Transport decarbonization is shaped by electrification, affordability, grid readiness

EV-led companies derive more than 80% of sales from NEVs, transition companies exceed 25%, and traditional/ICE companies remain below 25%. The analysis shows that more than half of assessed OEMs — representing roughly 90% of global industry revenue — continue to generate less than 25% of sales from EVs, indicating portfolios optimized for incremental rather than disruptive change. While passenger vehicle manufacturers dominate this data, their strategies have an outsized impact, shaping the technology, supply chains and cost-reduction curves for the entire on-road transport ecosystem.

The prevalence of traditional and transition portfolios limits scale effects, slows cost deflation and constrains EV availability across vehicle segments, particularly outside early-adopter markets. As a result, supply-side strategies not only respond to demand conditions but actively shape them, reinforcing a gradual, system-level transition rather than enabling a rapid inflection in fleet electrification.

Regulation plays a key role in shaping coordination and the pace of electrification. In China, state‑directed industrial policy helps align automakers, battery suppliers and grid operators, accelerating deployment. In contrast, regulatory divergence across Western markets slows progress: Europe continues to apply emissions standards, even if softened, maintaining pressure on OEMs to expand electric and hybrid offerings, while the US is rolling back federal greenhouse gas (GHG) rules, reducing near‑term urgency.

As shown in Figure 2, auto OEMs project a significant shift toward alternative powertrains by 2030, with EVs expected to account for nearly half of new sales. However, the continued reliance on ICE drivetrains highlights the transitional nature of their strategies.

For the mass-market consumer, EV adoption is driven by practical calculation, not environmental motivation. The key concerns are budget, charging logistics and trust. This is reflected in our Voice of the Connected User Landscape (VoCUL): Connected Electric & Hybrid Vehicles 2025 survey, which shows that hybrids and EVs still represent a minority of vehicles on US roads.

While purchase intent points to a gradual shift toward electrified options, this trend is shaped mainly by cost and usability factors. Price (16%), performance (15%), and fuel or energy savings (11%) rank as the most important purchase criteria, while environmental impact ranks far lower at 2%. Even among current hybrid and EV owners, motivations remain largely practical: fuel and energy savings and performance outweigh environmental considerations (see Figure 3). High up-front costs remain the leading barrier, followed by charging infrastructure availability, range limitations and charging time.

Meanwhile, fewer than half of respondents (43%) believe EVs significantly reduce environmental impact compared with ICE vehicles, while a third do not believe EVs are better for the environment, and a quarter are unsure (see Figure 4). This reflects confusion between emissions generated during vehicle manufacturing, including the battery and other components, and emissions produced over the vehicle's lifetime during operation. Because manufacturing emissions occur up-front while use-phase emissions accumulate gradually, the overall environmental impact of EVs is not always easy for consumers to evaluate. 

As a result, consumer EV adoption is approached mainly as a practical decision, with cost, convenience and reliability weighing more heavily than environmental considerations. While mass-market consumer decisions are shaped by budget and convenience, the commercial sector operates under different economic and operational pressures.

Passenger vehicles currently lead electric adoption in penetration and scale, while commercial electrification is advancing through focused, high‑impact deployments aligned with duty‑cycle economics and infrastructure readiness. Commercial transportation is expected to expand steadily over the next decade. Reflecting this momentum, 451 Research's Supply Chain Digital Transformation Survey 2026 finds that nearly half of transportation respondents plan to deploy some form of fleet electrification — including hybrid and battery‑electric vehicles — across more than 50% of their fleets by 2030.

Commercial fleet electrification is driven by operational feasibility and cost performance, with operators prioritizing predictable uptime, route reliability, payload capacity and total cost of ownership. Electrification is most viable in stable, repeatable use cases such as last‑mile delivery, return‑to‑base fleets and fixed regional routes where charging can be centralized at depots under managed energy tariffs. Applications with variable routes, high payload requirements or long‑haul distances face greater complexity due to higher charging power needs, dwell‑time constraints and reliance on corridor infrastructure.

EV charging requirements further differentiate commercial electrification from the passenger vehicle market, particularly where operations depend on high‑voltage DC fast charging to support tight turnaround times or extended duty cycles. The survey results indicate that fleet charging is more time‑critical than residential charging and frequently requires higher‑power connections and grid upgrades, including mid‑voltage service. As a result, infrastructure delivery — rather than vehicle procurement alone — often determines deployment timelines.

Accordingly, DC fast‑charging access, site readiness and charging availability emerge as central adoption factors. Charging wait times, limited access to infrastructure and charging‑related operational constraints rank among the most commonly cited challenges for fleet operators (see Figure 5). Successful commercial EV deployment increasingly depends on coordinated delivery of vehicles, high‑voltage DC charging infrastructure and grid capacity.

To understand the life-cycle impact of electrification, it is essential to analyze the emissions profiles of major automotive OEMs. While the most comprehensive data reflects the passenger car market due to reporting availability, it establishes a key baseline for the importance of use-phase emissions that is relevant to all vehicle segments.

In the automotive sector, Scope 3 emissions include indirect emissions generated across the value chain beyond an automaker's own operations. These include upstream emissions from materials and component production, as well as downstream emissions produced during vehicle use. As vehicles consume fuel or electricity over many years, use‑phase emissions account for the majority of automotive emissions, driving Scope 3 to represent approximately 98% of total life-cycle emissions, far exceeding emissions from manufacturing (Scope 1) and purchased energy (Scope 2).

S&P Global Sustainable1 data shows that most automotive Scope 3 emissions are concentrated among OEMs with portfolios dominated by internal combustion engine (ICE) vehicles, highlighting the relationship between drivetrain mix and use‑phase emissions profiles. OEMs with a higher share of EVs show comparatively lower use‑phase emissions, highlighting the influence of portfolio composition on overall emissions levels (see Figure 6).

BEVs have higher production-stage emissions than ICE vehicles, largely due to battery systems, with significant contributions from raw materials extraction and refining as well as battery manufacturing processes. Over their operating lifetime, they deliver lower Scope 3 emissions, driven by higher energy efficiency and the absence of tailpipe emissions. Over time, these lower use-phase emissions can offset higher up-front production impacts, particularly as electricity generation becomes cleaner. Because operating emissions are linked to electricity consumption rather than fuel combustion, grid carbon intensity and charging efficiency are key determinants of life-cycle emissions.

Hybrid powertrain vehicles typically fall between ICE vehicles and EVs in emissions performance. While hybrids can lower emissions relative to conventional ICE vehicles, outcomes vary depending on factors such as vehicle mass, driving patterns and charging behavior. Plug‑in hybrids that are not consistently charged may deliver more limited emissions benefits. Emissions data suggests that OEMs with mixed or transitional powertrain portfolios often maintain Scope 3 emissions profiles closer to those of ICE‑focused manufacturers than to EV‑oriented peers.

Regulatory pressure across Europe, China and the US has delivered measurable efficiency improvements in recent years, lowering per‑vehicle emissions intensity. However, the pace of improvement is slow, suggesting that efficiency gains alone are insufficient to offset the growth of vehicle fleets and continued reliance on combustion technologies. Efficiency improvements alone cannot deliver sustained transport decarbonization at scale.

While hybridization can reduce near‑term transition risk, it does not address structural emissions. Only full electrification offers a scalable and durable pathway to long‑term Scope 3 emissions reduction, provided EV deployment is aligned with grid decarbonization and efficient charging infrastructure. As a result, transport decarbonization increasingly shifts from a vehicle‑level challenge to a power‑system challenge, placing grid capacity, carbon intensity and the timing of infrastructure investment at the center of electrification outcomes.

For passenger vehicles, emissions outcomes are closely tied to perceptions of life-cycle impact, home and public charging access, resale value and trust in grid cleanliness — making transparent communication about grid mix and charging emissions critical. In commercial medium‑ and heavy‑duty transportation, higher vehicle utilization amplifies the emissions benefits of electrification. Still, outcomes hinge on operational fit, depot and corridor charging availability and access to reliable, competitively priced electricity. In both cases, emissions performance is increasingly determined not just by vehicle technology, but by the broader energy system in which those vehicles operate.

Transport electrification ties decarbonization outcomes directly to power‑system performance, as rising electricity demand elevates the importance of grid capacity, carbon intensity and local reliability in determining real‑world emissions reductions. According to S&P Global Energy, transport electricity demand is projected to reach approximately 933 TWh in Europe and nearly 900 TWh in North America by 2050, reflecting combined electrification across passenger and on‑road commercial transportation, and placing significant pressure on transmission and distribution networks.

For passenger vehicles, electrification is primarily constrained by the low‑voltage residential and public distribution grid, where local transformer capacity, home‑charging access and neighborhood‑level limitations shape adoption. VoCUL data underscores the importance of transparency to consumer trust, with 63% of respondents expecting charging stations to disclose whether electricity is renewable or fossil‑fuel-based (see Figure 7).

For on‑road commercial transportation, particularly medium‑ and heavy‑duty vehicles, electrification increasingly depends on access to the medium‑voltage grid, including depot substations and high‑power corridor charging. In many regions, grid upgrades and connection approvals are not keeping pace with fleet deployment, making time‑to‑power, permitting timelines and utility coordination decisive. Commercial transport decarbonization has become fundamentally a power‑system-integration challenge, rather than a vehicle‑availability problem.

As electrification moves from early adoption to scale, decarbonization outcomes will increasingly depend on aligned decisions across the value chain. In this context, data interoperability among vehicles, chargers, utilities and platforms will play an increasing role in translating electrification into system‑level emissions reductions.

For automakers: To bridge the gap between long-term EV goals and current market realities, OEMs must focus on building consumer trust and enabling an affordable transition.

• Prioritizing affordability: Developing entry-level EVs with simplified trims and reduced supply chain costs can help to reach mass-market consumers.
• Leveraging hybrids as a strategic bridge: In markets with high EV costs or underdeveloped grids, hybrid models may be used to retain customers, acclimate users to electric driving and generate revenue to fund the long-term transition to fully electric lineups.
• Strengthening supply chain credibility: Increased disclosures about battery materials sourcing, recycling pathways and life-cycle emissions can serve the dual purpose of building trust and ensuring regulatory compliance.
• Reframing sustainability: Effective vehicle marketing will emphasize total cost of ownership, efficiency and operating savings, rather than environmental signaling alone.

For fleet owners: Fleet operators are positioned as outsized influencers of transport decarbonization due to their scale of purchasing, centralized operations and predictable duty cycles. Incremental electrification, including hybrid and battery‑electric deployments in well‑defined use cases, enables fleets to materially reduce emissions while managing risk and capital exposure.

For utilities and grid operators: EV charging must be treated as a structural demand driver, not a marginal load. Proactive planning is essential to maintain grid stability and enable the transition.

• Aligning infrastructure with demand: Partnering with fleet operators and charging providers can help to ensure that grid reinforcement and connection approvals keep pace with deployment.
• Preparing for V2G: Developing clear market signals, interoperability standards and customer participation models can enable utilities to leverage managed charging for future grid flexibility.

For the charging ecosystem: To build consumer confidence and adoption, charging providers must shift focus from network size to user experience and transparency.

• Focusing on reliability and access: Expansion of mid-voltage DC fast charging coverage will be critical, prioritizing reliability and filling access gaps along key corridors and in multiunit residential areas.
• Making transparency a feature: Standardized, real-time disclosure of electricity sources (e.g., renewable versus fossil-based) and carbon intensity at charging points can help to build trust and confidence.

For policymakers: Emissions ambitions must be matched with affordability and realistic infrastructure plans. Policy effectiveness will increasingly depend on demand‑side enablers — including cost relief, charging access and transparency mechanisms — rather than regulatory mandates alone.

Electrification will increasingly reward organizations that treat EVs as part of an integrated mobility and energy system. As the transition scales, fragmented vehicle, infrastructure and grid strategies risk slowing adoption and weakening economic and decarbonization outcomes. In this next phase, coordination will determine the pace, credibility and durability of electrification. Failure to coordinate puts the hundreds of billions of dollars already invested directly at risk.

A primer on electric vehicle charging infrastructure and vendors (Nov. 4, 2024)

Building the grid for electric fleets (Aug. 29, 2025)

Technology Primer: The impact of electric vehicle charging infrastructure on residential grid systems (Oct. 7, 2025)

Decarbonizing Aviation: Scale-Up Costs Biggest Challenge to Progress (Oct. 16, 2025)

Supply Chain Digital Transformation Enterprise Survey 2026: Surveyed a group of supply chain professionals to discuss their digital transformation use cases and business outcomes. This survey was fielded from Nov. 11 to Dec. 9, 2025. 512 web-based surveys conducted with a base of supply chain decision-makers in North America, Europe and Asia.

Voice of the Connected User Landscape: Endpoints & IoT, Mobility – Connected Hybrid & Electric Cars 2025: Survey conducts a population representative survey of US consumers about technology adoption, usage and buying intentions to understand how various tech trends are materializing in the mass market. The Connected Hybrid & Electric Cars 2025 survey was fielded from Sep. 25 through Oct. 8, 2025, among approximately 5,000 US respondents.

The Sustainability Assessment (CSA) is an annual evaluation of corporate sustainability practices, covering approximately 14,000 companies worldwide. The assessment is conducted through 62 industry-specific questionnaires, each comprising around 100–130 industry-specific and cross-industry questions that address 23 key sustainability themes across the economic and governance, social, and environmental dimensions. In this review, we analyze 78 companies across all regions. The analysis focuses on the disclosure of indicators such as the total number of vehicles sold globally (including internal combustion engine and alternative drivetrain vehicles), the number of vehicles sold by alternative drivetrain type in the most recent financial year, and public projections for 2030 of total vehicle sales. In addition, companies are assessed on their disclosure of Scope 3 greenhouse gas emissions, broken down according to the 15 categories of the GHG Protocol Corporate Value Chain (Scope 3) Standard.

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