Self-Driving Car Legal Issues in Australia: Everything You Need to Know in 2025

For years, Australians have been asking the same question: “Are self-driving cars legal here yet?” The short answer is not least for everyday drivers.

In 2025, Australia still hasn’t given the green light for fully autonomous cars. While features like lane-keeping assist and adaptive cruise control are available in vehicles from Tesla, Hyundai, and Mercedes, these are not “true” self-driving cars. They always require a human in control. What is legal are tightly regulated trials, where companies test autonomous technology under the watchful eye of the government. These trials are governed by the National Transport Commission’s (NTC) Guidelines for Automated Vehicle Trials, which set strict safety, insurance, and reporting standards.

So why aren’t we there yet? Why can’t an Aussie walk into a dealership today and buy a car that drives itself from Sydney to Melbourne? The answer lies in Self-driving cars legal issues in Australia, safety concerns, insurance gaps, and outdated road rules. Let’s break it down.

Self-Driving Cars Legal Issues in Australia

Technology exists. Tesla has been running its “Full Self-Driving” beta in the U.S. for years. Mercedes has Level 3 automation approved in Germany. Japan already has specific laws for autonomous cars. But in Australia, several hurdles stand in the way.

1. Outdated Road Rules

Australian road laws assume a human driver must always be in control. Even simple clauses like “a driver must keep hands on the wheel” make it impossible to legally approve a car that doesn’t require a human at all times. Until those laws are rewritten, autonomy is blocked.

2. Safety Risks

Self-driving technology isn’t perfect—especially on Australian roads. Research shows AVs still struggle with:

Pedestrians and cyclists who act unpredictably.

Regional roads where lane markings are faded or missing.

Extreme weather like heavy rain or bushfire smoke that blinds sensors.

A 2024 study found that AVs were five times more likely to crash at dusk or dawn because sensors can’t easily adapt to changing light conditions. Until those flaws are resolved, regulators are cautious about giving the green light.

3. Liability Problems

Here’s the million-dollar question: if a self-driving car crashes, who’s to blame?

a)      The car owner who wasn’t even driving?

b)     The manufacturer who built it?

c)      The software company who coded the algorithm?

Current Australian law doesn’t have a clear answer. That grey legal zone makes courts, insurers, and governments nervous.

4. Insurance Gaps

Car insurance has always been built on the assumption that humans make mistakes. But what happens when software makes a mistake? Who pays? KPMG estimates that autonomous cars could reduce personal driver insurance demand by up to 40%, but only if insurers figure out how to cover manufacturers and system providers.

5. Privacy & Cybersecurity

a)      AVs collect enormous amounts of data—where you drive, how you drive, who’s in the car, and even nearby pedestrians. That raises big questions:

b)     Who owns the data—you or the manufacturer?

c)      Can police or insurers access it without permission?

d)     What happens if hackers take control of a car?

Legal experts argue Australia’s Privacy Act 1988 isn’t strong enough to handle these risks.

6. Infrastructure Limitations

Australia’s sprawling regional and rural roads aren’t easy for self-driving cars. Trials have shown that inconsistent signage, patchy connectivity, and poor road markings confuse the technology. Until infrastructure improves, safe deployment nationwide will be difficult.

The Role of the NTC Guidelines

Australia isn’t ignoring the issue. Instead, it’s running tightly controlled trials. The NTC’s “Guidelines for Trials of Automated Vehicles” are essentially the rulebook.

To run a trial, companies must:

• Provide a safety management plan.

• Carry insurance coverage.

• Apply for exemptions from road laws.

• Conduct detailed risk assessments.

Share trial outcomes with regulators.

For example, automated shuttle trials in Sydney and Adelaide showed promise but also revealed that AVs perform poorly in complex traffic or hilly terrain. These insights help regulators understand the gaps before legalisation.

What the Future Holds

The big change on the horizon is the Automated Vehicle Safety Law (AVSL), expected around 2026–2027.

This law will:

1.      Create a single national framework instead of fragmented state rules.

2.      Introduce the concept of the Automated Driving System Entity (ADSE), a legal entity (like a carmaker or software company) responsible for safety.

3.      Clearly define liability when accidents happen.

4.      Strengthen cybersecurity requirements.

Experts predict that Level 3 vehicles (where a car drives itself under certain conditions but still needs human backup) could become legal by the late 2020s. Full Level 5 autonomy—cars that drive themselves everywhere with no human involvement—likely won’t arrive until the 2030s.

Lessons from Global Examples

Looking abroad helps show where Australia stands:

Germany: Approved Level 3 automation; manufacturers carry liability.

Japan: Enacted laws in 2020 assigning responsibility in autonomous crashes.

USA: Regulations vary by state—California allows extensive trials, but rules aren’t uniform.

Australia: Still in trial mode, prioritising caution over speed.

Australia’s measured approach aims to balance safety with innovation, but it also means we’ll be slower than other markets.

Quick Snapshot of 2025

Issue	Status in Australia (2025)
Fully Autonomous Cars	Illegal for public use
Semi-Autonomous Cars	Legal with human oversight
Trials	Permitted under NTC
Liability	Still unclear
Insurance	Not adapted for AVs
Privacy & Cybersecurity	Weak protections
National Reform (AVSL)	Due 2026–2027

FAQs

1. Are self-driving cars legal in Australia in 2025?

No. Only trials are permitted under strict guidelines.

2. Why aren’t they legal yet?

Because of unresolved safety, liability, insurance, and infrastructure issues.

3. Who pays if an AV crashes?

Currently unclear, though future reforms will likely make manufacturers accountable.

4. When will they become legal?

Level 3 cars could arrive around 2026–2027, with full autonomy expected in the 2030s.

5. Are AVs safe?

Trials suggest potential safety benefits, but risks like sensor blindness at dawn/dusk remain.

Final Thoughts

Australia’s cautious stance might frustrate tech enthusiasts, but it reflects a genuine concern for safety, fairness, and public trust. For now, Aussies can enjoy semi-autonomous features, but the dream of hopping into a car that takes you from Bondi to Byron with no hands on the wheel is still years away.

The coming Automated Vehicle Safety Law will lay the foundation. Until then, the biggest roadblock hasn’t been technology; it’s the law