Autonomous driving requires long-horizon closedloop decision making in dynamic traffic environments. Latent world models offer an effective framework for this problem by enabling imagination-based decision making in compact latent spaces.

However, multi-source observations contain controlirrelevant redundancy, whereas reliable driving decisions rely on risk-relevant relations, future dynamics, and continuous action adjustments. This mismatch makes observation reconstruction and absolute action modeling suboptimal for learning decisionrelevant latent dynamics.

We propose LIDAR-AD, a decoderfree Latent-Interaction Dreamer with Action-Residual Chains for autonomous driving. LIDAR-AD replaces observation reconstruction with redundancy-reduced latent alignment, encouraging compact representations of risk-relevant relations in multi-source driving inputs.

It further models vehicle control as residual action updates and uses residual-action sequence contrastive learning to align multi-step residual-driven rollouts with future latent states. A deterministic analysis shows that the latent-tanh residual parameterization preserves interior action reachability while representing smooth long-horizon control as compact local updates.

Together, these designs improve risk-aware state abstraction, continuous-control modeling, and long-horizon dynamics prediction. Extensive experiments across diverse simulated driving scenarios demonstrate that LIDAR-AD consistently outperforms world-model baselines, achieving the highest reward and the best success rate among learning-based methods.

Evaluations on nuPlan-derived log-reconstructed scenarios further demonstrate the transferability of LIDAR-AD under real-world traffic layouts.