Global Research
- General Research Insights
- Future transport

Future Transport

By Michael Tyndall, Head of European Automotive Equity Research

18 February 2025

Article

Article

Seven takeaways from our industry event

HSBC hosted the Fifth Future Transport Week from 20-24 January 2025. We held 12 expert and company panels over five days, bringing together insights from consultants, analysts, and firms across the transport supply chain. So, what were the key takeaways?

1. The future is still electric…

The transport sector is the second-largest contributor to global CO2 emissions, making decarbonisation a key focus of future development. When it comes to passenger cars, electric batteries remain the leading technology to help lower emissions. Sales of battery electric vehicles (BEVs) far outpace those of hydrogen combustion engines globally, though we continue to see a compelling use case for hydrogen in commercial vehicles such as delivery vans and taxis.

2. ….but might not arrive as quickly as once expected…

While we believe the future of BEVs is intact, the pace of adoption has slowed. China continues to dominate in terms of sales, but markets such as Germany have seen BEV figures slide. Arguably, we and others expected too much too soon. What needs to happen to make mainstream adoption a reality in markets outside China?

2025 could be a year when regulators’ resolve is tested

3. ….and affordability is the key issue

Our conclusion is that cost is the key factor. To this end, manufacturers are focused on making BEVs more affordable. In Europe, for example, many are bringing smaller and lower-cost models to market; and globally, suppliers are also constantly examining new technological solutions to reduce the cost of batteries. Alongside cost, government policy could affect future take-up. 2025 could be a year when regulators’ resolve is tested, with some attendees at our event questioning whether new rules, such as the EU’s ban on internal combustion engines due to start in 2035, could be modified.

4. Self-driving technology is coming closer…

Numerous new car models now include some level of autonomous function as standard. These include forms of cruise control, where the car automatically maintains a steady pace at a safe distance from other vehicles, though the human driver remains in overall control. Some city authorities, including China’s capital Beijing, have consulted on rules to facilitate the commercialisation of largely autonomous “robotaxi” services, where the human passenger sits back. There is no doubt that self-driving technology is on the rise, but we think it will still be some time before robotaxis and fully autonomous vehicles become a reality outside some very specific geographic perimeters.

5. …but the “global car” is getting further away

Recent years have seen new tariffs applied to vehicles, with the possibility of more to come. Because of this, and because of significant regulatory differences between different markets, as well as varied consumer tastes, the general view at our event was that we will continue to see a regionalised and polarised global auto market. The “global car” seems further away.

IMO’s target to achieve net zero by 2050 requires that ships powered with alternative fuel come into operation meaningfully before the end of this decade.

6. Shipping and aviation aim to become greener…

Alternative fuels and electrification of fleets are among the options as aviation and shipping look to reduce their environmental impact. Indeed, the International Maritime Organisation’s (IMO) target to achieve net zero by 2050 requires that ships powered with alternative fuel come into operation meaningfully before the end of this decade. Alternative fuels are currently more expensive than conventional ones, however, and equipping ships to be able to use them comes at a high cost.

7. …and stable regulation is critical

Indeed, the transport sector as a whole faces great change, which requires substantial investment. Future transport has the potential to be more sustainable and safer than ever – but the best way for the industry to achieve the transition that stakeholders want to see is by garnering economies of scale. Stable regulation and investing in long-term change are critical.

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Disclosure appendix

The following analyst(s), who is(are) primarily responsible for this document, certifies(y) that the opinion(s), views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Michael Tyndall, CFA, Pushkar Tendolkar, Yuqian Ding, Edoardo Spina, CFA, Parash Jain, Will Cho, Jonathan Day and Camila Sarmiento

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