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Affordability as the prerequisite for swift change

The cost structure of electrification is different than with fossil fuels and renewable energy costs have fallen drastically over the past decade.
Cars in a car park, some electric charging
Money icon Challenge 4: Affordability

The fourth challenge that we need to overcome to electrify urban mobility is affordability.

There are two dimensions to this:

  1. We need to get the economics right. Electric mobility must be a viable economic solution for cities and companies.
  2. We also want to make sure that everyone will be able to afford these solutions that make our cities liveable, eliminate emissions and create economic opportunities.

There is one important characteristic of electrification that we need to fully understand: the costs of electric mobility are structured differently than those of fossil fuels that we are used to.

Icon for fossil fuels For fossil fuels, the upfront price of purchasing a car, motorbike or bus is usually not the dominant part of costs – fuels and other operating costs usually cost more over the lifetime of a vehicle, and this is particularly true for buses.
Icon for electric In the case electric mobility, this is different: the upfront costs is relatively high, especially to purchase a battery, but the variable, operating costs are lower than for fossil fuels for each kilometre travelled. This makes a big difference: there is a higher initial investment, but it becomes more economic if used a lot.

This is particularly true the lower the prices of renewable energy. As this graph shows, the costs of different sources of energy have fallen drastically over the past decade.

A graph showing each type of renewable energy generation and a sharp fall in price, particularly in solar energy, between 2010 and 2020

Such reductions in cost will increase the attractiveness of electric solutions.

For urban mobility, this means the economics of electric mobility are already favourable and will become more so in the future.

But every euro from public budgets can only be spent once. Each decision for electric mobility must also include this economic dimension – and this especially means ensuring affordability of all parts of the population.

If you want to look at the ‘total cost of ownership’ – the true cost of owning a car – you can use this tool on the website of the European Alternative Fuels Observatory

And if you want to look at the costs and business models of different types of buses, you can look at this overview prepared by the International Public Transport Union, UITP.

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Electrification of Urban Mobility: How to Get it Right

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