Trains, bicycles and electric cars: how sustainable transport represents an unknown investment opportunity

In 2024, funding for sustainable transport increased by 42%, reaching 19 billion euros, according to a report by Oliver Wyman. If the data from the present is striking, the data from the future will be even more so. According to another report, this time from EIT Urban Mobility, part of the European Institute of Technology, over the next 25 years it will be necessary to invest €1.5 trillion in sustainability, including €500 billion for sustainable mobility.

With this data on the table, and to commemorate the United Nations General Assembly's declaration of November 26 as World Sustainable Transport Day, with the aim of promoting sustainable growth and improving social welfare through more environmentally friendly transport alternatives, we analyze this booming sector.

The first step is to understand what the UN means by "sustainable transport" in order to better understand the scope of the sector, as well as potential investment opportunities. This is the definition given by the organization: “The provision of services and infrastructure for the mobility of people and goods, advancing economic and social development for the benefit of current and future generations, in a safe, affordable, accessible, efficient and resilient manner, while minimizing carbon emissions and other environmental impacts.”

Furthermore, sustainable transport also appears in several points within the Sustainable Development Goals (SDGs) announced by the UN in its famous 2030 Agenda. Specifically, point 11 highlights the need to move towards “sustainable cities, with urban mobility and reduced pollution”. Meanwhile, point 13 mentions “climate action (mitigation of climate change through low-emission transport)”.

Therefore, sustainable transport affects both private mobility of people and public transport, as well as goods, which move by land, sea and air.

Europe is committed to promoting both rail transport and low-emission zones. In the case of France, the decision has been made to reduce short domestic flights when there is a train alternative, and in Spain, the government is considering implementing a similar measure. In addition, large cities have implemented low-emission zones to limit the transport of polluting vehicles.

Some Latin American cities, such as Bogotá, Mexico City, and Curitiba, have adopted a bus rapid transit system to reduce private transportation and encourage public transportation. Furthermore, China is investing heavily in electric vehicles and high-speed trains.

All these alternatives open the door to the development of areas as varied as the digitization of logistics, car sharing, micro-mobility with the expansion of electric bicycles and scooters, the creation of new infrastructure for high-speed railways, the search for new energy sources such as electric or hydrogen cars, and even green fuel.

• Electrification: The transition to electric vehicles will grow at a compound annual growth rate (CAGR) of 9.82% between 2024 and 2028, according to data collected by Statista. This implies that the electric car battery market alone will grow from $14.99 billion in 2016 to $93.94 billion in 2026. These data open up opportunities both for the best-positioned automotive companies and throughout the entire supply chain involved: vehicle chargers, renewable energy companies for charging these vehicles, or electric battery manufacturers, among others.
• Infrastructure: Sustainable mobility requires high infrastructure spending. In fact, if we take into account the Global Infrastructure Outlook Report, we can see that an investment of $2 billion per year until 2040 is needed to address the proposed changes. When we talk about infrastructure at this point, we include both the improvement of the roads themselves and the expansion of public transport alternatives, the establishment of charging points for electric vehicles and a series of other improvements that seek to reduce emissions. An example of this is the city of Shenzhen, in China, which is the first city in the world with all electric city buses. This change has resulted in a 48% reduction in carbon dioxide emissions and annual savings of $14,000 per bus ($112,000 in the case of the 98,000 diesel buses converted to electric).

New urban mobility options represent a $260 billion market, according to Oliver Wyman. The most striking thing is that the Revenues will grow at a rate of 10% annually over the decade, compared to 5% for conventional transport.

These options include the expansion of electric scooters and bicycles, shared vehicles, vehicle charging services, and smart parking services, which are booming in North America.

Looking at one of the world's best-known indices that includes companies in the field of electric mobility, such as the STOXX Global Electric Vehicles & Driving Technology, one can observe that its profitability exceeds 10% annualized since 2019. A very attractive return for a sector that is present and has great future expansion.