The key trends shaping the future European ETC market

Today, the most repeated news headlines for tolling in Europe refer to the end of concessions, the opening of barrierless highways, and the emergence of CO2-based tolling.

Are these the most relevant trends shaping the future of tolling?

In this blog, I examine the major trends in European Electronic Toll Collection (ETC), their likely development and their expected impact on the market.

In terms of regulation, relevant trends impacting the market evolution include:

• Tolling as a method for infrastructure funding: Tolling is increasingly used to fund the construction and maintenance of roads. In most countries, The decline in fuel tax receipts, attributed to the rise of electric vehicles and the improved efficiency of the internal combustion engine (ICE), the increase in road construction and maintenance costs, and the increase in financial expenses resulting from high debt levels and rising interest rates are forcing governments to use tolling as a mechanism to for road funding.
• Tolling as a method to reduce traffic: In some urban areas, tolling is deployed to reduce congestion. Charging to enter delimited areas reduces congestion, notably in highly populated areas such as the centre of Gothenburg, London, Milan and Stockholm.
• Tolling as an instrument to reduce emissions and achieve green transition targets: Toll rates will be adjusted to emissions. New regulations such as the Eurovignette revision and new national legal frameworks allowing for the application of congestion charges and Low Emission Zones (LEZs) are shaping the road pricing conversation. LCVs will also be submitted to CO2-based charges from 2026, and LEZs continue to be deployed in multiple European cities.
• Renewal or end of concessions: Mainly driven by politics, as it could be an attractive method to increase popularity, but also driven to avoid the continuation of highly profitable contracts; in a country like Spain, some concessions that are coming to an end will not be renewed, and the state will take care of the operation and maintenance. In France, the future of the concessions could be reassessed in light of environmental charging.
• Interoperability expansion: The European ETC market is almost fully interoperable. EETS legislation has fostered the creation of a single market. The number of countries compatible with EETS keeps growing. The number of EETS issuers present in each country continues to increase. The new EETS directive sets clear cross-border enforcement rules based on a common platform, EUCARIS, and data exchanges. EETS legislation has enabled a fair and transparent ecosystem

In terms of technology, relevant trends impacting the market evolution include:

• Digitalisation and electronic payments adoption: Cash payments are slowly fading away in European tolling. Moreover, ETC improves traffic speeds while simplifying the end-to-end toll collection process, reducing overall toll collection costs. Finally, tolling-specific devices are becoming cheaper and more reliable.
• DSRC as the technology for Light Vehicles in the next 5 years: DSRC (Dedicated Short-Range Communication) is deployed on most roads under concessions in Europe. Its adoption is relatively high. Devices are inexpensive and reliable, stakeholders are happy with the overall operations, and contracts are in place.
• GNSS further expanding for Heavy Vehicles (HVs): GNSS is the most cost-efficient system for wide-scale tolling schemes. It is beneficial in countries with vast amounts of foreign traffic. Most HVs are now equipped with the technology, mainly through fleet telematics devices.
• Slow move towards MLFF: MLFF (Multi-Lane Free Flow) is the most efficient system from a safety, user-friendliness and emissions-reduction perspective for facilities with heavy traffic. MLFF improves traffic speed significantly. Moreover, MLFF has much lower CAPEX and, in some cases, OPEX than systems with barriers. Implementing it in existing facilities is complex as toll booths are still there, and demolishing them is expensive. However, in facilities with heavy traffic, the return on investment is rapidly recovered.
• ANPR gaining traction as a major charging technology: ANPR facilitates this thanks to its increasingly high read rate and ability to work device-free. In addition, if a good license plate and enforcement system is put in place is likely to succeed. These schemes should be complemented by legislation that enables the collection system.
• Emergence of connected embedded vehicle platforms: The penetration of the vehicle’s embedded cellular/GNSS modules is increasing, and most light vehicles will be equipped by 2032. The Continental/ Axxès partnership, a cooperation to provide an ETC service integrated into the second version of Smart Tachograph for commercial vehicle fleets as of 2024 is paving the way for a universal embedded tolling device and platform.

As far as market evolutions are concerned, major trends include:

• Service providers integrating tolling into a broader set of mobile payments and services: Payments and vehicle services will be integrated into a single platform, either the smartphone or the vehicle. For the Light Vehicle (LV) segment, toll service providers are integrating new vehicle-related payments, such as parking and EV charging and are exploring the move into MaaS. In the HV segment, toll services will increasingly be integrated into the broader fleet management services. Services’ integration will create stronger competition among service providers and encourage cross-sector partnerships and mergers. Solution providers must find new revenue streams as the competitive landscape becomes fiercer.
• M&A activities: The tolling service provision market will consolidate as profitability is currently insufficient. Many suppliers are still too small to recover their investment in R&D. With the promise of “one contract, one device, ” EETS legislation is also boosting cross-boarder partnerships and reducing revenues from selling/renting devices.
• The transition towards EVs will precipitate the (r)evolution of road infrastructure funding models. Certain cities have announced that they will forbid ICE vehicle access from 2025, starting with Stockholm. At the same time, EVs will pay lower toll fees when environmental charging is applied or if governments provide special incentives, as in Norway.

By analysing the trends, we anticipate that most will positively impact the European tolling market. It is very likely that governments’ need for funding as well as the need to reduce emissions and traffic, will continue to drive the tolling market’s growth and the penetration of ETC.

Interoperability, the development of new connected vehicles and the move towards barrierless tolling will further increase the ETC adoption and, consequently, the market size.

We believe that it is very unlikely that countries will remove tolling with the end of concessions. If it is to be entirely removed, it will be difficult for countries to meet their infrastructure funding needs. With the existing cost of debt, European countries need more than ever mechanisms to fund the construction and maintenance of road infrastructure.

We can also observe that GNSS has a significant likelihood and magnitude of impact. As we explore in other articles (Will GNSS-based Road Usage Charging ever be applied to cars?), it is becoming widely adopted in Europe and facilitates the extension of the toll domain to a country-wide road network.

While the timeline remains uncertain as it heavily relies on infrastructure development and governmental initiatives, the growing adoption of electric vehicles will drive the RUC market development in the long run. However, these vehicles will pay lower toll fees in the short term, given their vehicle class and government incentives.

M&A activity and service providers’ integration of tolling into a broader set of mobile payments and mobility services will increase efficiency and reduce costs.

Overall, these trends indicate a shift towards a more sustainable, interconnected, and user-friendly tolling system in Europe, which is in line with the continent’s broader goals for digitalisation and environmental responsibility.

If you wish to learn more about our forecasts and want to understand the subject in more depth, please contact Alberto Lodieu.

For those interested how these trends will impact the different European countries, our latest report can be found here.