Powering progress: How electrification is transforming transportation and mobility
Building the future of transport, one charge at a time
What does it take to transform an entire industry? That’s the question automotive leaders must answer as the transition to electrification reshapes the global landscape. From battery-powered passenger cars to the electrification of public transport and supply chains, the shift is not just about new technology – it’s about rethinking processes, infrastructures, and ways of working.
For automotive leaders, this isn’t just an opportunity; it’s an imperative. But the road to electrification presents a series of steep challenges. To stay ahead, organisations must grapple with complex issues like charging infrastructure, bi-directional charging, profitability, and new regulatory demands. Here’s how these obstacles can be overcome, and why collaboration is essential to this transformation.
The electrification spectrum – how mature are we?
- Passenger vehicles
- Commercial vehicles
- Public transportation
- Emerging segments and special challenges
Electric vehicles (EVs) are reaching mainstream adoption, particularly in markets like China and Europe. EVs account for over 25% of new vehicle sales in these regions, and the trajectory indicates they are quickly becoming the norm. This marks a clear opportunity for automakers, but it also introduces pressure.
While lithium-ion battery technology continues to mature, with improved cost efficiencies year over year, competition is intensifying. Traditional automakers are now contending with tech-savvy newcomers who are free from legacy business constraints. Software ecosystems, user-friendly charging experiences, and life cycle sustainability are becoming major differentiators.
However, profitability remains a challenge. Though electric passenger vehicles are gaining consumer traction, the mass-market EV segment demands cost innovation and operational efficiencies from OEMs to safeguard margins.
Electrification of commercial vehicles is on the rise, but the level of maturity varies widely by use case. Urban delivery vans and light commercial vehicles are leading the way, achieving viable Total Cost of Ownership (TCO) parity due to regulatory pressures and decarbonisation goals. Heavy-duty trucks designed for long-haul operations, however, face significant barriers such as limited range, battery weight, and slow charging options.
For Original Equipment Manufacturers (OEMs), flexible solutions like modular battery packs, hydrogen technology, and investment in fast-charging infrastructure are critical to driving long-term adoption. Partnerships with logistics operators and charging providers will also play a vital role in smoothing the transition for this segment.
Public transport electrification has emerged as a shining example of successful adoption, especially in cities across China and Europe. Urban bus fleets are decarbonising at scale, supported by depot-based charging models and predictable routes. For intercity and regional transport applications, however, range concerns and charging logistics remain unresolved hurdles.
Electric buses highlight the need for OEMs to tailor modular platforms that can scale across diverse transport ecosystems. Localised production, battery recycling programs, and life-cycle service models are paving the way for a more sustainable outlook.
Smaller vehicles like two- and three-wheelers dominate electrification narratives in markets like India and Southeast Asia. These categories are highly mature, but localised, driven by specific regional requirements. Meanwhile, construction and agricultural equipment represent one of the industry's most challenging frontiers. Vehicles in these sectors face unique obstacles, such as energy density requirements, extended operating hours, and limited charging infrastructure in remote and harsh environments.
Despite these hurdles, the pressure to reduce emissions in heavy industries is rapidly escalating. Early adoption is already evident in controlled settings like ports, mines, and regulated areas. For instance, airports, warehouses, and municipal services tied to zero-emission mandates are becoming key drivers for change.
From a regulatory perspective, the EU Clean Vehicle Directive (CVD) sets the stage for this transition by defining what constitutes a "clean vehicle." Currently, clean light-duty vehicles include those achieving CO2 emissions not exceeding 50g/km and meeting 80% of applicable real-driving emissions (RDE) limits for NOx and particulate numbers until the end of 2025. However, only zero-emission vehicles will meet these criteria from January 1, 2026. This mandate is expected to spur significant investment in electrified off-highway and specialised equipment.
For OEMs, targeting these controlled environments and regulated sectors offers promising entry points to scale solutions. Modular platform designs and a focus on local environmental requirements will mark the path for adoption in these challenging yet rewarding landscapes.
Charging infrastructure – the backbone of electrification
The success of automotive electrification depends on the availability of robust charging infrastructures. Global numbers tell a story of rapid growth: by the end of 2022, the world had approximately 2.7 million public charging points, a 55% increase from the previous year. Over 900,000 stations were installed in 2022 alone, with Europe accounting for 460,000 slow chargers and 70,000 fast chargers. The Netherlands leads the way with 117,000 public chargers.
However, these numbers highlight both progress and necessity. The expansion of charging networks is essential, but it’s still falling short of meeting projected future demand. Automakers are growing impatient with legacy providers and have begun exploring ownership models for infrastructure development to ensure faster deployment.
Addressing user needs through a mix of accessible slow chargers and high-efficiency fast chargers will be critical in optimising the system for end users. Collaboration between OEMs, energy providers, and policymakers must remain a priority to build scalable solutions.
Smart charging and bi-directional solutions
Smart charging offers a critical solution for easing grid loads while delivering cost benefits to consumers. Leveraging systems that encourage charging at off-peak hours and integrate renewable energy will reduce grid stress and align with sustainability goals.
User-managed charging models rely on time-of-use pricing to incentivise consumers, while supplier-managed options integrate advanced vehicle-to-grid (V2G), vehicle-to-home (V2H), and vehicle-to-building (V2B) systems for maximum efficiency. These bi-directional solutions transform EVs into mobile power sources, contributing energy back to grids during peak periods or outages.
Smart charging and bi-directional technologies are gaining traction, exemplified by pilot projects in 2022 that showcased their economic and environmental potential. Scaling these innovations will require both investment and updated regulatory frameworks to standardise practices.
Regulatory initiatives are acting as strong drivers for electrification and infrastructure expansion. Europe’s Alternative Fuels Infrastructure Regulation (AFIR), for example, mandates widespread charger coverage across trans-European transport networks. Policy measures like these align public goals with corporate strategies, encouraging investment while resolving accountability issues.
At the same time, corporate sustainability goals are placing additional pressure on segments like municipal fleets and logistics providers to transition to zero-emission vehicles. This alignment of policy and industry ambition is unlocking funding opportunities critical for achieving scale.
The electrification ecosystem is fuelled by data, from energy consumption patterns to vehicle diagnostics and payment platforms. While sharing this data across vehicles, networks, and energy systems promotes smoother integration, it also introduces security and privacy risks.
Automotive leaders must collaborate to establish industry-wide standards for secure data exchange and interoperability. Consumers’ trust will be central to long-term growth, making this issue as critical as any technological or operational challenge.
Charting the path to a cleaner future
Electrification represents one of the most impactful revolutions in automotive history, but its promise will only be realised through collective efforts. From expanding charging networks and adopting smart energy practices to meeting regulatory demands and improving customer confidence in data security, the work ahead is both complex and collaborative.
Automotive leaders have an unprecedented opportunity to push boundaries, deliver innovation, and pave the way for a greener, cleaner world. By addressing challenges with boldness and unity, the industry can transform mobility for future generations.
The road ahead is clear. Now is the time to seize the moment and drive the change we all need. Together, we can realise the full promise of electrification.
