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Future transport: Ignore consumer preference at your peril

  • Article

The transport sector is making some progress on decarbonisation, but it is slow and the outlook is tough. According to the UN, the sector accounts for roughly one-quarter of global greenhouse gas emissions. Making transport clean(er) remains the central tenet of the industry.

Road is key. With c75% of transport emissions attributable to road and 80-90m cars sold annually, reducing passenger car emissions is a vital part of reducing the environmental impact of transport. Regulators in most of the world steadfastly believe a switch to electric vehicles (EVs) is the right choice for road transport.

The headwinds to EV adoption, however, are clear and well-rehearsed. These include affordability, lack of infrastructure, and limited range. Consumers seem less convinced than regulators that the future is electric. They are switching to EVs, but – with the exception of China – at a slower-than-expected pace.

Regulators have started to adjust to reflect this reality. 2025 saw a number of road decarbonisation targets diluted, delayed, or deleted. However, this regulatory course correction comes at a cost, including to shareholders. The net result has been a collective hit to car manufacturers’ profits of more than USD70bn, an amount that could have instead been invested in technologically neutral alternatives.

The road ahead. On a positive note, the International Council on Clean Transportation believes that last year (2025) will be the peak for road transport emissions and that this year (2026) is shaping up to be a record year for EV model launches in China and in Europe. Perhaps a more collaborative approach between regulators and industry could deliver faster progress towards decarbonisation?

For sea and air transport, the challenge remains the availability of alternative fuels. Along with electrification, these are key tools to reduce environmental impact. The availability of sustainable aviation fuel remains far below industry requirements, with higher production needing greater government support. In shipping, the adoption of a net-zero framework has been delayed – and it seems some nations are questioning its viability. Government commitment is needed if these sectors are to achieve substantial decarbonisation.

Meanwhile, autonomous driving is gaining speed. As EV ambitions have wavered, developments around autonomous vehicles have progressed (thanks in no small part to extensive use of AI), with robotaxi fleets growing at pace in the US and China. We see scope for further rapid expansion in robotaxis, but in the US we think pricing would need to fall meaningfully before these pose a threat to existing ownership models.

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