Electric vehicles: An on-ramp to sustainable mobility

Global climate change scientists are sounding the alarm: current national plans are falling short of 2050 net-zero emissions targets established in the Paris Climate Accords. With the transportation sector contributing almost one-quarter (23%) of global CO2 emissions—road transport making up 75% of those carbon emissions—the automotive industry is positioned squarely in the headlights.

Governments are pinning their hopes on vehicle electrification. To significantly reduce greenhouse gas (GHG) emissions, countries have set aggressive electric vehicle (EV) sales goals for automakers. The US aspires for EVs to make up 50% of sales by 2030, and China, Japan, the EU, and the UK are aiming for 100% by 2035.

Consumers are willing to embrace EVs, but they’re wary about persistent cost and charging issues.

The auto industry is poised at an inflection point—evolving from a century of designing and producing internal combustion engine (ICE) vehicles to a new generation of energy-efficient electric cars, trucks, and buses. To see if the industry is truly intent on making the full pivot to electric vehicles, the IBM Institute for Business Value (IBV) interviewed 1,501 executives from nine countries. We also surveyed 12,663 consumers from seven countries to understand their readiness to accept EVs.

Our results found consumers are willing to ditch fossil fuels, but they’re wary about the persistent cost and charging provider issues that have plagued the EV market since its inception. Executives also appear committed—but not entirely confident.

Driving toward electric mobility

Advances in renewable energy, battery technology innovations that have reduced costs and improved travel ranges, and financial incentives have been driving surging EV sales in major markets since 2020. Our respondents reinforce the switch. Although ownership plans vary widely by country, 50% of consumers who drive expect to own an EV as a private car within the next three years.

But more significant is the corporate spending shift. Industry execs told us that, by 2025, their companies will be spending more on EVs than ICE vehicles. And they project EV allocations will increase 61% by 2030, redirected away from not only gas-powered vehicles but other alternative low-carbon powertrains such as hybrid electric and fuel cell vehicles. In fact, 62% say their organizations will no longer sell ICE vehicles after 2035, with a complete phaseout expected after 2041.

The future of mobility: Automakers are committed to the EV transition, shifting spending allocations from gas-powered to electric vehicles.

Yet, despite their spending priorities, only 44% of automotive executives surveyed expect to achieve the industry’s ambitious 2030 sales goals. Why? The impacts of the EV transition are significant for automakers, requiring entirely new designs, components, skills, partnerships, and processes, as well as a renewed focus on what’s important to their customers. And herein lies the challenges.

Our survey surfaced several speed bumps that need smoothing to maintain the momentum of the industry’s EV transformation:
 

• A disconnect between consumer expectations and executive perceptions as OEMs define how to price and sell EVs
• The need for stronger ecosystem collaboration to support the charging infrastructure and battery lifecycle required for expected driving ranges
• Continued evaluation as to which new operational competencies companies should strengthen and keep in-house versus those they should outsource or develop in partnership with external parties.

Read the full report to learn more about these current challenges and how automakers can use advanced technologies to speed the transition to more sustainable mobility.