Future of Mobility: Trends and implications · Future of Mobility: Trends and implications...

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Future of Mobility: Trends and implications CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited OFV Oslo | December 2017

Transcript of Future of Mobility: Trends and implications · Future of Mobility: Trends and implications...

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Future of Mobility:

Trends and implications

CONFIDENTIAL AND PROPRIETARY

Any use of this material without specific permission of McKinsey & Company

is strictly prohibited

OFV Oslo | December 2017

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2McKinsey & Company

Shifting mobility market and trends

Electrifying the future

Future of urban commercial mobility

Outlook for Europe

Agenda

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For more than 2 years, the industry has been talking about disruptive trends

that have the potential to radically change the mobility industry

SOURCE: McKinsey Center for Future Mobility

4 disruptive technology-driven trends …

Electrification Connectivity

and IoT

Autonomous

driving

Diverse mobility

… radically changing

the mobility industry

▪ Shifting markets and

revenue pools

▪ Diffusion of advanced

technology

▪ Changes in mobility

behavior and new

business models

▪ Increasing investments

▪ New competition and

cooperation

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Over the past 2 years, significant additional momentum has been built up

along all four disruptive trends, and continues to do soExamples

SOURCE: McKinsey Center for Future Mobility

From today… … to tomorrow

51% of models announced until

2021 will have xEV powertrains

3.5% of vehicles sold

have xEV powertrains

80% of the top 20 OEMs are

planning to have AV L4+ by 2025

1-2% of vehicles sold are

equipped with basic partial

automation (L2) technologies

16% of customers already reported

they would use shared mobility in

the future

<1% of passenger miles

travelled currently carried out

using shared mobility

Percentage of consumers ready to

change car brand for better

connectivity doubled in last 2 years

12% of cars equipped with

embedded connectivity, generating

revenues of less than $1.5 billion

Sustainable mobility

Autonomous driving

Shared mobility

Connectivity

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Current and future annual global vehicle sales, millions

Driven by urbanization and macroeconomics, global vehicle

sales will continue to grow, although at a slower pace

4123

105

87

10

115

Fewer private

vehicles

Macro-

economic

growth

2015

Private

vehicles

2030

New

shared

vehicles

HIGH-

DISRUPTION

SCENARIO

SOURCE: McKinsey Center for Future Mobility

SHIFTING MARKETS AND REVENUE POOLS

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20302016

With disruptive scenarios becoming more likely, the share of revenues from

disruptive business models could increase to 20-25% by 2030

Automotive revenues based on

consumer spend in 2016 and 2030

SOURCE: McKinsey Center for Future Mobility

"Disruption to personal mobility" scenario, USD bnShared mobility

One-time vehicle sales

(incl. xEV and AV)

Aftermarket

2,600

1,270

35

~ 6,600

1,325

Data-enabled services

(connectivity)1

250

840

3,800

~ 3,500

Disruptive

business

models

Traditional

business

models

1 revenues only, not comprising cost saving potentials

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A more granular perspective on geographical areas and city archetypes

becomes ever more important due to differing growth rates

1 Vehicle sales revenue adjusted from consumer spend to reflect OEM addressable revenues; including removal of VAT, import tariffs, shipping costs, and dealer margin

2 Global CAGR of 4.6% across all geographies and city archetypes

3 Based on disruptive scenario, i.e. 80-90% ridesharing app adoption, 10x growth in rideshare vehicle miles traveled by 2030, 100% connectivity saturation by 2021, ~50% of vehicles sold

electrified by 2030

Traditional1 and new automotive revenues 2030 forecast2

7.8%

SOURCE: McKinsey Center for Future Mobility

Percent

6.8%25

Rest of World

China

18

Europe

22

11Rest of Asia

NAFTA25

22

Small towns

30

19Developing

suburban

cities

10

Developed

suburban cities

19

Developed

dense cities

Developing

dense cities4.0%

China

Except China

3.5%

Except dense cities

Dense cities

Revenue by geography2015 - 2030

CAGR2Revenue by city archetypes32015 - 2030

CAGR2

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1 1076 Companies. Using selected keywords and sample startups, we were able to identify a set of similar companies according to text similarity algorithms (similarity to companies business

description) used by the Competitive Landscape Analytics (CLA) team. Companies used were pulled from Capital IQ and were filtered by year founded greater than 1990

2 Until September 2017

SOURCE: Start-up Investment Analytics (SILA); CapitalIQ; Pitchbook; McKinsey

SILA analysis identified strong acceleration of investment activities

with few big industry shaping moves and many small investments

0.8

110.9+

36.5

8.2

8.7

0.4

3.3

15.4

42.5

12.9

0.6

24.1

68.5

Total disclosed investment amount since 2010

USD bn

Average invest p.a., USD bn

2014-172Technology clusters1 2010-13

6x increase in average funding

from 2010-13 to 2014-17

Total 4.3 25.3

Vehicle leasing and

fleet management0.0 0.2

Backend and cyber

security0.4 0.9

Sensors/semi-

conductors1.8 1.5

Gesture/voice

recognition0.1 0.1

Electrification/energy

storage0.4 1.7

Telematics 0.4 0.4

Parking and mobility

optimization0.0 0.1

User interface

technologies0.6 3.5

Autonomous

solutions0.1 6.4

Sharing solutions 0.3 9.6

6

5

4

3

8

2

9

10

1

7

>USD 1bn<USD 1bn

Single transaction

Smart MobilityElectrification

Connectivity

5

1

2

7

8

3

4

9

10

6

Autonomous

171,248# Transactions

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Shifting mobility market and trends

Electrifying the future

Future of urban commercial mobility

Outlook for Europe

Agenda

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Short term, four key drivers will drive EV market dynamics

SOURCE: McKinsey Sustainable Mobility Initiative

E-MOBILITY TRENDS

▪ Vehicle sales projected to grow by ~2%

p.a. until 2030

▪ Oil prices could rise meaningfully within

next 10 years

1 | Macroeconomics

▪ CO2 targets, real driving

emissions changes, and

‘Dieselgate’ generates

headwinds for future

investments in diesel tech

▪ Local regulations on city

level as a driving force for

EV roll-out

Regulation

and incentives

▪ Battery prices could fall

between $100-190/kWh

for battery packs by 2020,

and continue to fall

▪ Charging infrastructure

rollout could accelerate in

key markets (US, EU,

China)

3 | Technology

▪ Up to ~50% of car buyers consider an

EV based on survey insights

▪ Top EV purchase barriers - price and

model variety - likely to dissipate

4 | Customer demand

E-mobility

industry

dynamics

2 |

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Macroeconomic trends will help facilitate E-mobility…

SOURCE: McKinsey Global Growth Model, Federal Reserve Bank of St. Louis ; UN Population Division; IHS, McKinsey Sustainable Mobility Initiative

MACROECONOMICS

1 8 recession periods since 1947; occurrence every 8.5 years, last recession in 2009

2 Companies exiting the market, lower investment, potentially more OECD cooperation

Rising oil prices and declining battery

prices could put EVs at cost parity in

some scenarios by 2020-25

Trend through 2030

Oil prices could recover2 with

rising prices in the next 10 years

Implication on EVsMacroeconomics

EVs may be favored over conventional

vehicles in cities due to zero emissions

targets

Global urban population could

increase by ~1.1 bn between

2016-30

Urbanization

Robust and lean powertrain/EV

portfolio required to adapt quickly to

changing mobility trends and sustain

economic downturns

Global economies expected to

grow by 1.6-3.2% p.a. until 2030,

with 2 recessions1 (in the US)

expected through 2030

GDP growth

Oil price

1

Growth driven by urban and shared

mobility that favors EVs over

conventional cars

Despite shared mobility trends

global vehicle sales expected to

grow by 2% p.a. through 2030

Vehicle sales

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CO2 regulation is a key factor for EV penetration

1 To ensure comparability, CO2 figures are cycle-adjusted and normed (to NEDC)

SIMPLIFIED

“World of today“

“Mix of powertrains“

“EV world“

Incre

ase in

reg

ula

tio

n o

f C

O2 g

/km

1

2015 2020 2025 2030

Corridor for potential CO2 regulation

CO2 g/km

130

121

144

95

~50

172166

96

107

68-78

180

150

100

50

Year

Regulation

corridor

~70

~80

Estimate

Communicated

Required powertrain portfolios

Until 100g CO2/km, a portfolio of

ICE, mild-hybrids, and less than 10%

electrification can meet targets

Below 100g CO2/km, a “portfolio

game” with equal importance of

ICE, PHEVs, and EVs can meet

regulations

Below 50g CO2/km, a portfolio mainly

consisting of EVs and PHEVs is

required

2

SOURCE: McKinsey Sustainable Mobility Team

DRIVERS FOR E-MOBILITY AND MARKET OUTLOOK

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540

599

500

100

300

1,000

900

800

0

400

600

200

700

201615

269

2010 11 14

-77%

12 13

140

642

2022E

800

1,000

227

SOURCE: IHS, Bloomberg, New Energy Finance, IEA report on GlobalEVOutlook2017, McKinsey Sustainable Mobility Team

Battery price declines transform into increased range for EVs

Weighted average battery pack price

and indicative ranges, $ per kWh

1.2

180

120

140

160

100

80

1.4

0.2

0

0.6

0.4

0.8

1.0

BEVs in the car parkMillion units

Weighted average range of BEVs in the car park, Miles

2118 1914 1715 2022E20162011 12 13

Projected1Actural <100 miles 100-200 miles ≥200 miles

1 US Department of Energy target in 2022

Biggest improvements in battery cost will be driven by technology jumps and scale effects

3

DRIVERS FOR E-MOBILITY AND MARKET OUTLOOK

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14McKinsey & CompanySOURCE: McKinsey Sustainable Mobility Initiative – 2016 Electrified Vehicle Consumer Surveys

Percentage of responses, US and Germany, 2016

Between almost 30 and 45% of vehicle buyers in the US and Germany

respectively consider an EV purchase today

4

ICE

models100 100 96 73

96 50 44 3

Germany

96 50 29 4

US

EV

models

(BEV +

PHEV)

Percentage of consumers that identify themselves at each purchase funnel stage

ConsiderationFamiliarityAwareness Purchase

DRIVERS FOR E-MOBILITY AND MARKET OUTLOOK

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In 2019/20, the number of available BEV models will increase

dramatically – this could become a tipping point in EV adoption

Source: IHS Markit Automotive; Press; McKinsey

1 Excluding Light Commercial vehicles (LCVs)

Announced new BEV models

A

B

C

D

E

Segment

Start of Production in…

2019 2020 2021 2022 2023 20242018

2020: new CO2 limits

12

5

15

1

4

1

2

4

1

3

1

2

3

1

3

4

4

6

3

2

4

3

2

3

1

2

2

3

Produced

in 2017

E-MOBILITY MARKET OUTLOOK

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…it may come faster and be more far-reaching than anticipated

SOURCE: Tony Seba

TECHNOLOGICAL PARADIGM CHANGES OFTEN OCCUR VERY RAPIDLY

No horsesLots of horses, one lonely car

5th Avenue, NYC

Exponential technological progress combined with disruptive social dynamics

(“tipping points“ in consumer behavior) make forecasting speed and magnitude

of change very difficult

1900 1913

E-MOBILITY ECOSYSTEM AND VALUE CHAIN UNBOUND

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Shifting mobility market and trends

Electrifying the future

Future of urban commercial mobility

Outlook for Europe

Agenda

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18McKinsey & Company

Commercial vehicles contribute more than their

fair share of emissions vs private vehicles%

London

7092

8~30

China (nationwide)1

85

30

15

Car parc2 NOx 3

~70

SOURCE: London Atmospheric Emissions Inventory, France Ministry of Environment, KVA, China Ministry of Environmental Protection

1 NOx emissions in urban areas in China are expected to have slightly lower than 70% contribution, mainly due to access restriction

2 London 2015, China 2014 3 London 2013, China 2014 4 EURO6 standard

Commercial vehicle

Passenger vehicle + others

CVs also contribute a much higher impact on overall congestion due to:

• Longer idling time

• Slower acceleration

• Slower average speeds

• Frequent stops and starts

• Frequent blocking of lanes and traffic

Due to two primary characteristics

Commercial vehicles on

average travel 1.5 to 2

times more miles than

passenger vehicles

Higher

utilization

Commercial vehicles

consume more fuel than

passenger vehicles

▪ CV : 0.1~0.5 liter per km

▪ PV : ~0.1 liter per km

Higher fuel

consumption

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Increased freight volume and instant and same-day deliveries are likely to

lower utilisation of vehicles even further

SOURCE: McKinsey “Future of Last Mile” customer survey conducted in US, China, Germany (N=4,700)

Instant and same day deliveries are soaring

▪ Increasing freight volumes and expectations on service levels from

consumers are exacerbating the issue

▪ Instant and Same-day deliveries fragment delivery networks,

creating a system with lower utilization of vehicles, many of which

are already operating on less than truckload (LTL) capacity

% Share of B2C delivery

market, number of parcels

20252016

<1

+43% p.a.

~25

Same-Day

Instant

2015

+40%

2045

Freight volumes are growing

Freight volume in U.S. urban areas

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20McKinsey & Company

▪ Autonomous LCVs

▪ Bike delivery

▪ Night delivery

▪ Combining passenger

and parcel delivery

▪ Route optimization

▪ Load-pooling/

Crowdsourcing

▪ Electric vehicles

▪ Drones

▪ Droids

▪ Urban consolidation

center (UCC)

▪ Warehouse

logistics

▪ Order grouping

(e.g., Amazon)

▪ Return

management

▪ On–demand

printing (reducing

inventory)

▪ Dynamic hand

delivery

▪ Trunk delivery

▪ Click & collect

▪ Individual parcel boxes

▪ Parcel lockers

Evaluated 100s of solutions addressing different parts of the delivery

value chain - we identified 6 in particular that provide the most value

SuppliersWarehousing &

Sorting facilities

Transporting

vehicles

Delivery

destinations

Fixed locations

Dynamic locations

Autonomous ground vehicles

(AGVs) with lockers

2High impact

solutions

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1 Large emissions reduction. Cost can be further reduced in areas with governmental regulation

2 Also possible for B2C in conjunction with other technologies

Each of those 6 solutions is aided by one or more of the mobility trends2Solution How mobility trends improve its outlook

Urban

consolidation

centers (UCCs)

▪ Better connectivity benefits route optimization and improves transparency to

customers

▪ Regulation of urban vehicles can improve attractiveness of UCCs

Electric vehicles

▪ Electrification of vehicles has benefited from falling battery costs

▪ Investments in EV charging infrastructure enables higher adoption rates

▪ More distributed renewable generation makes EV charging easier

Load-pooling

▪ Shared mobility companies like Uber and Lyft pioneered the concept that has

been adopted for freight load-pooling

▪ Connectivity allows for fast and simple delivery transactions via mobile devices

Night delivery

▪ Electrification of vehicles help manage noise pollution

▪ Better connectivity and navigation apps allow drivers to efficienctly execute their

routes at night

Autonomous

ground vehicles

(AGVs) with

lockers

▪ AVGs depend on advances in autonomous driving technology to become viable

▪ Electrification helps manage air pollution concerns given increase mileage

▪ Connectivity lets customers track their parcels and meet delivery windows

▪ E-commerce creates more demand for B2C deliveries, improving utilization

Parcel lockers▪ Public investments in locker infrastructure can accelerate adoption

▪ Connectivity makes accessing and picking up a parcel from a locker seamless

▪ E-commerce creates more demand for B2C deliveries, improving utilization

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Integrated solutions create additional impactShare of total commercial

delivery in reference cityxx%

1 Emissions per parcel (or parcel volume equivalent for B2B)

Integrated solutions

Delivery cost, % # of vehicles, %Emission , %

Developing,

dense Parcel

lockers

Load-

pooling

Autonomous

ground vehicles Electric

vehicles

Night

deliveries

Urban

consolidation

centers

+ + + + +

-35%

-70%

-35%

3

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23McKinsey & Company

Shifting mobility market and trends

Electrifying the future

Future of urban commercial mobility

Outlook for Europe

Agenda

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24McKinsey & Company

We think mobility disruption in cities can happen along 3 major trajectories

SOURCE: McKinsey

Seamless

Mobility

Rapid change, system coordination

and deployment of mobility solutions

results in a radically different

mobility system

Private

Autonomy

Technology change accelerates

but social change is slow, resulting

in high uptake of EV/AV but within

current ownership models intact

Clean

and Shared

Despite technology readiness, AV

adoption remains very low while

EV and shared mobility

accelerate

Potential path for major

European cities

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In dense developed cities: “seamless mobility”, based on multimodal

transport and true mobility as a service

SOURCE: McKinsey

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26McKinsey & Company

Nearly half of the current global 20 EV capitals are located in Europe

Figure 1: Cumulative electric vehicle sales and 2016 sales share in electric vehicle capital cities

SOURCE: ICCT

64

224

68 767

3633

710

15

5

25

10

20

100

70

110

80

30

0

90

60

40

50

10

40

20

0

35

30

Electric vehicle sales through 2016 (000s)

Hangzhou

Qin

gdao

Beiji

ng

118

Schenzhen

Tia

njin

Shanghai

Am

ste

rdam

Berg

en

Paris

San J

ose

Tokyo

Los A

ngele

s

Utr

echt

Sto

ckholm

1

London

San F

rancis

co

6

New

York

1

Rotterd

am

-

Hague

Electric vehicle share of 2016 new sales

Oslo

7Taiy

uan

Share of 2016 sales, %Plug-in hybrid vehicles Battery electric vehicles

China Europe Japan US

The EV landscape in Europe demonstrates the power of

regulatory environments to spur vehicle electrification

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27McKinsey & Company

However, out of the top 25 cities with the highest forward looking EV

intensity only 6 are in Europe, and China looks to dominate

SOURCE: IEA Global EV Outlook, National and City Statistics, The International Council on Clean Transportation, City Scope Database, Siemens Green City Index, California New

Car Dealers Association - California Auto Outlook, SMMT - EV & AFV Registrations, The Middle Ground – Electric Vehicles Singapore

Adoption index, #

Index, scale 1-100

NOTE: Modeled only for data available so far (as per previous page)

Country

47.7

50.7

47.9

49.8

49.8

50.2

48.8

50.5

49.7

46.6

47.7

49.3

53.4

51.9

54.4

52.0

50.9

52.6

52.9

51.9

52.7

54.7

59.9

64.1

50.9

Hong Kong SAR, China

Beijing

London

Denver

Copenhagen

Los Angeles

San Francisco

Shenzhen

Shanghai

Wuhan

Seattle

Paris

Hangzhou

Portland (OR)

Tianjin

Oslo

Guangzhou

Seoul

San Jose (USA)

New York

Chengdu

Tel Aviv-Jaffa

Boston

Washington, D.C.

San Diego

City’s ability to

act

City’s motiv-

ation to actCity

Demographics

& car pool

4th3rd

2nd1stQuartile:

EXAMPLE: EV ADOPTION (MID-SIZE CAR)

Insights

▪ China and USA together

make up over 2/3 of the

top-25 list

▪ USA leading with 10,

followed by China with 9

and Europe with 4 cities

▪ Tel Aviv and Seoul only

cities not falling into these

3 regional buckets

▪ Oslo and Hong Kong

clearly leading the index

▪ Oslo with >10% difference

to the number 3 city

▪ Cities in developing

countries generally fall

short in the category

demographics and carpool

but often show a strong

motivation to act due to

heavy pollution – vice

versa in developed

countries

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Cities are taking ambitious steps to reduce the reliance on

individual cars (1/2)

SOURCE: Press search; expert interviews; team analysis

Helsinki

Paris

Norway

Focus/description

▪ Launched a program with the aim at making personal cars irrelevant by 2025 by having

a comprehensive, point to point, "mobility on demand" system focused on a high user

convenience (purchase mobility in real time, from their smartphones, and minimizing

waiting times)

▪ Helsinki expects a flood of new residents over the next few decades, but the more people

come, the fewer cars will be allowed on city streets. In a new plan, the city lays out a

design that will transform car-dependent suburbs into dense, walkable

communities linked to the city center by fast-moving public transit

▪ The mayor of Paris has called for diesel cars to be banned from the French capital

by 2020 as part of plans to reduce pollution. Additionally, the Mayor wants more

pedestrian-only areas and a doubling of cycle lanes. Only 40% of Parisians own cars

today, down from 60% in 2021

▪ Last year, when smog levels spiked in Paris, the city briefly banned cars with even-

numbered plates. Now, in the city center, people who don't live in local neighborhoods

won't be able to drive in on weekends, and that rule could soon roll out to the whole week.

Recently implemented drastic measures against cars: 3x higher price for street

parking, free parking from 8 pm instead of 7 pm, ban of free parking on Saturday,

increased price of car impound by 35%

▪ Expected to become the first country where one in every 100 cars is purely electric.

This results from the Norwegian Parliament's incentives to get people off fossil fuel

(e.g. no tax for plug-in vehicles)

▪ The smoggy city of Milan is testing a new way to keep cars out of the city center: If

commuters leave their vehicles at home, they'll get free public transit vouchers. An

Internet-connected box on the dashboard keeps track of a car's location, so no one can

cheat and drive to work

Milan

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Cities are taking ambitious steps to reduce the reliance on

individual cars (2/2)

SOURCE: Press search; expert interviews; team analysis

Focus/description

▪ Developing a prototype for an integrated Personal Mobility smartphone platform:

the SMILE program (Smart Mobility Information and ticketing system leading the way for

Effective e-mobility services). The app integrates diverse mobility offerings into one option

taking into account the customer's needs

Vienna

▪ Forty years ago, traffic was as bad in Copenhagen as any other large city. Now,

over half of the city's population bikes to work every day. Car-free zones have

slowly spread since then, resulting in one of the lowest rates of car ownership in Europe.

Transport authorities created a network of bicycle lanes throughout the city, and bicycle

super highways to reduce traveling time and safety. In addition the city implemented a

new bike sharing system to foster the use of bicycles from door to door

Copen-

hagen

▪ Madrid has already banned most traffic from certain city streets, and has expanded

the car-free zone to more than a square mile, in which non-neighborhood residents will

be fined $100. In the next five years, 24 of the city's busiest streets will be redesigned

for walking, not driving. Currently, the most polluting cars in the city have to pay

have to pay more to park

Madrid

▪ Though Hamburg isn't planning to ban cars from its city center, the city is making it

easier and easier not to drive, with plans for a new "green network" connecting parks

across the city. The city is also covering up sections of the infamously crowded A7

autobahn with green spaces

Hamburg

▪ Together with national and local incentives, taxis and delivery trucks can get up to

€10,000 in incentives for xEV purchases; Schiphol has installed fast chargers for taxis

▪ Though the registration tax incentive in the Netherlands has ended, Amsterdam has

strong non-monetary incentives in the form of parking. xEV owners get access to

electrified parking spaces, whereas new ICE owners can wait up to 10 years to get an on-

street parking space

Amsterdam