Autonomous Bus Market Outlook: Challenges and Future Prospects, 2025-2034

The autonomous bus industry is rapidly changing the face of global urban mobility by offering the potential for reduced traffic congestion, improved safety, and lower operational costs. Global Market Inc. predicts that the autonomous bus market could reach USD 12.4 billion in 2034 from USD 2.1 billion in 2024, depicting an 18.9% CAGR.
 

However, despite a positive growth outlook and advancements in artificial intelligence (AI) and sensor technology, the sector faces significant roadblocks. These include regulatory uncertainties, high infrastructure costs, and concerns over safety and public acceptance that continue to hinder widespread adoption. This article explores the key challenges confronting the autonomous bus industry and examines the prospects that could define its trajectory in the coming years.
 

Key Challenges in the Autonomous Bus Industry

1. Regulatory and Legal Hurdles

Governments worldwide are grappling with the challenge of keeping pace with autonomous vehicle (AV) technology. Varying regulations make it difficult for manufacturers and operators to scale deployment globally.
 

For example, the National Highway Traffic Safety Administration (NHTSA) in the United States allows limited testing of autonomous vehicles, while no comprehensive federal law governs their operation. Meanwhile, China has aggressively pushed forward, with Shenzhen, a major metropolis in southern China and home to BYD and Huawei, becoming the first city in the country to allow autonomous vehicles on public roads after implementing regulations on intelligent connected vehicles in August 2022. In contrast, Europe remains cautious, with stringent safety assessments slowing down the process.
 

Without a harmonized regulatory framework, companies face uncertainty, delaying large-scale adoption.
 

2. High Costs and Infrastructure Requirements

Autonomous buses rely on an array of expensive technologies, including LiDAR, radar, cameras, and AI-powered decision-making systems. This makes their cost significantly higher than traditional diesel or electric buses, hampering product uptake.
 

Additionally, cities need to invest in smart infrastructure, such as automotive vehicle-to-everything (V2X) communication systems, updated traffic signals, and dedicated lanes. In August 2024, the U.S. Department of Transportation released an updated National Deployment Plan for Vehicle-to-Everything (V2X) technologies. Titled Saving Lives with Connectivity: A Plan to Accelerate V2X Deployment, the plan aims to guide the nationwide implementation of V2X technologies. The goal is to establish 12 interoperable, cybersecure deployments by 2028 and expand to over 50 by 2036.
 

However, many municipalities, particularly in developing nations, lack the funds to make such investments, slowing down the integration of self-driving public transport.
 

3. Safety and Public Trust Issues

Safety remains a primary concern. While autonomous systems have the potential to reduce accidents caused by human error, incidents involving self-driving vehicles have heightened public skepticism.
 

For instance, Tesla is under scrutiny from federal regulators following reports that its "Full Self-Driving" system may be linked to a fatal accident. According to documents from the National Highway Traffic Safety Administration (NHTSA), an investigation was launched in October 2024 after Tesla reported four crashes, one of which resulted in a pedestrian's death. The incidents occurred in areas with low visibility, including conditions such as sun glare, fog, and airborne dust. In addition to the fatality, one of the crashes resulted in an injury, raising concerns about AVs navigating unpredictable urban environments.
 

Winning public trust requires not just technological improvements but also transparent safety demonstrations and public awareness campaigns.
 

4. Cybersecurity Risks

As autonomous buses rely on real-time data exchange and AI-driven decision-making, they become vulnerable to cyber threats. A hacked autonomous vehicle could lead to catastrophic consequences.
 

Recent cybersecurity breaches in the automotive sector highlight this risk. In 2022, a cybersecurity firm successfully demonstrated how hackers could remotely take control of Tesla’s Autopilot system. If similar vulnerabilities exist in autonomous buses, entire fleets could be at risk, emphasizing the need for robust cybersecurity frameworks and continuous monitoring.
 

5. Limited Public and Private Sector Collaboration

For autonomous buses to become a reality, governments, tech firms, and public transport agencies must work together. However, bureaucracy and a lack of coordination often slow down progress.
 

Several countries such as Dubai and automotive giants like Renault emerged as exceptions, demonstrating how effective collaboration can fast-track autonomous transit. In February 2025, Dubai's Roads and Transport Authority (RTA) announced plans to launch a Rail Bus system at the ongoing World Government Summit (WGS). Designed with advanced, sustainability-focused technologies, the Rail Bus carriages prioritize safety while minimizing energy consumption and maintenance costs. Similarly, in May 2024, Renault teamed up with WeRide to test autonomous electric shuttles, aiming to showcase the readiness of new technologies for automated public transport. As part of this effort, Renault partnered with WeRide, a specialist in autonomous driving. The goal is to commercially deploy Level 4 autonomous vehicles on a large scale.
 

Future Prospects of Autonomous Buses

1. Advancements in AI and Sensor Technology

The good news is that AI and sensor technology are advancing fast. Companies like Waymo and Mobileye are constantly improving their algorithms to help autonomous buses make better decisions and detect obstacles in real time. Upgraded LiDAR and radar sensors are also making it easier for these vehicles to spot pedestrians, cyclists, and other cars with greater accuracy, reducing the risk of accidents. A great example of this progress is Karsan’s plan to launch Sweden’s first Level 4 autonomous bus in Gothenburg by August 2025. This project will integrate ADASTEC’s flowride.ai platform with the city’s transit system, using a high-tech sensor setup, including LiDAR, radar, RGB cameras, and GNSS, to ensure safe and precise navigation.
 

2. Expansion of Smart Cities and 5G Networks

The rollout of 5G networks is set to revolutionize autonomous bus operations. With ultra-fast, low-latency communication, buses will be able to interact with traffic lights, other vehicles, and central control systems in real time. China has already integrated 5G-powered smart transportation networks in cities like Wuhan, improving traffic efficiency and safety. Similar initiatives in South Korea and Japan highlight the critical role of 5G in scaling autonomous public transit. A recent example is Malaysia’s ongoing efforts, where Digital Nasional Berhad (DNB), Ericsson, and eMooVit Technology demonstrated 5G use cases for an autonomous electric bus set for trials later this year. The showcase featured real-time applications such as in-vehicle public Wi-Fi, CCTV monitoring, telemetry data tracking, and journey log collection, proving that 5G can enhance both operational efficiency and passenger experience.
 

3. Sustainability and Environmental Benefits

As cities push for greener transport solutions, autonomous buses are expected to align with sustainability goals. Many self-driving buses being developed today are electric or hydrogen-powered, offering a cleaner alternative to traditional diesel buses. In Europe, hydrogen-powered public transit is gaining momentum—HYVIA introduced the Master City Bus H2-TECH in November 2022, making it the first hydrogen urban minibus on the continent. More recently, Barcelona announced plans to debut two hydrogen-powered articulated buses in November 2024. Similarly, the EU-backed “Urbino 12” electric autonomous bus project aims to reduce carbon footprints while enhancing urban mobility. If widely adopted, these initiatives could play a key role in global efforts toward carbon neutrality.
 

4. Pilot Programs and Commercial Deployments

Despite challenges, pilot programs for autonomous buses are gaining momentum worldwide.
 

Europe: The European Union has funded multiple self-driving bus trials in countries like Finland and Germany.
 

United States: Companies like May Mobility and Local Motors have conducted autonomous shuttle trials in cities such as Detroit and Jacksonville.
 

Asia: Several countries are making significant strides in autonomous public transport. In June 2024, China’s Ministry of Industry and Information Technology (MIIT) approved the first group of automakers to test automated driving technology on public roads, supporting the development of intelligent connected vehicles. Meanwhile, Singapore’s Land Transport Authority (LTA) launched a pilot program in January 2025, inviting industry players to propose trials for autonomous public buses, with a three-year test run set to begin in mid-2026. Similarly, Israel’s Innovation Authority initiated a two-year trial in November 2022, in partnership with the Transportation Ministry and Ayalon Highways, selecting operators like Egged to test self-driving buses on public roads.
 

These pilot programs will provide crucial insights into real-world performance, helping refine autonomous systems before wider deployment.
 

5. Public Awareness and Education Initiatives

For autonomous buses to gain public acceptance, people need to be on board—both literally and figuratively. Governments and companies must invest in education campaigns, offer free trials, and highlight safety records to build trust.
 

Similar initiatives are already making an impact in the autonomous bus sector. In February 2025, a driverless bus trial at Milton Park saw positive results, with around 1,400 people participating. Likewise, in July 2024, Qianhai introduced its first autonomous bus line, B998, into trial operation, allowing local residents to ride for free through online reservations. These real-world experiences help familiarize the public with the technology, making widespread adoption more likely.
 

Autonomous buses hold immense potential to reshape urban transportation, offering safer, greener, and more efficient mobility solutions. However, the industry must overcome regulatory challenges, high costs, cybersecurity risks, and public skepticism before large-scale deployment becomes a reality.
 

With rapid advancements in AI, growing investments in smart cities, and increasing collaboration between governments and tech firms, the future of autonomous buses looks promising. If managed effectively, they could become a crucial component of next-generation public transport systems, making cities more connected and sustainable than ever before.