – can reduce severe outcomes versus human benchmarks.
One study examined 56.7 million rider-only miles across cities including San Francisco and Phoenix and finds statistically significant reductions in suspected serious injury and outcomes, alongside reductions in crashes involving injury of any severity.
Another study combining Swiss Re and Waymo data covered 600,000 claims and over 125 billion miles of exposure, with large reductions in property damage and bodily injury claims versus human drivers (including versus humans using ADAS).
Level 0-2 vehicles are classified as automotive ‘driver-assistance’ systems (ADAS). While there are some vehicles that have made immense strides, all commercially available vehicles remain L2 as a human is required to either supervise or take control when requested.
Companies are also taking different approaches to achieve autonomy; the best example of which is Waymo using expensive LiDAR, while Tesla continues to pursue improvements in a camera-based system.
Risks attached
Just as AVs present opportunities, they also give rise to risks. Car repair is one such example, given that safety data demonstrate declining accident frequency.
This has been a long-standing trend, with factors such as lower speed limits and enforcement of drink-driving laws contributing to improved passenger safety over time.
Repair costs are also influenced by the severity of such claims, and in aggregate this has had a larger effect on total repair costs than declining frequency over time. Cars equipped with ADAS are more expensive due to the parts required, as well as being more complex to repair.