This article originally appeared on the World Economic Forum Global Agenda.

As urbanization accelerates, cities are at the forefront of changes in energy, mobility and consumption. Across regions, cities are experimenting with ways to improve air quality, reduce congestion and provide clean, reliable and affordable energy to their growing populations.

Automation and shared mobility will play a key role in this transformation, changing the ways that people commute in cities. Before long, fleets of electric autonomous vehicles (AVs) will drive people from their home to their office or the supermarket. These shared AVs will run at higher utilization rates, substantially reducing the cost of mobility and congestion.

Combined with more renewable generation, they will charge in hubs at optimal times, sometimes in the middle of the day, when wind and solar generation is most productive, sometimes at night, when rates are lowest. When the demand for mobility is low, these fleets will be able to return stored electricity back into the grid.

At the intersection of these trends, the electrification of mobility is poised to support cities’ ambitions and provide customers with cheaper, safer and greener urban mobility.

Environment, mobility and energy

Our work with the World Economic Forum’s Future of Mobility and Electricity initiative identifies three primary benefits of the electrification of urban mobility.

First, the electrification of transport supports national and local ambitions for cleaner mobility. Even without significant changes in the sources of electricity generation—primarily coal, natural gas and renewables—an electric vehicle (EV) can still reduce CO2 emissions by 60% compared with internal-combustion engines. With more than 20% of emissions coming from light-duty vehicles in the US, EVs could be a major factor in improving air quality and the health of urban residents.

Second, as battery prices fall, EVs will soon provide cheaper mobility for individuals and fleets. With lower operating costs, the total cost of ownership for EVs—that is, how much owners spend over its useful life—should reach parity with internal-combustion vehicles over the next five years and continue to decrease. Shared across multiple customers, their patterns will also be optimized to reduce congestion in cities.

Third, if charging times and locations are carefully planned, EVs could provide additional benefits. Smart charging could schedule EVs to charge when electricity prices are low and stop charging when demand for electricity is too high. EV batteries can also store surplus electricity and distribute it back to the grid on demand—a feature that could be particularly significant for large fleets of EVs.

Maximizing the potential

The current approach to the electrification of urban mobility—a steady, gradual change, which we call proliferation—would fail to maximize these potential benefits. Current programmes encourage the purchase of privately owned EVs, which spend 95% of their time parked, limiting the volume of miles or kilometers actually electrified.

Current approaches also deploy EV-charging infrastructure based on the patterns of privately owned vehicles, primarily in residential and business areas. Failure to integrate intelligently with the power grid can limit the business case for the charging operator and could lead to grid instability if too many EVs charge at the same time—especially if it coincides with peak demand times, like weekday evenings.

Smarter cities will take a more integrated and assertive approach to make the most of electric mobility by converging the grid edge and mobility evolutions, a paradigm we call transformation. These cities will encourage the electrification of high-use vehicles, especially fleets of shared, autonomous vehicles, to increase the volume of miles electrified. They will deploy charging stations to meet the needs of future mobility patterns, focusing on shared, autonomous fleets as well as private owners, and integrated with the electricity grid to facilitate smart charging at the best times. Transformation could bring the share of electrified miles up to 35% in some US cities by 2030.

While there are benefits in proliferation, accelerating the transition through transformation would create additional value to the society, with more electrified miles and the convergence of mobility and energy transformations.

• Electrified autonomous vehicles will revolutionize urban mobility by decreasing the overall cost per mile by up to 40% and reducing congestion in cities.
• Fleets that are integrated with clean, digitalized, decentralized and non-dispatchable (that is, not easily turned on and off) electricity resources will boost consumption of electricity generated by solar and wind generation, lessening the need to curtail production of these clean energy sources and further reducing total emissions.
• Public and commercial fleets of electrified vehicles will introduce more flexibility to electricity systems through smarter charging and ancillary services, optimizing the electricity consumption and generation.

Taken together, the benefits of transformation could quadruple the value of new mobility patterns for society—up to $635 billion in the US by 2030.

To accelerate the path toward transformation, public and private decision makers should embrace three guiding principles:

• Take a multistakeholder and market-specific approach. Silos between different industries and players will have to be broken down and replaced with cooperation in defining policy and business model definition. Planners should take into consideration local characteristics, including the energy mix and the quality of public transport as they define the priorities of their mobility electrification strategy.
• Prioritize high-use vehicles. Focusing on fleets and high-use vehicles can maximize value by electrifying more miles while also reducing congestion and accidents.
• Deploy the critical charging infrastructure today while anticipating the transformations. Charging infrastructure should be carefully planned and be as interoperable as possible, to guard against the risks of stranded assets.

Our recommendations aim to support policy makers, urban planners, private investors and businesses as they take the critical actions required to accelerate electric mobility at the convergence of energy, mobility and urban transformations. For more details, read the full report, Electric Vehicles for Smarter Cities: The Future of Energy and Mobility.

Joseph Scalise and Joe Herger are partners with Bain & Company in San Francisco, where Christophe Guille is a manager. All three work with Bain’s Global Utilities practice, which Joseph coleads in the Americas. Stephane Rousselet is a Bain consultant based in Paris.