Greetings to you all, and a warm welcome to this ABB Capital Markets Day. I have to say it's really nice to see that we could gather so many of you actually here in the room in Zurich, and I know we have a big crowd joining us virtually. Thanks to all of you for taking the time to spend this afternoon with us. In the first part of this program, we will focus on the recent developments of the ABB Group. You will hear from our CEO, Björn Rosengren, our CFO, Timo Ihamuotila, and our Head of Sustainability and Communication, Theodor Swedjemark. I'm Ann-Sofie Nordh, and I'm heading the investor relations team here at ABB. Before we start, there are just a few little practicalities I would like to share with you.
After each set of presentations, there will be an opportunity for you to ask questions, and there are three ways you can do that today. For you that are with us here in the room, just raise your hand, and there will be someone coming running with a microphone. There is also, for all of you, a chat tool available in the CMD webcast window. You can also, as a third option, dial in and put through your questions through the audio. In order to do so, you just register via the link available on the CMD site, and you will have all the details how to proceed from there.
I also unfortunately have to mention that we still have some COVID restrictions, and for those of you here today, I kindly ask you to wear your mask unless you're obviously eating or drinking. You have today's agenda available on the site at all times. We aim to finish today at about 5:00 P.M. I should mention that for you here in Zurich, just so you have noticed and are aware that we have canceled the mingle session after the official program, just as a precautionary measure, in these COVID times. I should also say that there are no fire drills expected today, so if you hear an alarm, please make your way out the building, and we will assemble in the park just opposite the entry.
I also just want to quickly draw your attention to our safe harbor notices and our use of non-GAAP measures. These are available on page two. These cover any forward-looking information that you may hear today which could contain some uncertainties. With that said, I will let Björn loose after we kick this session off with a short video.
Thank you, Anssi, and a warm welcome from me as well. Of course, we would have loved to have all of you here in this ABB historical building. We are happy that we had the opportunity to run this Capital Market Day in hybrid. Maybe this is the future. I have now been with ABB for two years. On one hand, it's been a very cumbersome time with all the restrictions related to COVID. On the other hand, it's been a very enlightening and exciting, energizing part for me to drive the transformation of ABB. Today, we will talk about how ABB contributes to, and the opportunities we see in sustainable transports. Sustainable transports is also crucial for enabling a low-carbon society. Some people say that ABB is a conglomerate. I don't agree.
I believe that ABB is a purpose-driven company with the ambition to drive customer value by helping our customers to become more productive as well as sustainable. We do that through Electrification and Automation. In both these two areas, ABB is number one or number two. We want to drive impact by being a leader when it comes to resource efficiency. It's actually using the Earth's limited resources in a sustainable way, and in that way minimize the impact on the environment. ABB's product offer is both relevant, strong, and well-positioned to drive strong growth and returns. I very often talk about value creation, and it always starts with the customer. For us to be able to be a leader when it comes to resource efficiency or to deliver in line with our purpose, ABB is well-positioned.
We say that we have three core competences that drive the success of ABB. The first one is innovation and also cutting-edge technologies. The second one is domain expertise, and the third one is the ability to scale. If we start with the first one, innovation and cutting-edge technology, I don't think anyone today question the competences of ABB within this way. We are investing almost 5% of our turnover into innovation and R&D. We have more than 7,000 R&D engineers. 60% of them are today focusing on software development. The second competences is the domain expertise. Now when some of the COVID restrictions have eased up a little bit after summer, I've been actually spending quite a lot of time traveling to our operations, but also to meet our customers.
I'm quite astonished what a strong position ABB have. I do believe that it actually comes that ABB having the history in driving a lot of system projects, service sales, but also products, and in decades build up this strong knowledge about our customer segments. Many times, we even know these customer segments better than our customers. The third competence is related to scaling, okay? What do I mean with that? Yeah, ABB has a global footprint. We are a global company, but at the same time, we look upon ourselves as local, meaning that we are in the different parts of the world with local people. We are available in more than 100 countries, and we have the ability to take our development, our innovations, and to scale them up in the world.
These together is actually creating the strength of ABB. Our product offer is both relevant, but it's also broad. It actually consists of software and digital service products, which is today around $500 million and growing double digits. We have software-enabled products, which is the majority of our portfolio. These products, of course, loaded with semiconductors. Then we have the traditional products. I do believe that if you want to be a global leader, you need to be strong in all these three areas. Let's move in a little bit into my favorite competence, innovation and technology. It's quite exciting. ABB has products that are mature, that are already a success in the market. We also have a broad portfolio of products that are in the emerging phase. Just give you a couple example.
The EC Titanium, it is the world's most efficient electric motor with built-in drive, variable speed drive. Another one, the Terra 360, which we recently launched, which is the fastest EV charger, electric mobile charger in the world, where you actually have the capability to load or charge a car in only 15 minutes. Then, of course, I love to talk about the Azipods, as I always dreamt about having this in my portfolio when I was previously in Wärtsilä. Azipod is a unique product. It's actually electrifying propulsion in many cruising ships and other special vessels. Here, ABB has a unique position, and I'll come back to that a little bit later. When we talk about energy efficiency, it's no longer an option, it is a must.
When it comes to electric motors, they have been in the market for 100 years, but it's only lately that a lot of efforts have been put in to make them more efficient. Did you know that 45% of all electricity is actually used to drive electric motors? Did you know that there are 300 million motors operating out there, and the majority of them do not have a variable speed drive, which means that they are very inefficient? By making sure that the motors have the latest technology, but also connected to variable speed drive, we can actually save 10% of the world's electricity consumption, which is equivalent to around 300 megatons of CO2 emissions. It's quite dramatic. I say I come back to the Azipod.
Did you know that there are approximately 2.1 billion people traveling with ferries as well as cruising ships every year? The cruising ships and the most advanced ferries are all equipped with electric propulsion from ABB. When you look at these propulsion systems, including drives, generators, motors, but also switchgear on the electrification part, it's up to 20% of the value of the ferry. Today, we also offer a power-generating system, including battery solution as well as charging. It's astonishing how this is actually being accelerated into the market. I'll give you an example. The P&O Ferries are going between U.K. and France, crossing the English Channel. By using ABB equipment, they actually reduce the CO2 emission with 40% on each of these cruise. This is what I call energy efficiency. Another environmental problem is plastic.
You know, plastic does not break down. It stays the same. Every year, about 10 million tons of plastic ends up in the ocean. This is a huge problem we all know. This means that we need to move away to plastic. Plastic is a very good material to be used, especially in the food industry, but also in the cosmetic industry. Now, a company called Zume, which ABB has partnered with, have actually developed a new compostable material that has both the capabilities as plastic as well as the price efficiency. By doing this, the plastic can be replaced. Together with Zume, we are planning to install 1,000 robot cells where this material is being produced.
The first installation is done in a Indian company called Satia Industries Limited, which is the world's largest wood and paper manufacturer, where the first mill is being built. I'm gonna show you a video so you can see how it looks like. It's quite fantastic. This has enormous potential in the future to support the sustainable development of the world. In line with our purpose, we are committed to energize the transformation of society and industry by helping our customers to become more productive and sustainable. By this, we do it by electrification as well as through automation. We are put in a sweet spot when it comes to growth opportunities. Let me give you some examples. When it comes to the energy transformation, the demand for electricity is actually double from, more than from any other energy resource.
When it comes to energy efficiency, 40% of the reduction of the energy efficiency is actually generating decrease in the greenhouse gases with 40% in the coming 20 years. It's a transformation towards electricity, but also the drive of energy efficiency. On the other side of our purpose, it's related to the automation. As we see, industries are today looking for more flexible production. We see that actually the working population in relation to the total population is in a decreasing. We see also labor cost increasing, which all is supporting automation, industrial automation, as well as the use of robotics.
When we look at our business and the businesses where we are into, we see that we are in a sweet spot, and we see that our business's potential to grow going forward is substantially higher than what the history has shown. What is actually driving the growth abilities of our business? The first one is the well-positioned in these global trends like electrification and automation. The second part is the way we operate, the new operating model, where decision-making is done by the division closer to the customer, which makes us faster in reaction to drive growth. The third one is more related to legislation and stimulus in relation to ESG, where ABB today is well-positioned. That makes us lift our growth targets from 3%-5% to 4.7%. We'll come back to that a little bit later.
I said we have gone through a transition, and it is now 1.5 years ago that we introduced our new operating model, where we have full accountability by the divisions. We have, during this period, reduced the central and the country resources from 18,000 to 900 and moved them out to the businesses. Now, when we've been traveling around visiting our operating entities around the world, we can see that we have more work to do within the divisions because the divisions also need to move the accountability down in their operating entities. During the coming years, we will continue the transformation of ABB towards a more accountable structure in eliminating these matrix organization structures. We are moving towards our target of over 15% EBITDA margin. I think the progress is going well.
We are not there yet. We have more to do. If we look where we are on the last rolling 12 months, we are at 13.9%. If you also then take away the margins from the Dodge business as well as from the Turbo business, we are actually at 13.4%. We are committed to be above 15% by 2023, and I feel that we are moving in the right direction. When we have our divisions, 21 divisions today operating with full accountability, it is of course important to keep the group together. We call it the glue, the ABB Way. Together with our purpose, which actually answer why we keep the group together, the ABB Way is actually answering how do we keep the group together.
Here, the ABB Way is the glue that keeps it and also driving the performance management, keeping our values at the right place, as well as making sure that our brand is taking good in a good way, as well as making sure that we are fulfilling the governance structure, including the code of conduct. The ABB Way should help the businesses to become more successful. If our businesses are benefiting of being part of ABB, then the group fits well together. If any of our business do not benefit by being part of the group, then we have to question should it be part of the ABB structure? As you know, we have decided to divest three of our businesses.
When we introduced the ABB Way and our new operating model, we said that each division is responsible for its strategy, and each division has a strategic mandate depending on where it is today. If the division takes the right journey, it's first from stabilizing the business, improving the profitability, and then focus on growth. When we started, the majority of our businesses were actually in the profitability mode. When we say the profitability mode, it means that it's not delivering in line with our peers in the market, in line or better. When the businesses are delivering in line with them, the focus should be on growth. What we can now see here is that today, about 60% of our divisions are in the so-called growth mode.
I think we can see that many of the other businesses are moving the right way. In 2023, we do expect that 100% of our businesses have a strong focus on growth. By that, I hand over to Theo, who will talk about our sustainability targets.
Thank you so much, Björn. It's great to be able to be with you all here today, also from my side, to share a brief update about ABB and our leading sustainability efforts, as well as some exciting news about our ambition to drive progress within the area of circularity going forward. First, I will give a quick recap about our sustainability strategy, our ambitious sustainability framework, which was announced at last year's Capital Markets Day here in Zurich. Covering all aspects, the material aspects of ESG, our strategic approach is structured around three main impact pillars: enabling a low-carbon society, preserving resources, and promoting social progress, which together with our unwavering commitment to responsible business practices, really targets to embed sustainability in everything that we all do within ABB every day to drive maximum impact across our entire value chain.
That means leading from within our own operations, but driving maximum impact also upstream and downstream of ABB. What have we been up to since last year when we presented this strategy? I can tell you we have been very, very busy kicking off the implementation of our strategy. We have started to operationalize our goals and targets, updating our ESG governance to align it with both our purpose, but also our operating model that Björn just described again, the ABB Way. What does that mean? It means that we are successfully integrating the delivery of these sustainability targets into our performance management process. Same level accountability and transparency and approach to the way we drive the delivery of these targets by division and business area internally. You already heard Björn talk about performance process, and you will hear Timo talk a bit more about performance culture.
I just want to underline and make it crystal clear that the same level of transparency, accountability, and speed is expected and will be delivered internally when it comes to delivering ESG, just as any other financial or strategic targets. That also means that Björn's somewhat by now famous scorecards will be expanded to also include ESG parameters, which will be reviewed together with business reviews and already are actually to a large extent by our business teams. Whatever action will be supported by the appropriate management incentives. I also want to share a few quick highlights that we are very proud of.
During the course of the year, our plans to become carbon neutral in our own operations latest by 2030 were approved by the Science-Based Targets initiative, which also confirmed that they are in line with the 1.5 degree scenario of the Paris Agreement. We also chose to align our plans together with The Climate Group's three corporate 100 initiatives, which is EV100, RE100, and EP100. We did this because they basically represent the three main levers through which we will become carbon neutral in our own operations latest by 2030. That means converting our roughly 10,000-strong fleet of cars towards electric ones. We will purchase 100% of our electricity based on renewables, and we will continue to drive energy efficiency in all our factories and buildings and operations throughout the world.
It's also great to see that we see continuous progress in actually delivering reduction of our own emissions. You should see the number here, -25%, which is a very strong performance, but also in safety. This is an area where we are very proud at ABB, and we have a strong culture and history. By now, we are really operating at world-class levels. Very strong. We are very proud of that.
I also wanna take the opportunity to thank the teams for driving our ambitious diversity and inclusion strategy, where we're also starting to show some progress, including in the area of gender diversity, where maybe on stage today you will see we still have a little bit of work to do, even if things are going in the right direction. Now to the most exciting part of my presentation, the ABB circularity framework. I'm really proud to be able to show this to you today because it is the representation of our ambition to drive industry leadership in circularity. It's an area where we have a long history, but maybe we never spoke about it in this way or particularly loudly. But we will focus increasingly on across the company, including commercially, going forward.
More to come also in terms of marketing aspects related to this. Under our We Preserve Resources pillar, under our sustainability strategy, we have a very ambitious target of targeting at least having 80% of our products and solutions by 2030. That means our turnover covered by this circularity approach. What does this mean? It means we have a unique, systematic, company-wide framework where all our product solutions and services are included and will be evaluated against clear KPIs following the life cycle stage and key circularity levers to enable us to score, measure, and drive continuous improvement in terms of circularity, both for our customers as well as within our own functions and operations. Importantly, this will also enable us to develop new, more circular business models.
The list of examples where this applies within ABB already today is practically endless, so I will not spend more time on that besides mentioning a couple of examples. For example, you see on the slide here a picture of our beautiful EL factory in Frosinone, where we produce millions of circuit breakers every year, and we have already, or Tarak's team, today been able to prove that it's possible to run such a sizable operation without sending any waste to landfill. Or Sami and his team, who have quite a long history by now already, to taking back robots which have already been in operations for many years at hard work in industry, refurbishing them, repurposing them for a second life back in industry to serve new customers and help deliver efficiency and sustainability. I just want to underline that.
Supported by digital technologies, this framework will really help us drive sustainability, preserve resources, but also enable new, more circular value propositions. With that, I hand back to you, Björn.
Thank you, Theo. Now moving over to the product portfolio management. As part of aligning our operations with our purpose, we already one year ago informed that we are exiting a number of businesses. I'll give you a little bit an update on that. We during the third quarter this year, we announced that we sold our Dodge business, mechanical power transmission, and that business was closed during Q4. We are of course very happy for the Dodge business to end up in a home where they are really focused on for the future. The price for this business was $2.9 billion, which is actually 22x EBITDA or the profit of the business, which is actually the highest price that anyone paid for mechanical business. We're happy for that.
We are now in the process of exiting Turbocharging. Here we are running a dual track. We are looking at potential buyers, but also looking at the opportunity to lift the company or spin it off to our shareholders. We will soon come out with a final decision, which is the right one. We will of course take into consideration to make sure that the business ends up in the right hands to be able to develop and to grow into the future. The third business which we announced was actually an IPO of the E-mobility. This is not because E-mobility is not part of our purpose. E-mobility is core of what ABB is doing. This is more a technical solution to give E-mobility the right circumstances to grow in line with the market or faster.
Today, our E-mobility business is the largest in the world. We have now decided to list it on the SIX Swiss Exchange. We believe it's a good home where there is a lot of capital and a lot of investors who are excited about this, business. We will keep the majority of this business, and it will also be consolidated into ABB in the future. The money that we get from the listing will be used in the businesses to grow with acquisition as well as investing in organic growth. We have big hopes of growth and of this business in the future, and you will, hear more when Frank will present the business a little bit later. The last business that we decided to exit is the Power Conversion. It's also the business that have been mostly affected during the COVID period.
We now expect to start the process during the second half of this year. With that, Timo, a little bit about the committed culture.
There we go. Thank you, Björn. Good morning, good afternoon from my side as well. Thank you for your interest in ABB. It's a great company which we as a team are looking to make even better. In this short presentation, I'll cover a couple of things. I'll talk a little bit about driving better quality of revenue. I'll talk about progress in our profitability improvement. I'll talk about how we invest in future growth, and then about cash generation, cash flow, capital allocation, and finally, a couple of words about our revised target framework. Before that, let me talk a little bit about ABB Way from CFO perspective. Our decentralized model, as Björn described, is fully implemented, both the organization as well as way of operating.
At the moment, we have zero overlap between corporate and business activities, and the corporate activities are clearly defined. If they are not defined to be part of corporate, like treasury, tax, brand, then they are automatically part of business. That helps us drive to the lean corporate. I'll come to some numbers a bit later, but I'll actually give you 800 people instead of 900 people, what Björn said, outside the non-core business. I'll talk about that, ramp down later as well. We also have a systematic and granular way to look at our portfolio management. Everything we do in ABB needs to fit this model. This is not a corporate thing. Everything needs to be supporting the core, i.e., purpose. We want to be in the markets which have good market dynamics, good growth, and profitability dynamics.
We want to be number one or number two, i.e., the right assets to win on the market, and we also want to perform to full potential. As I said, not only group looking at or group and business areas looking at divisions, also divisions looking at their product groups, our sales units looking at the customers, which are the really, really good customers for ABB, and also our product managers looking at the different SKUs and looking where are we really making the bang of the buck. It really is a cultural way of thinking through a portfolio lens. This naturally then leads to capital allocation. I mean, in our system, cash is a corporate asset, and we're all the time moving forward to a situation where our divisions actually compete on capital to invest, which is great to see.
This doesn't mean that we would be doing micromanagement, but we of course have clear approval hurdles on how we move forward on different investments. I'll come back to this topic as well when I talk about investing in growth. First, a bit about quality of revenues. We have now been driving this concept of quality of revenues for some four years. This means no EPC business, more customers with secular growth trends, more software and digital in our offering, and more distribution partner business because the distribution partner business tends to be both higher margin, and you can also expand faster because you don't yourself have to invest into the full channel. Let's take a look at this in this picture bit sort of on a five-year interval from 2016 to 2020, how we have made progress here.
After the Power Grids exit and some other actions, we simply have no EPC business. You can be assured all ABB project business is high, more than 50% ABB content. If you look at the utility share of ABB revenue, it's down from 32% to about 15%. At the same time, the industry revenue is up 9% and also transport and infrastructure is up 8%. Our short cycle business is up 20%, moving ABB towards these more secular growth customers like EV charging, water and wastewater, data centers. When you look at our operational gross margin development during this time, it is up actually about 300 basis points, so 3%.
This is testament to more software in our business driving value with the embedded software strategy on top of our digital offering. Finally, our revenues from distributors is up 10%, so to about 1/3. I would say a lot of really good effort done by the teams on the better quality of revenue. I think as a team, we can be proud of that achievement. Let's talk about the margin. I mean, Björn touched upon this as well, but the systematic operating model is really starting to come through here. You can see that despite quite a big drop on volume to the COVID year of 2020, we were able to hold margin. Now the last 12 months is at 13.9%.
It's great to see that improvement is really coming from all the business areas and also from lower corporate cost. We are firmly on track to reach our 15% EBITDA margin target 2023. I mean, the growth divisions will drive improvement in mix. The profitability divisions are improving profitability. In our system, every division drives for at least 3% productivity per year, and we also expect to have lower corporate. This actually good segue to my next slide regarding driving this positive mix. This is a bit of a busy slide, but it's very, very important. Bear with me, I'll go through the structure a little bit here. First, this is about how different divisions performed versus their 2020 strategic mandates. Green means you had a growth mandate 2020, yellow, you had profitability mandate 2020.
Second, we are comparing the last 12-month growth to 2019 to exclude the COVID impact as much as possible. Third, we are actually in this lens separating robotics division into two. We are looking at automotive separate from non-automotive because as you well know, automotive has really been more of a profitability drive with the exit from the systems business, which Sami and team have been driving. What does this then tell us? It tells that, first of all, the growth has actually mainly happened in the growth divisions. When you look at on the right, seven out of nine divisions are growth divisions, which have been sort of growing more, and they have combined margin of about 17%.
When you look at on the left, you can see that out of the 10, seven have had profitability mandates, and there the average is about 11%. There are some outliers like the Marine and Ports division and so forth, which have been hit by the COVID. Overall, you can see that the model is working. If you look at the stuff on the right part on the slide, you can see that our low voltage has grown 12% faster than medium voltage, for example. Our drives divisions have grown 6% faster than the motors divisions. Non-Auto robotics have grown 26% faster than automotive robotics. This is working, and it is also driving our investment divisions. Let's then first look at organic growth, and then I'll go to inorganic.
Here on the left-hand side, you can really see that our divisions have different R&D and CapEx intensity. R&D can run anywhere from 1%-2%- 15% of revenue. As we discussed earlier, over 60% of our R&D folks, of the 7,000, are working in software to really drive digital offering this embedded software, higher gross margin as I discussed, which also then has greater pull-through of our traditional products. Let's talk about couple of practical examples here. For example, Electrification installation products. This is about 2% R&D type of division, but the value is really on the channel and distribution. You need to have right product in right place at the right time for the installer. That's where the value is.
This is then a key driver of margin and also key barrier of entry of that kind of business. Whereas then you can see on the right-hand side some businesses where we have significantly increased R&D. I mean, you see E-mobility 100% up. Frank will talk about that later today. Drive products where we have really invested in a plug-and-play connectivity in IoT and also the software platform on the drives to change the use case of a drive with software up 15% and robotics up 50% on investing in new areas like food and beverage, hygienic motors, hygiene products, or in RobotStudio on design of totally new areas of business like this medical back-end or logistics.
From sort of historical times in technology, I have learned this statement that in R&D you should invest where it matters. I think with this model, we are really investing in R&D where it matters. If you look at inorganic growth, i.e., acquisitions, I mean, Björn spoke about the divestments. Now we use, of course, a similar tight lens on acquisitions. I think during the last years there's really been a big change how we look at M&A at ABB. First, we started to increase the analytical discipline, and now with ABB Way, I think we both have the right model as well as the right discipline. For ABB, M&A is really a strategy execution tool. It is not the strategy itself. Very important.
First, the divisions create a long list, then subset of that moves into the pipeline, and then we follow our clear criteria. Of course, it has to be close to the core and purpose as discussed. From financial side, we want to see EPS accretion after year one, and we want to see return higher than weighted average cost of capital after year three. If you just look at this ASTI acquisition through this lens, this was about $200 million ticket with about $50 million of revenue. That would break the return over weighted average cost of capital hurdle in about 3.5 years. We also drive minority investment through this divisional lens where our ABB Technology Ventures organization helps on implementing.
You can see here on the left the four investments which have been done by this model, and these are also all investments which can then later also become acquisition targets. As I said, we have the right model, the right discipline to drive value-adding acquisitions. I would cover couple of, I would call them housekeeping items here. First on the corporate side. We are committing to our $300 million or under corporate cost, excluding non-core. Just to remind that this is down from $1.1 billion 2018. On the non-core, we continue the ramp down, and we expect to finalize this 2022. At the end of 2021, we still had 10 projects in operation. At the end of this year, we will have four. At the end of next year, 2022, we will have zero.
We have made progress on these two large projects, which I spoke about in our last capital markets day. We're not expecting more than this $300 million of operational charges in non-core, so the same situation as a year ago. As I said, we should be out of this by end of next year, with maybe some legal tail ends only left. Finally, we are doing the separations of these four assets, and this year we expect about $130 million of separation costs. Next year, about $150 million, including, of course, all the preparation for the E-mobility IPO. The other one, and Björn touched upon it, so I'll just go through this a little bit more detail. What does the Dodge and Turbocharging exit impact ABB?
First of all, Dodge is having about 60 basis points impact on Motion level, and Turbocharging about 180 basis points impact on process industries level. This is combined about 50 basis points for the group. They create great assets and as demonstrated, we expect full value. However, getting to the 15% after that is a bit steeper hill to climb. We spoke about the last 12 months now being at 13.4, so still work to do. We as a team, and I'm personally also confident that we will get to our more than 15%, 2023. A couple of words about cash. 2021 has really been a year when we have improved our cash generation. This is coming from profitability improvement, also less of these transformational items.
Already during the first nine months, we are about $400 million ahead of years 2019, 2020. The long-term cash dynamics for ABB continue to be favorable. The strategic mandates of the divisions also drive strong cash generation. On the net working capital, we of course now at the end of this year and maybe a bit going into the next year, given the tight situation on the market, a little bit more difficult to read. Longer term, I think net working capital dynamics are also positive. We can release cash both from inventory as well as from receivables. We continue to expect to have less of these transformational burdens, and we continue to expect to have a fairly flat CapEx around this sort of $750 million area.
Very importantly, the ABB Way really defines clear responsibilities also regarding cash. Business areas and divisions are measured on this operating free cash flow, which has all cash components in it, also restructuring, also CapEx. The tax and finance related cash items are corporate responsibility. Let's talk a little bit about uses of cash. We reiterate our capital allocation principles, funding organic growth first and foremost, then rising sustainable dividend per share, value creating acquisitions, and then returning additional capital to shareholders, which we have mainly done through buybacks. As you can see from the chart, our operating cash is expected to be higher than CapEx and dividend. That will leave room for acquisition investment and also possible further share buybacks. Importantly, we are also adjusting our rating targets slightly here.
We are saying rather than single A, we say strong investment grade. We are doing this because we have improved profitability and we are also expecting less cash flow volatility going forward, driven by the improved business mix of ABB. This will give us additional financial flexibility when we look at the longer term optimal capital structure for ABB. Let me close with the revised financial target framework. Starting with growth, Björn spoke about this as well. We are increasing from 3%-5% to 4%-7%. This is mainly coming from the organic growth side, where we are increasing the comparable growth from 2%-3.3% to 3%-5%. Today's theme of sustainable transport really shows that we have levers which have made this a better growth positioned company.
First of all, quality of revenue. We have really profiled ABB towards more attractive markets. Second, these long-term trends on energy efficiency, increased electricity demand, higher carbon price, as well as labor shortages, and this possible onshoring which are happening are all strong secular growth drivers for ABB's businesses. Finally, the ABB Way operating model with profitability and growth mandates is driving both organic as well as inorganic growth in the right way. On operational EBITDA margin. We adjust this from upper end of 13%-16%, to at or above 15% from 2023 onwards. This of course also means that we are not intending to drop below 15 after 2023. We maintain our ROCE free cash flow conversion and EPS growth targets.
Maybe on return on capital employed, I'll just say that if you take out from our balance sheet the 20% Power Grids stake, because we kind of already got paid for that, our return on capital employed on last 12 months basis is already closing in on 14%. We're making good progress on getting into the 15%-20% return on capital employed target as well. I think this is an ambitious set of targets, but with the ABB Way operating model, and also with the high performance, high integrity culture we are implementing at ABB, we are on a good path to get there. With that, I would hand it back to Björn.
Thank you, Timo.
Very good.
It's good to see that the financials are under control. We are coming closer to the end of 2021 and coming closer to year 2022. We have seen that the ending of this year continued to show strong demand in the market. We also see continuous challenges as we reported in Q3 on the supply chain. We believe it will affect Q4 and moving into 2022. On the other hand, no cancellation, which means that we are all in the same boat. We expect next year to continue to grow, but of course, we have a huge orders on hand, which will also be delivered during next year. The focus going forward will be for each of our business to continue to drive continuous improvement and to move towards our financial targets.
We are also going to execute the exit of the businesses which we have promised to make sure that the offer and the business, ABB will be in line with our purpose. By that, I think we end the first session, and we move over to the Q&A. I hand over to you, Ann-Sofie Nordh.
Thank you. Let's do so. As I said, different options to put questions through. For you on the telephone line, I just want a quick reminder that star 14 to put a question through, and star 15, if I'm not mistaken, to withdraw the question should you wish to do so. With that said, let's see if we can start, if we have any questions here in the room in Zurich. I see no hands waving. We'll go to the conference call, please. I believe we have Alexander Virgo on the line. Your line should be open, Alex.
Thanks very much, Anssi. Hope you can hear me all. Good afternoon to everybody. Thanks for the presentation so far. I wonder if you could make a comment, Björn. In the first instance, encouraging to see you raise your growth targets to 3%-5% organically. I'm wondering if you can just comment a little bit on the differences that you see between your portfolio and some of your nearest peers, given they're expecting much stronger organic growth in the near term, and the implications, I suppose, of some of those structural themes that you have talked about. And then second question to Timo.
The shift in your long-term credit rating target is an interesting one, given the cash generation you're going to be making over the next few years is a combination of both free cash improvement and disposals. I wondered how we should interpret that with respect to the amount of money you feel or your war chest or what you feel you can look to spend. Thank you.
Now, maybe I start up with the first question regarding the growth of ABB compared to the peers. I think every company are different, and we have different product lines and offerings in the market. I think ABB is well-positioned when it comes to these ESG trends. I think when you look at our offering today and the potential of growth, I think it's quite good, and I think it's significantly better than we have seen historically. I don't really know which one you are referring to, but of course, some of our competitors have bought big software companies which software development growth has been higher, which could have some effects. I think we do not see of any of our product line that we would grow less than our competitors. I think that's the ending.
I hand over to you, Timo.
Yeah, thanks. Thanks, Alex, for the question. If you look at this, we really want to kind of like signal with this that ABB has become a better company from its cash flow volatility and stability perspective. We think that we can have a situation where if you look at some of these targets, and this is now just rough stuff what I'm talking about, but if we would go to something like
2-2.5, but net to EBITDA, we could have like a $10 billion capacity on the balance sheet, and we would still be in line with this. This does not mean that we would, of course, go to such place right away, but it means that we can think through different growth scenarios and of course, different capital return scenarios with this new lens of saying strong investment trend rather than single A.
Great. That's very helpful, guys. Thank you.
Thank you. Let's take another question from the telephone line, please. James Moore, your line should be open.
Okay. Yes, good morning, everyone. Björn, Timo, Anssi, can you hear me? Can you hear me?
Yes, we hear you. Thank you.
Thanks. I have one on growth and one on margin if I may. Sorry for the echo. I can't help that. On organic sales growth and the increase from 2%-3% up to 3%-5%, can I ask what kind of organic sales growth assumptions you have made on oil and gas and wind over the cycle? I'm trying to understand if we've got here strong late-cycle process kick-out helping you make the numbers in the medium term. Maybe I'll come back to my margin question.
Yeah. It's clear that some of our businesses we expect to grow somewhat slower than others. Some of our other businesses are in, let's say, more growth-oriented segments. If you're now referring to the oil and gas part of the business, we do not expect that part will be growing very much. Maybe you can add that, Timo.
Maybe just to comment on the process industries in general. We have, of course, built a strong backlog during the year in process industries. When you look at the coming sort of few years, that should also contribute to the revenue growth picture. Of course, the growth target is really through-cycle. If you look at sort of two-three years forward, yeah, it is going to contribute.
I think it's clear what you're saying. The recovery, I mean, we saw especially within the short service business, we saw a softening up during the COVID year, which has actually coming back. As we also seen the orders which you have also seen, that we in many of the division there in process automation, we will be seeing good growth. I mean, when we say 3%-5%, it's over a business cycle. Of course, the recovery demand that we are seeing after COVID is, as you have seen on the orders, much higher than that. We do, of course, believe that this will be delivered out, and we will see good growth, recovery growth, which is higher than these numbers short term. That's pretty clear.
If I could follow up on the margin target. When you look beyond 2023, 2025, to 25 or 2030 even, do you see further potential beyond the 15%, or do you think that remains a good guide for the rest of the decade? Can you say which are the five remaining yellow profitability businesses, and which three lifted up into growth actually on slide 16?
It's a little bit difficult to hear somewhat you're saying, but the 15%, it's a target we have set to be on 23. Timo also in his presentation mentioned that we are not planning to go back under 15%. Of course, we do expect that many of our business will continue to improve, which is normally as we are focusing continuous improvement. See it as an in between target. We'll come back when we have reached our target, which I've clearly said that we are not there yet, even if we are moving in that direction. We'll come back with new targets, of course, in the future.
Thank you very much.
Thank you. We have lots of questions coming through the chat tool, and I will put one through here. It comes from Ben Uglow, and it says, it refers to you, Timo, in one of your slides, where the majority of growth divisions had 17% margin, but the profitability was an 11% margin on the other, on the left-hand side. Could you say what signals when the division is moving into growth? What are the criteria and what are the signs of growth?
Yeah. You can.
Thanks, Ben. I think Björn spoke about this. This is not like a set threshold. It's not like, you know, automatically when you are above 15, boom, you become a growth division. That's not how it works. It is about this topic about are you performing to full potential. Björn mentioned that that means we look at the competitive landscape, and if we are performing in line or better than competition, that should be a strong signal that you can move to growth. Of course, these then combined with a revenue weighted average give the margin for the group, and that way we think we drive the best possible mix for profitable growth. That's how we think about it.
I mean, I can give an example. For instance, E-mobility, as we will hear more about later on today, it's of course not on a profitability above 50%, but it is definitely in a growth mode.
Thank you. I believe I have a question here in the conference room. There is someone, if you just hold on a bit, you will have a microphone coming through.
Yeah, hello. It's Urs from EFG. Living in Baden, I get a lot of anecdotal evidence from ABB engineers, and it seems that taking out complexity of the structure, it somehow drops down to the units. What I hear is that you work a lot with hubs and some claim they have now even more work with administration. Another issue seems to be work using KPIs, cash flow and net working capital that somehow they're reluctant to order enough components and material. Is that just anecdotal evidence, or do you see some issues there, and how would you tackle them?
I think, you know, we have many of the business area heads in a couple of divisions who will be able to talk about this a little bit more. I think that I'm not saying that what you're saying is wrong. I'm sure that there are places where it can be seen, you know, when you have been used to how ABB has been working in the historical way. I would say that when you're looking at our divisions, how they operate in the market, there's a lot of collaboration between the different businesses. As we say, smart leaders collaborate. We have certain hubs when it comes to technology, especially when it comes to software. These software hubs is to create environment for specialized competent employees. China is an example.
Poland is another one where we have a lot of software development at the moment. These are being, of course, governed by the different divisions, and they decide what kind of resources they want to have. It's very much up to each division how they drive, but there is also a lot of collaboration between the divisions. Please, you will have a good opportunity when we see the businesses to talk about this. They are all here today, and the whole afternoon will be related to them and their development. Yeah.
I just want to say that we are definitely not limiting in any way the ordering of components in this situation or anything like that. If we look at the inventory numbers of the Group, they also kind of show it. We have been very clear that in this kind of business situation, it makes sense to have the right inventory in place. When you work on your net working capital, this is also a great time to drive customer collections when the market is in this kind of situation. We are not giving any kinds of central instructions on how you should run the operating free cash flow. It is fully up to the divisions to decide.
Okay. Shall we do another question from the conference call, please? Andre from Credit Suisse, your line should be open now.
Yes. Good afternoon. Thank you very much for taking my questions. Can I start with one on what you talked about, the pushing responsibility further down into divisions and going further into decentralized mode? Could you talk a bit more about that, and can you tell us whether this will change the remuneration structures of your managers below the divisional management level?
Number one is that, the accountability in the divisions, we have moved that 1.5 years ago. Many of the divisions, I mean, which we are seeing, continue to have complex structures, but many of the divisions are moving into much more straightforward, clearer way of operating, and I think that will drive performance going forward. This is, of course, a long journey. We've been only operating 1.5 years, and I've done this with many companies before. Of course this is a journey that will continue to drive performance in the different businesses. I must say, I'm really encouraged how many divisions actually have simplified their structure.
I think Marine, which you will hear later on, is one of the where we also now have clear P&L responsibility further down in the organization, which I think is going to help them to improve the business. It's a journey. This will take time, and that's why we are not on the top of where this company can perform. We will continue to become a little bit better every year, but it is hard work, I can assure you that.
Yeah, if I can just comment quickly on the remuneration KPI. It is the possibility to the business area leaders and the division leaders to further put specific number KPIs to the teams in line with what Björn just said, as long as they are auditable. That's how we think about that. Of course, we don't want to have a huge fragmentation, but if there is a specific business inside Marine and you want to drive the performance in that area, we can also give specific KPIs in that dimension as long as they are auditable.
I think it's important here that you know from centrally we follow the divisions and the business area that is. The business area, they follow the divisions, but also product lines within their business, of course. Transparency is key to be able to fix things. You need to know where you make money and where you don't make money. It's pretty clear.
Thank you. If I may follow up on that, does that leave scope then for ABB to become significantly more than 20 divisions, maybe further down the line?
You know, I don't think we have any targets when it comes to number of divisions. We make sure that the business area, they decide what is the right. You saw last year, Morten in Motion, he actually divided the motors and generators up into three divisions, which is operating today, which has given a much better transparency and a better focus in the businesses. Now this year, of course, also Electrification has taken that direction when it comes to service. Yes, it can change, but it's up to the business area where they think it's the right structure.
Thank you. My second question, if I may, is on acquired growth, and the system that you laid out. Is that something that you expect to deliver already in 2022, or we're still in the early stages of building the pipeline and doing due diligence, et cetera?
No, I think it's a huge work that is taking place today in the divisions and in the business area to identify potential acquisition candidates. You need to know the different businesses. You have to understand the businesses, if they can add value to the businesses. We will continue to build this backlog of potential M&A candidates. When exactly this will be done, it's of course always related to who wants to sell, what is the valuation at the moment, and what are we prepared to pay for it.
You know, this can change a little bit suddenly, you know, that it's a little bit tougher in the market, and there will be many companies available, or suddenly someone decide that now it's time to step out because it's a, you know, you need to maybe utilize ABB scalability that I talked about before to drive the business even further. That can be many things, but definitely if you don't focus on it will not happen. Now it's big focus in the different division. I can assure you that.
Thank you very much.
I will take another question as it come through the chat tool here, and that's aimed for you, Theo. It says, how important is ABB's offering for resource efficient solutions to achieve your sustainability targets? Does this give your ESG strategy an advantage over peers?
Okay. Very interesting question. Short answer is yes, in my humble opinion or in my real opinion. As I mentioned, our strategy is really going across our entire value chain. Whereas in the past, many companies really focused on doing the right thing in their own operations. Today, we say we wanna lead from within our own operation, but we wanna drive maximum impact across the entire value chain. Björn, you mentioned energy efficient motors and drives. It's an example we like to talk about because it's very clear in terms of what energy efficiency, for example, means, or resource efficiency.
The target that we have set ourselves to help save for our customers, which is a Scope 3 target, more than 100 megatons of CO2 in one year in 2030, is 150 times more CO2 reduction than ABB becoming carbon neutral in our own operations. It's one example. The circularity approach that I introduced before is another one, again, where we will apply kind of a really hardcore KPI-based approach, where we can then drive circularity both within ABB, but also for our customers in many different dimensions. Short answer is yes, and long answer is also yes.
I'll squeeze in another one from the chat tool here, which I think the answer may be quite short. Perhaps Timo or Björn, it's come from Henrik Olsson, and he says, "The way you spoke about the 15% margin target made it sound like a new trough through the cycle target from 2023. Is that the correct understanding?
Yeah, I mean, I think, you know, since I started here in the company, I said ABB with the core competencies we had, this is definitely a 15% or above company. This is of course nothing you can do overnight. It's a lot of hard work with the different businesses. It's correct that we believe when we go over 50%, we should not go back under 50%. That is correct.
Very good. We'll take another question from the telephone line, please. Daniela, I think your line should be open now.
Hi. Good morning. Thanks for taking my question. I just wanted to follow up on some of the organic growth questions earlier on. In the last 12 months, your order growth has obviously been close to double-digit, I guess, probably, lead times extended given the supply chain issues that you've mentioned. If you think through the cycle on your guidance of the three-five, given next year is probably gonna be a lot more than that, looking at your order book, it means the outer years seem quite low. Can you talk through this? Sort of what is wrong on this?
Is it that actually you can't deliver this for two or three years, what you currently have on the order book, or how shall we think about that?
I mean, maybe I can answer this. I mean, we are not really guiding for next year. That is number one. The 3% or 4%-7% is actually part of a business cycle. We are in the recovery phase from the COVID, which is quite an exceptional, you know. I mean, many of us have been in the business for many years, but we haven't seen anything else. We're seeing huge growth numbers. It's huge demand in the market, and we have a big order book that we will deliver on. We haven't given any guidance on that part. Of course, you know, from the short- to medium-term perspective, of course, there is an upside to that. That's quite clear.
Thank you. We'll continue with another question from the conference call. Martin at Citi. Are you with us?
Hi. Thanks. It's Martin at Citi. Thanks for the question. Just to talk about your acquisition. You've talked about 5 or more acquisitions per year, which I guess means that these will all be relatively smaller. But you've also mentioned about this growth difference to some of the peer targets, could be because they have software businesses. You've also said that on a like-for-like basis, you're not underperforming peers or you shouldn't be. Just to get your sense, do you believe that not having a larger vertical software business, that doesn't impede your customer offering or impede growth in any way, but you feel that this, I guess, slightly different business model that you've taken against, say, Emerson or Schneider or Siemens is certainly the best way to grow ABB? That's the first question. Thanks.
You know, I mean, we have nothing against software businesses, and we are developing our software business as the day goes on, and we are making that a bigger part of operations. What we decided not to do is to go in and to buy a big software company, platform company, and pay the multiples that you need to do and to get the synergies out of that. Of course, if you have a big software business in your portfolio, it's of course never negative from that perspective. What we are doing with our portfolio, we are actually building it on our 21 divisions and our number one or number two position in each of these businesses. Our offer consists of what I said from the beginning, three things: pure software offerings and digital services.
That is growing faster than any other part of our business. We have the software-embedded business. That's why we have 60% of our, all our R&D engineers actually focusing on software development. The third one is the traditional. To stay a leader in the segments in the business we operate, we believe it's not enough to be a software supplier. We need to deliver on all these three offerings and to be a leader within that. That's what we're trying to do. We will not buy a software company because we want to have a software company. It actually has to be synergetic with the business we operate. We could think about buying a medium-sized software company if we really saw that that would add a lot of value to our businesses. That is bigger. We will make a business case from that.
It's not that we don't want this part of it. We don't say that it's negative, but we think we are well-positioned in the businesses where we operate today with the offerings that we have.
Yeah. I would say that looking at the return on capital employed for a very long term is one good financial metric to then see if these strategies are really sort of working in a comparable way. I'm now talking really long term.
Yeah. No, thanks. That's really helpful. If I have a second question just on buybacks and cash return. You've given an updated framework there. Should we infer from that that the proceeds of the announced disposals will largely come in a buyback? You do seem to suggest that the divisions will fund their acquisitions from cash flows. Just to clarify if that's the best way to think about it, or is it too early to tell given that some of these disposals have yet to complete? Thank you.
Well, we think that cash is cash, basically, and cash comes from certain things, and it goes to the balance sheet, and then we look at our capital allocation principles to deploy the cash. Oftentimes, the best way to deploy and the best return comes from organic R&D. We recognize that as well. When you need technologies and speed, you do acquisitions. Sometimes when you have an opportunity to consolidate, you also do acquisitions. We work that model continuously. We understand that for ABB to be, let's say, net cash positive or neutral is too strong of a balance sheet for long term. That's why we are saying today that we can also work with the balance sheet where we have quite a bit more debt than currently.
These are of course long-term things for us to think through. I think what is really, really important is that we are really making this company performing better, higher margin, also lower cash flow volatility, and that will give us further financial flexibility.
Great. Thank you.
With that, thank you, Martin. With that, we'll have to make that the final question for this session. With that, we will sort of start the next phase of this agenda, which takes us into the topic of sustainable transport. In this session, you will hear from all the business area leaders as well as a couple of the divisional heads, and they will each talk about how their offering fits and ties into this special topic of the day, sustainable transport. Björn will make a bit of a short intro to sustainable transport topic, and we will start this off by looking at a video, and Björn will take it from there.
Thank you, Anssi. I have the privilege to kick off the more interesting part of the day. We will talk about what can ABB offer, but we will also talk about what is the potential within the area of sustainable transport. It's also quite clear that in the part of the ESG transformation, of the way of moving to a carbon neutrality, this sustainable transport will play an important role. When you look at the portfolio that we offer within this area, it's quite exciting. You have some products and services that are already in the mature part, that is already setting good deliveries and good performance and growing strongly. Then we have the other side is more on the emerging side, new technologies, new products which are in the beginning of the growth period.
All of these businesses are actually contributing to our sustainable drive. When we talk about sustainable transportation, we can see that approximately $3.2 billion of sales from ABB is within this area. It represents approximately 10% of our business. The one that currently are the biggest, it's the marine side and the rail side. We have many other exciting that you will see from the different business that are growing quickly and becoming a bigger part of our business. The other interesting part is that this part of the market is actually growing at a pace of approximately 9%. ABB is outgrowing the market here. We actually have a growth rate of about 17%. What is driving this?
Of course, it's regulations, it's technology, and as we talked about before, the new buying pattern or buying behavior of our customers. After a short break, we will go into details from the different businesses, and I really encourage you to follow us all to the end because we're gonna show some of the interesting that makes ABB tick for the future. Thank you very much.
I just want to say with that little teaser, it's now time for a leg stretcher, both for us here in Zurich and you in front of the screens. For you here in Zurich, there is coffee, etc., available towards the back of the room. There is also seating available, just as a COVID precaution. Please use those. I'll see you back here at quarter two. Thank you.
Welcome back. I hope you had a bit of a coffee booster, got the energy up. At least we did. That's good. Not that our next presenters need it. We will hear from Electrification, Tarak Mehta, head of the business area, and also Frank Muehlon, head of one of the divisions. With that, Tarak, please.
Thank you. On behalf of the 52,000 colleagues of Electrification, Frank and I welcome you to what we believe is a very exciting future for us in Electrification. We're gonna focus today on sustainability and sustainable transports. When you look at what is driving the business when it comes to sustainability, it's very clearly decisions made by governments, but very clearly the focus on sustainability. The more world focuses on sustainability, the better the business is for ABB's Electrification business and our colleagues. Why do I say that? As the world shifts its energy from fossil fuels towards emission-reducing technologies and energy forms like electricity, the IEA just came out with a very definitive forecast, and that says electricity as a source of energy will grow twice as fast as any other source of energy.
As we add more people, as we improve the quality of life, as we focus on emissions reductions, just keep in mind, it just means even better business for us. We, over the last years as a team, have developed some market-leading technology and some strong positions, one of which, Frank Muehlon has had the opportunity to lead, where we've invested a lot, and he will tell you his story and his business' story in terms of where we are headed. When we look at sustainability, you heard from Theo about how we focused on our own assets, our own manufacturing, our customers' assets, and their own operating organizations. We see plenty of opportunity. Sustainability is also driving the need for data.
The digital world means more data centers, more volume of information that goes between the device, either to the edge or out into the cloud, which also drives the need for Electrification. When we talk about E-mobility, I will not steal Frank's thunder. He'll give you his perspective on what the future of the business looks like. Today, as I stand here, I almost feel proud as a parent that we have the opportunity to graduate one of our star pupils away from Electrification into a world of his own, on his own, and with his own team. Frank will give you his perspective on what that looks like, what the future looks like. I will, on behalf of all of us, give you a perspective of what it took us to get Frank and his team to where they are today.
When we talk about powering sustainable transports, we talk about how does it fit within the context of ABB. As you heard earlier today, the ABB Way is the glue that brings the entire company together. Within Electrification, we all, for now many years, have stood behind safe, smart, and sustainable electrification, both for our customers, but let's not forget our partners. As you heard from Timo, in the case of Electrification, more than 50% of our business goes through and via our electrical distribution partners. All of this is made possible by the 50+ thousand colleagues who make up the Electrification business. A very challenging period over the last couple of years, but nevertheless, you've seen the kind of improvement in the business performance since 2019 that this team has delivered. What is it that we're going to do?
How are we gonna get to a safe, smart, and sustainable future? Very simply. Focus on the customers. When a customer thinks about solving their problem, they should think about ABB's Electrification business. Our colleagues. Repeatedly in the customer surveys in our NPS score, the highest score we get is our colleagues. It's the people that interact with the customers on a daily basis. How are we going to make an impact in the customer's processes? Very simply. The 20+ external design awards that our colleagues have won, recognized both by industry, by associations, and by customers of developing very innovative solutions, executed through an embedded software, through a fully functioning software solution, taking advantage of digital processes.
You can imagine one that is in deployment today. This exact way of working with the customers is what we use in our service business, remotely helping customers in far off locations where we cannot send our colleagues, which we would normally do in 2019 and earlier. We're able to, through visual means, virtual reality lenses, support our customers to make sure their operations stay on track. It's really digital combined with innovations making a difference for our customers. Let's take a look at one example. Today, it's all about sustainable transport. Within sustainable transport, there are segments which are mature like rail. You'll hear from Morten later on the success that we've had in Motion in the traction side. We also got a significant portfolio of rail solutions when we procured or when we added GEIS to our portfolio.
All of which means we have a mature business in rail, but where we have a leading position. If you look at the four segments that make up about $8 billion of market opportunity for Electrification, our team is number one in three out of the four key segments. Frank will talk about the revolution that we are experiencing, both in terms of orders, but also in terms of technology development when it comes to the automobile, whether it is the bus or whether it is the car. We believe this is a hot market. To give you a perspective, over the last four years, this team led by Frank, but nevertheless, 1,000 colleagues in his organization, plus many more in other parts of Electrification, whether it's marine, whether it is shore-to-ship electrification, we have seen growth rates which are twice the market.
22% growth rate on average over the years. You've heard about the key drivers. It's really the ease of use today that we're looking for that is driving the growth for us in Electrification. What do I mean by ease of use? If you own an electric car, the ease of use is trying to find a charging point where you can connect your car. The ease of use is the customer interface you face when you have to qualify as somebody allowed to use a charging station. These are the opportunity areas that we see from the regulation side.
We believe the days of incentivizing electric vehicles are probably coming to an end, whereas the scaled adoption of electric vehicles is giving us a fantastic opportunity, 'cause for every station on the highway that has four or five cars that can be charged at the same time, there's a medium voltage substation you need to feed power to that. I will give you an example through a couple of actual deployments we've had. The technology is moving at a very fast pace. The cost of battery, the cost of electric vehicles, the cost of sustainable transport, even the cost of technologies like hydrogen, fuel cells, et cetera, is dropping at a pace which makes them very viable candidates for sustainable transport. Every one of these presents an opportunity for us in electrification. All of which means you need an infrastructure.
To power mobility through electricity can only mean good things for electrification because you need an infrastructure to deliver the energy to the transport that is supposed to be sustainable. We see a good opportunity going forward. I will go through three examples, and Frank will go through a very interesting example. We'll go from Los Angeles to Qatar to China, and then over to a very interesting example of how the energy revolution will be upon us when the car can exchange power both directions, and Frank will give you a perspective of what that means and what are we doing with one of our key customers. Let's move on to Los Angeles.
Imagine a few years from now, this solution will be in place, and the solution is an automated, self-guided people mover, moving 230,000 Citizens to the Los Angeles airport terminals and back. The combination of our technology, the addition of GEIS's EnviLine solutions, acquisitions that we have made in the rail sector over the years, gives us an opportunity to provide the Los Angeles airport with a very unique solution, which enables the reliability to move 230,000 people, but also provides, in the rare event that the grid goes down, we can't have the airport not having people go back and forth. We have 40 minutes of storage capacity while we are moving 230,000 people on a daily basis. Technology in deployment, an example of how sustainable transport creates demand, opportunities, and business for electrification.
The second example, if you happen to visit Qatar in 2022 for the World Cup, you will see ABB's infrastructure in play. We're helping the country take 25% of its bus traffic off fossil fuels into electric already in 2022. A commitment to do 100% of all the buses, which is about 1,000 in the country of Qatar, to electric. In order for Qatar to meet its ambitious targets for emissions reductions, they have to move 125 MW of power from fossil fuel-based to diesel-based buses to electric. 125 MW of power. Let's give a perspective what does that look like. That looks like 40, 30-storey buildings. That's a huge amount of power. It's equal to as much power as 45,000 homes need. This power infrastructure cannot be done overnight.
It has to be planned, it has to be managed, it has to be protected, and we have to make sure all of the grid that is supplying power to different parts of the country of Qatar are well-balanced, well-protected with reliable power. Not only do we have an opportunity on the charging side, which Frank was very happy to get as an order, a fantastic opportunity to help the country move towards this emissions target, but it also created a need for infrastructure, where we're happy to supply the medium voltage solutions you need for every four or five of these buses that need power overnight or during the course of the day when they are moving people around. Going from Qatar to further east to China, a very interesting pilot being run with Hebei Province, which is right around the Beijing area.
We're creating a virtual power plant for the utility. It's a 25 MW block. You can think about it as a Lego block. That is the first piece of a 10-block virtual power plant network that will have 225 MW of power. What does the virtual power plant do? As all power plants, it manages demand and supply. It makes sure there is enough power generation to match consumption. It ensures that the protection schemes make sure the critical infrastructures are up and about, but allowing the most optimal use of renewable energies. This virtual power plant is actually a reality. We, who have been in the utility business for many years, have talked about a virtual utility. Here is the first building block, which is of significant size, and scope, and scale.
Thanks to the technology of our colleagues developed in China, supported from a global dimension, we're deploying this in this particular province with the hope and the goal of making a 225 MW virtual power plant concept spread across a couple hundred kilometers with 12 million people supported, protected, and with high level of power reliability supplied by ABB's team in China. That's a good example. Now, to perhaps the highlight of the presentation today for Electrification, which is a proud moment for all of us. We have invested. It has been painful for the rest of us to support, but nevertheless, after $230 million of investment in the business, it's really great to see how this team, which is now almost 1,000 people, adding quite a few people per day, is growing at a pace which is market leading.
It's a technology where almost half of the $230 million is in R&D. It's a growth which puts this business in a number one position in the market. That's how we believe. It's an R&D portfolio which I would challenge is among the strongest in the market, and we're ready to invest more. This is our E-mobility business, which when Frank started in 2017 and earlier, was a very small part of the portfolio, but is a big driver of the growth as you see in Electrification, even in the third quarter and moving into the fourth quarter. What do we see with this business and why is this business and the team being asked to be part of an IPO?
This is a business which we believe will grow from a charger base to more one that's taking care of the bus depot that I mentioned to you of Qatar and many others, to take a look at the maintenance of the site, to support the customer, make sure the reliability is there. It's a business where you can imagine an apartment complex with 50, 60 automobiles, provides not only the infrastructure, but also helps maintain that infrastructure to keep the reliability. It's a business in which the information that we collect from the customers, including the power consumption, the demand pattern predictions, can be converted into valuable digital services. It's a business where we can define the future of mobility. By we, I mean Frank Muehlon and the team. Why the IPO? Very simply three reasons.
It's a business growing far more and at a faster pace than anything else in Electrification. We're seeing growth rates above 50%, R&D investment percentages which are a multiple of anything else we have in Electrification. We must manage the business differently than the rest of the divisions of Electrification. That's what we have done. We managed this business for growth. Not only for growth, we also need to take a look and see what are the different business model opportunities. We're primarily a CapEx company, but there might be, and there will be opportunities for at least the E-mobility business to be CapEx plus OpEx and operational. Can we be there every day for our customers? Certainly, we are there through the connected chargers we have. Can we do more? Can we add more value-enhancing services for our customers?
Frank will give you a perspective of what he thinks we can do today, but also what the future brings. Last but not least, we have an opportunity to create a currency for both mergers and acquisitions, but also a very attractive profile to recruit absolutely the best people in the world. If we want to maintain our leadership position, we believe that graduating E-mobility business from the ABB high school or gymnasium to a university environment where they're more in control of their destiny, we're not watching them every single minute, but allowing them the freedom while still funding and participating in the bright future of their business is the right solution for us and also the right solution for this business. As well, we believe also the right solution for the ABB shareholders. We've had good support, so we're looking forward to it.
I won't take any more of your time, but hand it over to Frank to walk you through what the bright future this business holds and also a little bit about his own personal journey and this business' personal journey over the course of the many years that he's been leading the business. Over to you, Frank. Thanks.
Yeah. Thank you, Tarak. It’s really an exciting business. I mean, I can say this from the bottom of my heart. When Tarak asked me, 2017, “Frank, do you like to join this business?” I was, before the years, running billion-dollar businesses globally, right? Now, okay, this tiny business. I mean, okay, but very exciting, very nice fitting, and I was in, right? I was in. At that time, the business was at a run rate of $40 million in orders, to give you a number. Now you saw the number earlier, we’re at a run rate already beyond $400 million. That is a business growth you do not see anywhere else in ABB.
If you think about the drivers, why that growth and what is happening, we see in a lot of countries a regulatory push towards greenhouse gas emission reduction. Electrification of transportation is exactly what we discuss here today. To give you a couple of examples, you see United States, yeah, you see the infrastructure bill, the Biden bill. You see in Germany a strong push now. You see in the U.K. just last week, or 10 days ago, there was an announcement, every new home to be built needs to have an AC charger in there. It's these type of regulations, plus obviously the factor, if you drive an EV, you love it, right? It's really becoming the new norm. This is a great business to be in.
Now let's have a look at what type of business it is. Let's look at the size and the shape of this business. Tarak mentioned $230 million invested over the last five years, half of that in R&D, which brought us to where we are today. We had last 12 months a run rate of $263 million in pure revenues, and that reflects a growth of the last five years of 57% compound annual growth rate. We sold more than 500,000 AC chargers so far, more than 25,000 DC fast chargers. We're in more than 85 countries with our charging equipment. We have about 1,000 employees and adding every day. Out of that, more than 300 are R&D, and they generated more than 300 patents already.
We have about the same amount in the pipeline. These numbers are for real, so it's not a projection or whatever. It's the current status. It's the real numbers. That clearly puts us as the number one in this market. Also, it's a well-diversified position we have. If you look a bit at the allocation, these $263 million, about half of that is happening in Europe, about a quarter in the Americas, and about a quarter in Asia and Middle East Africa. Now, looking at this fantastic number of $479 million order intake in the last 12 months, again, here, nicely diversified in the customer base.
We supply to CPOs, which is Charge Point Operators, the guys running the equipment, into public transportation, which is projects like the Qatar one, then home and destination charging, car manufacturers and fleet. Now, that business is also special, right? It's special because it's at the crossroad of two industries. We're here in ABB, traditional electrical industry, so we know the rules, we know the game. But there's also the automotive industry, completely different set of rules, different parameters. Now when you go with your car and charge, actually you bring the two together. That's exactly the point where it comes together.
You need to be able to speak both languages to be successful and ultimately to offer a good user experience to the customer, to the driver, which is what we wanna do. The business we have is kind of clustered, vertically integrated and clustered in three categories. The majority of what we do, what we're very well known for, is the charging equipment, the AC and the DC chargers. Then the second pillar is all sorts of digital services to that business. So it's B2B and B2C digital services. And the third pillar is really independent of that, even agnostic to the hardware, pure digital offering software as a service for advanced energy management and fleet management. Looking at the portfolio from the hardware perspective. So we're very proud of having the widest portfolio in the industry.
Our portfolio ranges from low power AC. That's the charger you typically have in your home or at a workplace, where you have a charging time of a few hours and can easily charge up your battery. This is a normal grid connection to your home, and that's where the conversion from the AC grid into the DC battery happens inside the car. That's an AC charger. This is why we call it an AC charger. We come in the world of DC, direct current charging. That's where the conversion happens outside in the infrastructure. There we start with low power DC, with 20 kW unidirectional, and now also an 11 kW bidirectional. Talk more about that later. We go in the world of DC fast charging and DC high power charging.
When we talk high power, currently we talk about 350-360 kW for cars, and we talk about 600 kW for bus and truck. Here we're very proud actually of having two product lines. We have one product line where we have the charging in one piece of equipment. Our typical 50 kW charger, which you see at retail stores, for example. But then also the 360 kW charger, which we just launched a few weeks ago. A few words on this product, we're also very happy. We call it the world's fastest EV charger. How fast is that?
Just to give you an idea, if you wanna charge 100 km of range, and assuming the battery would be capable of taking the power the charger provides, then you charge these 100 km of range in three minutes. That's almost close to a gas station experience, but fully on clean energy. Now of course we know not every car can take that yet, so which is why we make that charger very flexible and modular, so you can charge not only one, but two vehicles at the same time simultaneously, or up to three, or even up to four. Then we have a lot of nice user experience features in there, but that would go too far probably now. We launched that charger recently.
We now have the first installations up in Norway and Bergen, and running very well, and we ramp up the production next year for that. The other portfolio line in the fast chargers is the so-called centralized power. That is a different approach. Think about you have more than four stalls, six stalls, eight stalls, 20 stalls, or you have a fleet of 100 or whatever. There it makes sense to have the power conversion centrally and different dispensers. They can also be quite industrial looking, like the one you see here. But that's what you need when you run a commercial fleet or for a bus when you have like the overhead connection. That's the portfolio roughly from a hardware perspective.
That portfolio from a hardware perspective would be nothing if it would not be properly connected. That's then the digital services you need to give to it to make it a product with a great user experience. Here's an example, a typical example of one of our customers, Charge Point Operator. Imagine you operate hundreds of sites somewhere, and these sites are unmanned. They're somewhere out in the wild. Consumers are going there and wanna have a service. You wanna know, is your site operational? Are all chargers operational? Are they occupied? What is the utilization rate? Do you need more prospectively going forward? Then when there is an error, obviously you wanna solve the problem.
We offer a service to make that, to get remote accessibility to the chargers, and can detect problems by about 90% and solve the problems remotely by about 70%. You don't even need to send a service technician. When a car pulls up, you come and want to charge, you need to have the handshake between the charger and the car. There's a lot of software at play there, especially with the new car models coming. When this handshake is done, you need to have a handshake with the back-end system of the operator to make sure that you're actually authorized to charge and that the billing process later on can be started. Of course, all the metering, et cetera, and all of that under cybersecurity regulations.
It's quite a complex environment you have here. To master that is also not easy, but if you do, gives a great user experience. Now, back to that example, which was already mentioned on the bidirectional flow of energy. Now, when you think about how energy generation goes forward, we hopefully see more and more renewables kicking in. More renewables also means more prosumers, so you produce your own energy, you use your own energy. Imagine you have a car, an electric car at home. You have a huge battery at home. You need to make use of that battery. You need to make use of that bidirectionality of energy flow.
In your home, you can actually make an optimization between when the energy you produce, you consume, or you charge your car, or when you use your car to charge your home, or when to tap into the grid, or when you wanna give it back into the grid. This is bidirectionality, and there is plenty of good business cases for you as an individual driver or prosumer and using it in your home. Also, if you think further into a commercial fleet, and you wanna really make use of a larger fleet and have thousands of batteries, of car batteries connected. Even if you think then about couple of years down the road, when really we see electric vehicles all over the place, then you tap into gigawatts of batteries.
The virtual power plant, which was mentioned earlier, becomes an absolute reality then. Here we have a pilot project. I mean, we're not that far down the road yet, so we're talking for bidirectionality currently more about pilots. This is probably the largest pilot project in Europe, together with Dreev, a joint venture of EDF and Nuvve, and we're quite proud to support that. R&D is a big topic for us. I mean, the whole industry is fast-paced. If you wanna stay ahead of a fast-paced industry, you need to invest in R&D. There's no other way. Besides the money we spend, we also are nicely diversified geographically. Whilst our core is Europe, we're also very strong with R&D in China.
We're also positioned in the United States and build out there even further going forward. We currently have about 17% of our revenues in R&D, so we're at the high end what was shown earlier. It's good. It's the right business to be in. There was a question earlier regarding software and software play, I think was addressed to Björn. If you look here, we have two examples. We started our own corporate startup for fleet management for EVs in Berlin about a year ago. Now we have Amazon Web Services as a partner developing that. Another example is then more inorganically, we just took over majority of a company in Belgium, really diving deep into virtual power plant for residential, et cetera, called Enervalis.
We will develop that model going forward. There's also the trend where we develop towards is really to make charging an integrated experience for the user in the home, but also, and that's the picture on the bottom right, this frequency regulation for utilities if you talk in scale, so that instead of switching on a gas turbine, the utility can actually tap into the car batteries and make that a model. But of course, we're not neglecting our core, which is the hardware. In the hardware also, the journey moves forward. Here we're currently developing so-called megawatt charging systems. When I was saying earlier, 600 kW is what we do today, here we talk about 1-3 MW per charging.
That's a solution which is currently developed in the industry. From our position, obviously, we're part of that development and leading it, and we have the first development contracts agreed upon. One is here, nice picture from Lilium. The Lilium jets. It's electric vertical take-off and landing. That will also use that standard and that type of charging equipment. Back to financials, to numbers. This is our growth. You saw it earlier in orders and in revenues and the 57% compound annual growth. I think I do not need to walk you through the numbers again.
What you see on the far right side, the $479 million order intake at $263 million revenue, and that's the last 12 months. There's clearly a backlog we have in front of us, which puts us in the nice space that we will have a very nice revenue next year. That is actually a fantastic growth also ahead. To sum it up, believe really we're in a great space. We're a global leader in a very fast-paced market. We are technology-wise at the forefront of multiple innovations. Sustainability is really our DNA. That's the core of what we do, reducing greenhouse gas emissions through switching to electrical. By IPO-ing, we can really realize our potential and create a platform for growth.
Thank you very much, and I think back to Anssi.
Yes, let's open up for some questions for Tarak and Frank. Let's see if we have any questions here in the room in Zurich. Any waves or hands waving? No? Then we will move to the telephone line, where we have Andreas Willi from J.P. Morgan. Andreas, your line should be open. Have a go. While we wait for Andreas' line to open, I shall ask a question that's come through on the chat line. It's aimed, I guess, for you, Frank. Here's the teenager coming out, taking up lots of the attention, I think. It's from Alessandro Foletti.
Mm-hmm.
He says, "I think that both your offering and product portfolio in EV charging are really strong. Do you think at ABB, you also have the brand recognition by the end customer? In the U.S., for example, everybody knows ChargePoint, Electrify America or Tesla, but not sure about ABB.
Mm-hmm. Yeah, that's a good question. I mean, that goes back to the business model, right? When I explained earlier that our portfolio is nicely diversified in our orders, so a big chunk were the so-called charge point operators. Electrify America is one of them. That means that the branding is then their branding because they are customer-facing. Now the industry knows very well, let's say who supplies the chargers, so this is kind of an open book. To the consumer, probably not that much. When it comes to the consumers, then it's the question of how do they buy? They buy then, and here is the Electrification kicks in again.
They buy usually when you wanna have a charger at home, you go to your electrician, and the electrician goes to his distributor. Here we go again. That's exactly what we're strong at. Yeah.
Shall we try again, Andreas?
Yeah. Can you hear me?
Now we can hear you. Great.
Okay. Thank you very much. I have a question on EV charging and how do you assess the longer term profit pool in that industry, maybe compared to Electrification overall, given the different market structure in terms of having more customers that buy in bulk, basically, and how that potentially can impact the profit pool. The question for Tarak in terms of Electrification overall, battery storage is a big topic in the sector. We haven't really heard ABB talk about that in the future. Is that something you look into, something you think will be an attractive expansion for ABB to go into, battery storage projects to a greater scale? Thank you. Let me then probably start it off.
I mean, obviously we do not give guidance now on profitability numbers. What I can say is that the gross margins in that business we see is if you know ABB, we are in a similar territory, right? Profitability of course depends then on all the investments, and we already said it's a growth business.
Probably before I hand to Tarak on the battery storage, didn't really flag it, but we already built out charging sites including battery energy storage, which is needed in a couple of cases when the grid is weak or the upgrades take very long or when you have kind of demand charges and wanna cross that over and reduce it.
Yeah. Thanks, Frank, and thanks, Andreas. We talked about this solution, for example, for Los Angeles Airport, which is very much about integrating and the storage is energy storage is the battery. So our distribution solutions business, which is the biggest division we have in Electrification, is very much involved all over the world with battery energy storage and recovery systems, along not only sustainable transport side, but also we have critical infrastructures including data centers, packaging the whole thing into one solution. When it comes specifically to the batteries, we're not in the battery manufacturing space. We're not interested in being in the battery space.
What we are interested in, and we have a significant business there, is in the management of the energy, management of the protection of the battery systems, but also the exchange of energy back into the grid, both at large scale, but we also have smaller scale solutions that we're deploying in different parts of the world. To supplement Frank's input when it comes to the margin profile of this business, please do not forget, a significant part of this is an AC charger solution that goes via distributors into with installers, which has a stickiness to it and margins which are even healthier than what has been mentioned by Frank.
There are good possibilities in that business, the bulk part of the business, which tends to be a little bit more competitive for sure.
Thank you both.
Great. I see no hands waving here in Zurich, so we'll take another question from the telephone line. Gaël de Bray from Deutsche Bank, are you live?
Oh, thanks very much. Yes, good afternoon, everybody. I have two questions please. The first one is about the EV charging business. You've talked about a $4 billion addressable market size for EV chargers if I include both cars and buses. But from a profit pool perspective, is the opportunity for ABB really in charging stations, or can it actually be more in the additional low voltage and medium voltage breakers that will be necessary to support the management of all of these, you know, millions of, potentially millions of mobile electric appliances and their connections to the buildings and the grids? What do you see in terms of the potential market size for electrification in relation to the chargers, but excluding the chargers themselves?
I would say that market is growing extremely fast. We do not break down and so far the industry doesn't break down the utility and the consumer investments in the infrastructure to install what we said is about $4 billion is the charging infrastructure. What switchgear, which is what you mentioned, Gaël, is not quantified in a very precise manner. We do believe that as the number of cars go up, as the number of electric buses goes up, there will be a very significant growth on the electrical infrastructure, feeding power into all of those places. That is exactly in the sweet spot of the Electrification business of ABB.
With some of the biggest businesses that are globally spread, with service capabilities, which these are new consumers, not utilities, nor they are industrial customers. We have the opportunity to provide not only the electrical infrastructure as ABB and Frank with his team, the charging infrastructure, but we also have the opportunity to maintain that infrastructure for customers going forward into the future. It's difficult to put a number on it. We would love to have a number on it, but this is always part of the utility spend, if it's big numbers. It's something that we are gathering, collecting information on in terms of what potential it is.
When I speak to the distributor CEOs, they see this as one of the biggest potential, like it was when LED lighting came up, like it was when the rooftop solar installations came up. They see this as the next really big wave in terms of their own installation opportunities from a turnover perspective. Good profit potential, good growth. Difficult to put an exact number on at this point.
Okay. Thanks very much for this. Can I have a second question, please?
Fire away.
Okay, thanks. Thanks a lot. A bit earlier, Björn has talked about the focus on automation and electrification and about the rising convergence between those two on the back of the overall trend towards more sustainability. I guess, you know, some of your competitors would add to this, that software is increasingly becoming the binding material between, you know, the automation and electrification technologies. I guess my question is, do you think that it's enough to have a software business accounting for about 2% of sales? I'd just like to hear your thoughts about that and your own strategy in this respect.
Let me repeat the question just to make sure that I understood it, given the audio, little bit of the audio challenges we are facing. Saying the merger of electrification, automation, where do you see the software play the role and isn't software the most important glue to drive business forward? We already participate. If you look at solutions from, and you'll hear that from Morten later on, if you look at shore-to-ship solutions from Peter, and he will talk about that along with the ship that you saw that Bjorn showed earlier. In all of those applications, electrification is a key component, a key supplier, key partner to develop it further. We are looking more from a vertical perspective.
What does the software and digital solution, and I don't wanna steal the thunder, but you will hear that from Peter later on and his team. Those solutions are more for us focused on a particular vertical segment, whether it's marine, whether it's traction, whether it is bus people. We provide software as well as automation to make that application work for the customer, and that software is targeted for that particular vertical. As we said before, the platform, while it's important, we can get it from Microsoft. We are connected to AWS, we are connected to Huawei. The communication between the devices and what needs to happen can take place along public platforms or industry platforms.
Where we are focused as ABB is more on Electrification on vertical solutions, whether it's food and beverage, whether it's Electrification of E-mobility, or it could be also solutions for marine and rail. We provide the solutions that put these two together.
Okay. Very clear. Thank you very much.
I have another question coming through here, on the chat, and it's from Olof Stjernholm at ABG in Stockholm. He says, question on E-mobility: How do you see growth going forward? Will it be mainly in AC or in DC?
Mm-hmm.
In what segment do you see most growth? Home, public, highway charging?
That's a good one. In both and in all. No, let me try to elaborate a bit on it. What we see is charging pretty much depends on your circumstance, on your use case. There is not a convergence towards AC or a convergence towards DC or a convergence towards home versus highway. At the end, you will see charging in each and every place where it's convenient to do so. If you have your quick connection at home, you wanna charge at home. Extremely convenient. If you can do it at the workplace, perfect. When you have a longer distance, obviously you need a station where you can do it fast and you don't wanna spend too much time. That is of the essence.
Obviously, if you want to do it fast, you're automatically in DC. The other one is more AC. We see in a number of chargers, about 70%-80% on the numbers, will be AC and about 20-30 is DC. Also different by geographies. China, for example, is more like 60%-40%, actually. Just as an example, I think, Switzerland is more like 80/20. Yeah. Just to give the difference here. When it now comes to the revenue translation on the $4 billion, however, you will see that DC is of course the most dominant one. Yeah.
I'm not sure whether this answers it a bit, but you see it in all the different areas of life. You do not really go to a petrol station to refuel and then are good for the next few days. You charge when it's convenient. Now, when you go shopping, when you're at work, when you're at home and sleep. This is where you want to do it. Yeah.
One of the use cases that you mentioned, the Green Pilot.
Mm-hmm.
It is a completely new use case, which most people are not familiar with, which is, can I rent you the car battery to do something else with it, since 92% of the time the car is not moving?
Mm-hmm.
What do you do with that energy? How do you use it? How do you monetize it? These are the opportunities that we face, that we see.
Right.
We have about one minute left, but Tarak, I will squeeze this in. If you answer, you have to talk double speed.
Quick.
It comes from Benedict Uglow, and it says, "Your main competitor in this space believes that it can achieve another 1 percentage point margin increase in the next couple of years, and ABB's margins are still a couple of percent lower than its current margin. Can ABB close the gap?
It's a function of two things, and we're working on both dimensions. One thing is the function of scale. We are in a business where scale matters, and if you are 20, 30% bigger, that has an impact and you do get the benefit from that. The other one is the scope, and that's where we are actively looking at our portfolio. When the scope is comparable, our margins are comparable. To give you a perspective into 2019, we said 60% of our business was at 18%. Today, 90% of the business is at 18%, and 10% of our business is around less than 2%. So it's a question of portfolio. It's a question of scale.
We believe we are up to the challenge, but more than the competitors, we wanna serve the customers and really grow the business, the profitable business even faster.
Thank you. Thank you, Tarak and Frank, for that. With that, I will get out of your way. We welcome now the next business area, Robotics and Discrete Automation. Sami, please take over the show from here.
Thank you very much. Thank you, Anssi. Welcome everybody to the world of robotics and discrete automation. Sustainable transport is an exciting business, and we in robotics and discrete automation have been driving innovation to our customers since many years, and we are one of the leaders of this industry. I'm very proud of that, helping our customers evolve into this new world. You heard from Frank and Tarak our sustainable transport strategy from a charging side. We support the e-vehicle side from a manufacturing perspective. Now, if you look at the underlying mega trends that were driving automation over the last years, actually, COVID has accelerated all of them. You know, if you take e-commerce, you take the uncertainty, digitalization, and all of them have been really accelerated.
If I use the words of a customer that I met yesterday, he talked about a turbo of his business. Now, our customers are asking always for improvement in productivity and in quality. Since, you know, two years, the word flexibility is becoming equally important. Give me automation, but give me the flexibility to protect my assets because of this huge fluctuation of demand. We are here to serve our customers to provide them with solutions in flexible automation. What am I gonna show you today? Sustainable transport from a bigger picture, the electric vehicle perspective, and also the role of automation there. I'll give you a little bit more insight.
Second, that we are well-positioned to continue to capture above average market share in this business to drive flexible automation, but also sustainability in that area, and resulting in an incremental profitable growth for us. Then I sneaked in a couple two slides at the end about the wonderful world of robotics and the high growth potential in really profitable businesses outside the automotive at the end. Let's get started. You heard from my colleagues before about the huge demand for electrification of the EVs. Now, you can argue about the growth rates. You know, 2035, half of the cars sold will be either electric or hybrid. We can argue is it a 30% growth, 20% growth.
We all know that it's a high double-digit growth that is coming out there. What is important also for our customers, because this uncertainty of is it gonna be 20, 30, 40. If you are a production head of automotive, how do you plan your capacity? That is why it is so important to provide solutions that are flexible, so can I adjust capacity up or down, or even be able to produce electric, hybrid, and combustion in the same line. This is all demand that will drive you know, our solutions to the market. More than $500 billion announced investments by OEMs until 2040. Now, these investments go across the incumbents, you know, Volkswagen from Porsche, Audi, and so on, go through many of the other great brands here.
You also have the pure EV players like Tesla and others. Here, we put really only the announced, because the non-announced, which are many players that we see in China, at least $several hundred million additional investments in the vehicle. I can tell you today, most of the offers that you actually go with into the market are already electric vehicle. These are the investments that our customers have. Now, the portion for automation and robotization is obviously different. Now, I wanted to show you how, you know, the world from a combustion engine manufacturing changes into the electric vehicle world. Here you see, you know, a car, very simple. The world of automotive divides it in the body and then the chassis.
Let's have a look at the chassis. Traditionally, ICE was built out of a combustion engine, a lead battery we all know of, the transmission, highly mechanical, fuel tank, and exhaust. Now, the big portion of it obviously is the internal combustion engine, which is quite complex and manually designed to be produced by our customers. It has actually more than 1,000 parts. What will happen? What will be replaced? First, the internal combustion engine obviously will be replaced by a motor, electric motor, and an E transmission. Controller inverter, we know these two businesses well in Morten's area. The battery, lithium-ion and a charger. Some of our customers use the same platform, and they insert basically the battery.
Some others use new platforms. From a manufacturing perspective, it is important to know that it will change the way that we approach the manufacturing of it. Let me tell you what will change. First of all, I spoke about the chassis. This is the ground part that has the motor on and so on. Engine components, this is mostly done by the automotive suppliers, the engine machine, and then the chassis assembly. Then we have the body. You do the assembly, you do the press, and then you do the paint because you paint the body and not the chassis. Then there is this famous docking or marriage of both.
Then you go to the final trim and assembly where you put the boxes, you put the seats and so on, and then you do final inspection. What will change when we go to EV? First of all, there are significant changes. There are two of them. First one is the electric motor assembly. This is the one you see in red, which will completely change into electric motor with less parts, but easier to automate. For us, the chances to automate an electric motor significantly higher than in a combustion engine, and we do that already for our colleagues in motion. The second is the battery. Now, the battery consists of battery cells, a module of batteries, and then the battery pack.
Now here we put the example of cylindrical batteries that we know from households that are combined together in a module and then put in a pack. All of this is automated by robots from ABB. Now, you can divide this into the philosophy of the manufacturer. You might do the cells yourselves, or you might do only the thing, the modules, but most of them do actually the battery pack. These are the two major changes that will introduce actually more automation robotization for us. There are four other areas that we will see minor changes, but still the engine components, obviously, you know, the rotor, the stator that go into the system, the chassis assembly. Why would the chassis assembly change?
Because the structure of the chassis needs to be more rigid because for safety reasons, when you put the battery in, it needs to be more stable. There we have new welding solutions, for example, to make this body more rigid. The body shop itself, because of the weight of the battery, you need to reduce the weight of the rest, use of new material like aluminum and others, switching from welding to actually gluing. These are all processes that we are quite familiar with from other industries that we're providing solutions for our customers. The docking and marriage needs to be more flexible to accommodate multiple types of cars.
You see here fundamental changes but also minor changes, all helping us to actually have more automation need in this industry. We are very proud that over the last four years, we've been driving innovations here. You can see from the chart, as we've seen from our colleagues before, 50% order growth from 2017 to 2021, while the market grew at 40%. We gained market share, and that is great for us, so our customers love our solutions. We expect that the market will continue to grow in the mid-teens, but obviously these high growth rates are based on a smaller starting point. Now, what will be driving this growth? New powertrain architecture, as I mentioned, the e-motor and the battery. More variants.
Customers will ask for having flexible automation to be able to serve all lower powertrain complexity so we can do that. New players, obviously the BYD and the NIO and many others in China, but also in the US will drive growth in this industry. The transition of the total business for us, which is about $20 billion automotive business into the future, you can see that we have an average growth rate of 5%-7%, but the portion of the battery and powertrain automation is actually growing by 10%. At the end state, almost 100% of the new manufacturing, as I showed you before, will be completely electric vehicle.
Now, we are well positioned since years, as I've showed you, we've been gaining market share, to serve our customers and to innovate in this industry. I've shown this in our last capital markets day, but very simple. We have our philosophies built on core products, which is the robots. We're very happy that when we heard also from Timo before we acquired the company, ASTI, a leader in AMRs, mobile devices that move around, that will really significantly change how manufacturing is operated, and then the machinery automation. All have in common that we have the core product, take the robot, and then we add the software to it. As Björn mentioned, 60% of our work is actually software in the robot.
We add a vision system, we add a gripper, most technologies will come from us. We come to the next level. We build scalable cells, which means they're repetitive, that address a specific solution for our customers, and then the smart system. Both, we add applications on the service side, but also on the software side, and these two will grow with the businesses. With these three, well, we can really provide new solutions independently, but also jointly because we put a robot on the machine, show an example later, and we put the robot on the AMR. All of the three combined gives us a unique position in the industry to actually drive even more innovations than anybody in this industry. Now, this is an important philosophy from us.
What makes us different? You heard this morning that we have a strong technology portfolio across, you know, robotics, large robots, normal robots, cobots, collaborative robots. Our domain expertise is really unique. We understand the industries. We have been in this industry for more than 40 years driving innovations. How does this come all together with the software? We have a unique simulation tool, a digital twin tool called RobotStudio, an automation studio in B&R, that we can actually model the whole line before even touching an asset. So we can take basically an existing facility, look at it, make a proposal virtually, completely virtually, and explain to the customer that this will be your productivity improvement, your flexibility improvement, and reduction of space. That same software that we model with is actually the runtime software for the robot.
Think of the efficiency gains and the risk that we're taking away from our customers with using these tools. Then we take that and we model for the powertrain, body shop, and many others. We use the same tool to do all of these modelings, and that gives us a huge advantage. Now, I'll give you a couple of examples that we are very proud of because we are leaders in this industry. The first one is what's called non-disruptive spot welding, quality inspection of electric vehicles. This can be done for ICEs, but also for electric vehicles, where we use really cutting-edge AI technology and ultrasound. We inspect every single weld on the body shop. Now, why is that important?
Because when we introduce that to our customer, we could, in the past, one person could do 85,000 inspections of welds per year. Today, we can do with one robot 1.8 million spot welds check. Think of the magnitude of productivity improvement. That's 20 times more than what was possible before. That drives productivity, but also quality improvement, and it's scalable. The system is robust. We can scale it across that customer, but also other customers as well. This is a great example of how when we bring technologies together, where we bring here in a battery manufacturing environment, our high-speed track system from B&R that does build a portion of a battery.
We do the same for other customers, because of high tech reasons, we cannot show all of the videos. We mount an ABB robot on the track. Here, we are able to produce 45 million units of parts for a battery. That means serving with one system a quarter of a million cars. This is unique because we can provide the robot and the track system from one hand, and the software as well. This is another example of a scalable battery assembly cell. We saw at the beginning the inspection, so using cameras who do the inspection of the battery cell and system. It comes in.
The robot also inspects all the parts of the battery system, and then glues and then puts the material on it, and it's done. Again, a huge productivity improvement. We do 40 of these cells and systems per hour. Improving from 20 to 40, that is really huge. Also, you can track back the quality, which is important for our customers. Another great example, this is a simulation that we did for a customer, and we built it. We designed. This is a typical car seat manufacturing environment, where you see waste, people walking around, high inventory. The inventory and the logistics separated from actual operations, and that is not state-of-the-art.
We introduced a new concept for the back and inbound logistics using AMRs to take actually all the kitted parts, use robots to actually feed the AMRs. The AMRs, which is the autonomous mobile robot, they go into the factory, and they can actually go to the cells that are available. This type of cell manufacturing is really key because you can adjust the capacity as you go. In the past, you had these rigid lines, and if capacity was there, it was good. If not, then you had a problem. With this new concept, you can actually add capacity or you reduce by adding these type of cells.
You can see here in this case, we were able to reduce the floor space by 25% and increase the productivity of this cell here by 15%. You can also expand if needed. Adding the robots, the AMRs, and this flexible manufacturing cell concept really improve productivity for our customer. This is the way the future will be. We see that coming across other industries as well, and we are driving these innovations for many of our customers as we go. Another great example when we bought ASTI mobile robotics, we were the first one with a so-called outdoor SLAM navigation. That's a system that actually maps the environment while going and then navigate in the environment.
You can see here that it's actually able to navigate outside, taking huge parts in that plant and move around. If it detects a human, it actually stops. It's called 2D scan of the environment, but it actually learn that it goes. ASTI was the first one to actually do that. We were able to do more than 60 of these travels per day, which is equivalent to 3-6 employees doing that work.
What is also great, you saw it on the list on Timo's slide, a little that we invested in a company here in the ETH Zurich in Zurich called Sevensense that actually is one of the first companies to come up with a 3D SLAM solution, which is using vision system to actually navigate around. While doing that, really detecting boundaries, detecting if there are humans, and so on, distinguishing between human and a fixed boundary. Why is this important? Because traditional AMRs go around with fixed lines. You have to put a magnetic line, you put the AMR on it follows that fixed line. What happens if you change the manufacturing setting? Take the example of the flexible setup.
You change the cells, then you have to reprogram the whole thing. Reprogram means in this case, you have to pull up all the lines, put new ones in, and so on. What if you want to navigate outside? With this 3D SLAM, we will have the technology to enable these mobile devices to be even more flexible and more productive. Last but not least, I'm very proud this year because we got many, many awards for our newest PixelPaint solution, where you're able actually to order your car and put, you know, a picture of a cat on it. I don't know why would you do that, but maybe somebody wants to do that. It's a PixelPaint. It's similar to your inkjet print at home.
Instead of spraying all that paint that is actually waste, some of you might have seen how a paint shop really looks like. As you can see here, it actually paints exactly, uses the paint that is necessary to do exactly that part. It reduces significantly the use of paint, a third of electricity used, and you can paint whatever you want, and it has the same quality similar to what you have using that big spraying of the paint, less waste, and really innovative. Our customers really love the solution. We'll see more and more of this coming. We lead through technology. In this industry, there are multiple places you can be with parts of your technology. As you heard before, you could be in the, you know, the EV body shop.
EV body shop, we all have probably seen these, you know, hundreds of robots that really do constant work. That is really done, and we know how to do it. There are areas that are really emerging. The final trim assembly is a great innovative place that we are a leader. The EV sub-assembly, the powertrain battery, as we have spoken, these are all areas that are really emerging. The battery assembly itself is also an area that we will see significant improvement. As we need to drive the cost down of the battery, since it is one of the most significant cost drivers of the car. Then we have really innovative areas we're working on are really in the early stage. You know, an example is the battery recycling.
You heard from Theo this morning about these great examples. We look at startups. We look outside how we can really make sure that these batteries are recyclable. The robotization really can help. Also fuel cells EV, where we're still at the beginning, but we're looking at technologies to support our customers there. This all will result in an incremental growth. The total bucket of robots plus solutions will be a roughly $20 billion business. The ICE powertrain portion will go down over the next years, but the EV powertrain and battery will overcompensate for the reduction there. As I explained to you, new technologies needed, new areas. Then there is a less affected part, which is the body, the paint shop, and so on. These are areas not affected.
In total, we will see an increase, but there will be a shift inside of this portfolio, and we are very well-positioned to serve that market. Now I come to another world, which is the other high-growth areas that we have in ABB Robotics and Discrete Automation. Again, the same philosophy. Fantastic technology portfolio, domain expertise that really go across multiple industries. We bring that all together with our simulation and digital twin tool, and then we can enter new markets. We started automotive, went to electronics, and then general industry, consumer segments, and machinery automation. This is really fundamental for who we are because software and the digital part is really core, but we perfect also our robots and our solutions for our customers. What does that mean in terms of opportunities for us?
Just brought you a couple of examples where today there are opportunities for us to grow. You know, it goes from food and beverage, aerospace, logistics, a high double-digit growth business for us. We started an incubator, and now it's significantly beyond the 100 million business. Retail, driven by e-commerce, and it's not going away. It's actually increasing. Wood and furniture. Lab automation. We started an incubator in Texas Medical Center just before the COVID situation. It was one of the best decisions we made because really we could help our customers in the lab to automate COVID testing and many other areas. Really, these are areas that are all driven by the four mega trends that I mentioned to you, starting by labor shortage to digitalization and e-commerce.
I fundamentally believe that the next 10 years in Robotics and Discrete Automation are much more exciting than the last 10 years. Thank you very much for listening, and I'm happy to take your questions.
Thank you, Sami. I'll try again here in Zurich to see if you have any questions here in the room. Yes, there is one here at the front. If you just hold on for a little minute, there's a microphone coming your way.
Yes, Sujit Aneja here. Just maybe on the slide 25, when you were showing the growth rate and the effect of ICE versus the EV, is there a way you can quantify that, those effects in percentage terms? You know, how much the headwind versus the tailwind?
Well, you know, we expect that the portion of the EV vehicle growth will be in the mid-teens. Yeah. We cannot really predict. You know, you saw my first slide. I was trying to avoid, you know, leaning towards this more conservative or less conservative, but mid-teens. So that will be the growth rate that we expect in the EV vehicle. The rest, which is the combustion, will go down to almost zero. So we see today about 75% of what we deliver our customers are actually all electric vehicle, 25%. Over the next years, I cannot tell you the exact year, but I expect it go down to 90-95%.
Obviously, if you look at the real trend of the electric vehicle development, there will be a significant portion of cars still running around with i.e., ICE, and it depends really significantly on the region. Obviously, China and Europe, more. Americas, less. That market needs to be served. But from a portion of new vehicles, it will be less, which is actually what is relevant for us because we build actually in mostly new factories. Thank you.
With that, we'll try a question from the telephone line. Andre from Credit Suisse, your line should be open now, please.
Good afternoon again. Thank you very much for the second opportunity to ask questions. I wanted just to go back to this EV versus ICE debate, and thank you for all the details you disclosed. If we think about ABB-related content or ABB Robotics and Discrete Automation, specifically related content on an ICE engine car versus EV, and looking at your slide 24, it seems to imply that you calculate about 2 times of the content for EV versus ICE, just comparing the gray down versus green up boxes. Is that kind of the right way to interpret this, or is there a better number?
Yeah, I mean, this is not an exact science, these numbers, or we would have put a number on. Yes, you're right. The rate of increases is significantly higher. So we will see a swap in this. As I said, you know, before, just this is from the math, 75% today of new investment that are relevant for us are in electric vehicle, and it's gonna go up to 90-95%, quite soon. Your assessment is right, yeah.
Great. Thank you. If I may, just a second quick question on cobots. I presume this wasn't covered much because we're talking about sustainable transport and applications there are relatively limited. Could you just update us on your strategy in this space? It is obviously a market where the competitive landscape is quite different and your position is quite different in cobots versus where you are in industrial robots. Just wanted to hear the latest on that, please.
Thanks, Andre. No, we are actually, this is one of our key focus areas, cobots, and we're very happy that, in April this year, we launched a unique family of cobots, GoFa and two other members of the family, and more is actually to come. We started actually with the YuMi. We were the initiator of this industry more than, I would say six years ago. Now is the time where the cobots that you see them going into multiple places. Now, to your question on the automotive side, yes, there are even places in the final trim and assembly that we see also demand for cobots.
More so coming from the general industry, smaller shops, even bakeries, furniture, and so on, where you have basically the challenge that you cannot change the whole factory, so you look at a section, and if you wanna introduce a robot, you need to put cages on. The alternative, you put a robot without even changing the manufacturing space. That's why cobots are really great for our customers. Now, our position is quite strong in that industry, as we just disclosed the market share numbers, but it is going quite well, and it's a great business for us. Although it's still on a smaller scale, much smaller, but on a higher trajectory growth than the other industries.
It's a core business for us.
Thank you very much.
Thank you.
Thank you. I'll take one question that's come through the chat tool here. It asks you to give your view on the apparent overcapacity in EV OEMs in China.
Yeah. I mean, I think there was a huge boom that came over the last years, and there might be some consolidation happening already and going forward. I think that you know, this market will continue to grow, and I think there will be a place for multiple players. There will be a place for the ICE manufacturers who really have perfected this business. But there is also a play, obviously, for the Teslas and then the new players as well. But will every small company that wants to produce an EV car survive, I cannot tell you, but I assume that you know, there will be a consolidation because this is gonna be a play of scale.
You have to really understand the battery part, which is really core and that is a scale play, and the motor manufacturing is also a scale play.
With that, we'll take another question from the telephone line, please. Joe Giordano, your line should be open, please.
Hey. Hi, everyone. Two questions from me. Just first, can you talk about the competitive landscape a little bit? Because you talk about being the number two player in that space, but then on slide 24, the market share still looks pretty small. You know, it suggests a very fragmented market. So can you describe that a little bit? And then secondly, can you differentiate a bit between de-prioritizing the systems business versus, you know, kind of highlighting here some of the integrated cells that you could do, you see, B&R technology and Delta robots and ASTI. Can you kind of differentiate between leaving those big systems orders but also kind of like prioritizing some of these integrated cells that showcase all of your technologies? Thank you.
No, thank you very much, Joe. On the first question, I distinguish, you know, the competitive landscape of robotics in a couple of categories. There are the pure manufacturers that means that produce the robot as is, no additions, no sales, not much, you know, in terms of solution. Many of the Japanese competitors actually do that. We have a big player in Germany who does obviously larger systems, and then there's us. You have multiple other, you know, niche players. You have the cobot manufacturers that are, you know, also growing. We have manufacturers of robots also in China, smaller ones emerging. This is the general landscape that we look at.
We consider ourselves the number 2, depending on how you add, if you look at the pure robot numbers or you put the system, you know, if you add the systems to it. In average, we are number 2. This is important for us because as you heard this morning also from Björn, I mean, we have to have the certain scale to be able to develop and invest in R&D more than the others. We are quite capable of doing that. You heard from Timo this morning, we increased our R&D investment by more than 50%. That also helps us quite well.
Now on the other question on the system side, yes, we decided one and a half years ago to actually exit what we call the turnkey business. The total business in robotics and the robotics automotive business is going down, but because the system business part is actually reducing. That business, what is it? There is a market out there for building manufacturing lines, including all the turnkey to it, high risk, it's a different scale of technology that you need, project management and so on. In many cases, you cannot even dictate that to use your own ABB robot. You could be actually building a system business for our competitor.
This is a business we said we wanna exit because we want to bring in our own technology and software into the market, and also the margin quality is significantly better in the pure product and solution business than the system business. We decided to exit that. We are quite well on our way to finalize that now this year and beginning of next year.
Very good. We will take another question from the conference call. Martin Wilkie from Citi. Your line should be open, please.
Yeah, thanks for taking my question. It's Martin from Citi. Just on the fast-growing markets that you mentioned towards the end of the presentation, you highlighted logistics there, and obviously you have made the acquisition of the mobile robots, ASTI, during the summer. Could you give us some soundbites as to how that's progressing? Obviously you bought technology there, presumably it can plug into some existing ABB channels to grow that business. We're just keen to hear the early progress in that integration. Thank you.
It's going absolutely in the right direction, like we expected it. It's a high growth business for us, similar to the logistic business itself. Also, we have you know big plans there as you also heard when we announced it's going the right direction. There are multiple areas. One is the business will grow on its own, and it's been growing over the last years at a significant level. What we will also now do is that we will use our own sales force in robotics to boost the sales there. That is going quite well. We see demand in automotive, in Tier 1, in general industry, also in logistics.
We are not only doing the logistics in the logistics, we are doing the logistics in the rest of the industry. The example that I've shown you of that manufacturing of a car seat is a typical one where you have the logistics embedded, and there you need the AMRs. Then you have the bigger solution where we sell the AMRs, plus the modeling software, plus the robots together. All of this is enhancing quite well. We have also plans to produce the same AGVs in China. As you know, next year we're very happy that we're gonna open up our new factory. We will also bring the AMR there to introduce it in that thing. Going in the right direction. Thanks, Martin.
Thank you. Thank you.
Thank you. With that, we close this Q&A session. We take a 20-minute break now, and we will meet back here at 3:35 P.M. Thank you.
They're often also the more energy-intensive industries. In order to tackle the sustainability challenge, the energy transition, getting it right for the process and hybrid industries is essential. Take this as an example, the example of marine transport as really being a good case also for the wider challenge of the process and hybrid industries when it comes to sustainability. On the one hand side, you've got a growing demand, rising standards of living. Growing world population basically mean an increase in demand over time. For marine transport, you can see it here, it's a factor of two or three growth in demand that is expected. At the same time, emissions must come down by at least 50%.
In other words, there's more than a factor of four that emissions per unit of transport need to come down. This challenge of our customers is our mission in sustainable transport. Here's how we go about that. We have basically three ways in which we're contributing. The first, and you've heard a lot about this already, from the colleagues who already spoke, is the electrification of transport. Clearly, electrification offers not only an entrance for renewable energy, replacing fossil fuels in transport, but it also offers a path for efficiency, gains in the overall system. It offers secondary advantages like lower maintenance, in very many cases. However, there are also within, especially the process in hybrid industries, some very hard-to-abate industries where electrical connections don't reach. Energy densities in batteries will not be large enough, so there is a need in certain situations for alternative fuels.
Enabling those alternative fuel chains is a second aspect of what we're doing in this area. Finally, across everything we do for our customers, increasing the efficiency, transporting more with less is clearly important throughout it all. Now, if you look at this from the perspective of process automation, how do we serve these markets? We have a portfolio of automation and digital offerings. We have the offering from our colleagues in Electrification and E-mobility from where we get world-class components that we can integrate, and that we can integrate together with industry-specific anchor offering as well as the domain know-how we have to form integrated solutions that help our customers to get on a path towards net zero transport. Now, this is not all moving at the same pace, and it's not all equally advanced.
It actually spreads out across this S-curve in quite a way. If you look at the highest part here, variable operation ships, Björn already talked about our Azipod offering. We came up with that 30 years ago, hybrid propulsion, basically using engines to produce electricity and gain efficiency from how well we operate this chain. We have more than 300 vessels in operation with that already today. So you can see it as a commercially already fairly advanced market. At the same time, further down the curve, we'll talk about all six parts that are shown here, we have two other market segments that are part of the marine market. Because of that, let me at this point hand over to Juha Koskela to give you a more in-depth briefing of what we do in the marine business.
Juha, over to you.
Thank you very much, Peter, and very good afternoon also on my behalf. As Peter already mentioned in his briefing, shipping industry is on journey to reduce greenhouse gas emissions 50% by 2050. We in ABB are fully committed to support this transformation with our market-leading electrical and digital solutions, allowing cleaner and more efficient shipping operation. Let me play a short animation to introduce these solutions more in details.
Electrification and digitalization play a significant role in making shipping more sustainable, efficient, and safe. ABB's technology is at the forefront of this. Electric propulsion is the backbone for ship electrification, fully integrating multiple engines and the electric drivetrains, including generators, switchboards, and propulsion drives and motors. The system's flexibility optimizes the number of engines used to meet the vessel's power demand, impossible in mechanical propulsion. Key for vessels with variable operational profiles, this saves fuel and cuts emissions by up to 10% compared to traditional systems. 30 years ago, ABB transformed shipping by introducing Azipod® propulsion, where the electric motor in a pod outside the ship hull can rotate 360 degrees, increasing maneuverability and operating efficiency with high hydrodynamic performance, further increasing the efficiency of electric propulsion by 10%. In total, this results in up to 20% fuel consumption and emissions savings.
ABB's electric propulsion has been developed to support decarbonization of all vessel segments. ABB's onboard DC grid solution increases efficiency and allows flexible integration of new energy sources such as batteries and hydrogen fuel cells for hybrid and zero-emission operations of short route vessels. ABB's electric propulsion portfolio for ocean-going cargo vessels includes shaft generator solution to increase efficiency of combustion engines using future zero-carbon fuels. ABB charging and shore connection technology completes the fully integrated ecosystem, enabling zero-emission port calls for both small and large vessels. With electrification as a key enabler, digital solutions give crews the right tools to monitor and optimize vessel safety and efficiency, so data-driven decisions can be made anytime, anywhere.
As also previously introduced, there is no single silver bullet solution to decarbonize the shipping industry. Operational profile, duration of the voyage, and size of the ship defines the feasibility of various technology options and decarbonization paths. Accordingly, ships can be categorized into these three categories. In the right side, variable operation ships are still powered by the combustion engines, but it also includes the electrical power plant concept and electrical powertrain for the propulsion system. In the middle, short route ships are becoming increasingly powered by either hybrid or even full electric propulsion system due to the rapid development of the marine batteries and the charging systems.
The more harder to abate cargo shipping segment, which are directly driven by the combustion engines, but also where electrification is contributing to increase the efficiency. I will come back to that later on. Real transformational step to decarbonize these ships will be when the new alternative fuels are becoming available and commercially viable. But when that will be realized, we will also see new energy converters, such as fuel cells, to be at least partly to substitute the combustion engines. We are, by the way, already testing this technology in the smaller vessels quite successfully. We believe that our solutions are really driving sustainability across all these categories, and this is a significant business opportunity for ABB.
Electrical propulsion that our CEO also successfully introduced has been default solution in the variable operation ships, like cruise ships, for more than 20 years. Our typical scope includes electrical power generation, electrical distribution grid on board the vessel, and the electrical powertrain for the propulsion system, including Azipod® propulsion units, as well as the power management system and other control systems required to operate the vessel. Recently, we have been more and more also integrating battery energy storage into these vessels to further optimize the electrical power plant operation. Key anchor product, as again already mentioned a couple of times here, is our Azipod® propulsion system. It is already selected in more than 300 vessels in 25 vessel segments. That solution has a superior customer value by up to 20% energy and emission savings.
Just the cruise ships alone, it reduces greenhouse gas emissions by 1 million tons every year, which is equivalent to the emissions from the 200,000 cars annually. It is also powering ice-breaking tankers capable of breaking 2 m thick ice while transporting oil and gas in Arctic. It's also utilized in many other specialized vessels, such as growing fleet of offshore wind turbine installation vessels. Putting all this together, we have a very strong share in $2 billion addressable new vessel market and a solid $1 billion service market.
It is also worth highlighting, as you can see from the list of the products, that we have up to 90% ABB product content, and half of that comes from the other divisions, from Electrification and Motion business areas. This means that we are driving additional value also across the other ABB divisions. Short route ships operating in the coastal areas and inland waterways, such as ro-ro ferries or harbor tugs, are becoming increasingly powered by hybrid or full electric propulsion systems. Our onboard DC grid power system can integrate any power source, such as a combustion engine or batteries or hydrogen fuel cells in the future. It provides up to 30% fuel and emission savings in these vessels.
In combination with the batteries and the shore charging system, it enables full electric zero-emission vessel operation. We are already deploying this solution in these type of vessels all around the world. One example is the first LNG hybrid tug in South Asia, operating in Port of Singapore. ForSea ferries have been converted from conventional engine operation to world's largest battery-powered full electric zero-emission ferries. These ferries are transporting 7 million passengers and 2 million cars in a busy ferry route between Sweden and Denmark. In addition to onboard power system and the batteries, we have also delivered fully automatic ABB robot arm charging stations in order to maximize the connection time and the charging period, which is very important in such a nonstop ferry operation.
Looking ahead, we see this $500 million fast-growing market as very attractive, especially with the rapid uptake of the battery solutions. In fact, today, there are already more than 500 battery-powered vessels in operation or construction, which is 40% annual growth since 2016. Ocean-going cargo ships are responsible for large portion of overall marine emissions. While these few zero-emission fuels are not yet commercially viable, stepwise approach focusing on the energy efficiency will be key to decarbonize this vessel segment. Electrification solutions such as the shaft generators or batteries used in a hybrid configuration in combination with combustion engines provide up to 5% fuel and emission savings in these vessels, which is significant considering that the cargo shipping is standing for more than 30%...
More than 90% of the overall emissions from marine industry. In addition to these onboard electrification solutions, ABB's shore power solution is connecting the ships to the shore side power grid. It includes the power connector both on the ship side and on the shore side, and also power conversion to adjust the grid electricity with the right voltage and the frequency level onboard the vessel. Electrification is representing some $500 million opportunity in this segment, which currently looks like that might be a bit modest estimate as there will be a high demand of cargo ships such as the container vessels currently. We also see increasing demand for the shore power solutions.
If these were our Electrification solutions to drive the decarbonization in the various operation short route and cargo ships. Good news is that our digital solutions are applicable across all these vessel segments and already utilized in more than 1,500 vessels. Our portfolio include collaborative operations in order to support the products and the solutions that ABB has delivered on board the vessel. We also have a wide portfolio for software solutions to optimize the vessel operation, such as route optimization and motion and energy advisory. Our cloud-based fleet software helps ship operators to analyze and optimize the performance of the entire fleet of the vessels.
In addition to these three categories, we are also focusing on the stepwise development of autonomous ship control system, utilizing the latest digital technologies such as machine learning. These solutions are comparable to, for example, lane or parking assistance or adaptive cruise control that we have in our cars. We already have some solutions available in the market, such as situational awareness software that provides full augmented view for the ship captain surrounding the vessel. We also have our collision avoidance solutions already available. In addition to electrification, also our digital solutions provide significant opportunity in shipping market. To sum it up, climate change and sustainability is a hot topic everywhere in the world, including the maritime transportation.
We have a leading technology to drive the decarbonization in the $4 billion market, including exciting and growing segments like these short route ships. We have a solid install base to drive the service growth in more than 1,300 ships, and there are more than 30,000 vessels addressable with our digital solutions. As already mentioned, we drive value not only in my division, but across the many other divisions in ABB. With that, thank you, and I hand over back to you, Peter.
Thank you, Juha. Definitely the marine business is the largest area in which we from Process Automation are contributing to sustainable transport, but by far not the only one. Let me give you a quick run-through of other areas in which we are making a difference. Battery gigafactories, e-mines, and alternative fuels. Batteries have, of course, been produced for decades. What's new about battery factories? I think a lot. If you think of the number of times people have said battery and charging today, in the electrification of transport that is part of sustainable transport, batteries play a major role. The size of new battery factories as well as their number has literally exploded. The way we participate in this market is that we're contributing with the automation and digital offering, our electrical systems, our instrumentation.
You also saw from Sami that we team up with our colleagues from robotics there. On our side, the cell manufacturing, coating a foil surface with a slurry is actually using many of the competencies we developed in the paper industry and in the minerals industry. We find good reuse of some domain competence that we already have from other areas. In this situation, we're quite proud of the contribution we've been able to make and the partnership we have with Northvolt. This is really important in terms of reducing the cost of sustainably manufactured batteries and enabling those new factories, which is, of course, a rather capital and material intensive business to also come up faster. It's a sizable market already today, and definitely a market with also promising future growth prospects.
If you think of the boom in batteries, clearly, the materials for batteries need to come from somewhere, and mining is, of course, a good part of that somewhere, especially, while we're not having as many batteries in the system for circularity and recycling yet. At the same time, of course, if you think of the integration of renewables, the strengthening of the grid, conductive materials like copper are also in high need. Sustainability actually demands materials, while on the other side, the greenhouse gas emissions from the mining and minerals sector account for roughly 7% of global greenhouse gas emissions. It's part of the solution, and it's part of the challenge.
To reconcile that tension, our customers in the mining sector are looking at ways to substitute the consumption of diesel and other fossil fuels with electricity, and we're helping them in that process. We, in fact, have recently launched our eMine, electrification and automation offering to enable customers to run, for instance, the big mining trucks that are rather large fuel consumers under electric power lines. If that is already an advantage in surface mining, if you think of underground mining, where the diesel fumes then also through ventilation have to be removed so that actually people can work underground also and vehicles can operate there, then the benefits of electrification and automation in mining are significant. It goes way beyond just introducing renewable energy sources by means of electricity to the sector that has traditionally been fossil fuel-powered.
At this stage, the market is still relatively early and emerging, but on the positive flip side of that, clearly showing a lot of growth opportunity, a lot of excitement when we're talking with customers in this sector. You have touched upon the alternative fuels. The green hydrogen value chain, if you look at it, from an electrical engineer's perspective, basically green hydrogen is a pathway from renewable electricity through electrolysis into basically molecules, and you use it wherever electrical connections don't reach, energy densities are insufficient, and where you need the energy-dense molecule that hydrogen is, or also further molecules that you can make from hydrogen, where you need those as a fuel or feedstock. This is also an early emerging sector, but with a lot of momentum right now.
We're having on many fronts promising customer interactions here. It's again, the competencies we've developed in serving the energy industries with automation, safety, and digital solutions, with electrical systems, but also with power rectifiers. You need some very large and very reliable DC, direct current, in order to operate these electrolyzers. That's, of course, something we're very familiar with from decades of serving the aluminum industry. Then, of course, this is about gases for the analyzers, the instrumentation that are used in this market. All of this goes into these solutions to really, industrialize a sector, in which green hydrogen can only benefit from improving its competitiveness relative to other fuels so that it become more of a mainstream alternative.
If I look at it in totality, including, marine as a very large piece, including the other areas that I've just, described also. In Process Automation, we already have developed nearly a billion-dollar business in or relating to sustainable transport. We've developed market-leading positions. We have a strong growth outlook about this also. Of course, you see the different parts of the market have different levels of maturity. We're proud to say that where the markets have advanced the most in terms of technology, in terms of commercialization, we are confident to say that we have also outgrown that market and we have taken share as we've gone along.
On the more emerging S-pieces that I talked about, we're more uncertain about their exact size and growth rate, but we do see that those are in all likelihood going to grow significantly faster. These numbers are estimates, but they're confident estimates because greenhouse gas reduction has to happen, including in the energy-intensive and hard-to-abate industries. It won't happen otherwise if we don't succeed here. In addition, regulations for emissions beyond greenhouse gases are also only tightening, and the demand for transport will continue to increase. On top of that, after now a few really low years in the marine sector, we're also quite optimistic about the cyclic recovery in marine. Finally, and I really wanna bring this home, sustainable transport is deeply embedded in our purpose.
When I say that, I don't mean we have a vision of sustainable transport. I mean, we have a business in sustainable transport. Each of the pictures you see here stands for a real business offering. We create success by substituting diesel with electricity in this mining application that you see here, these super big trucks running on the trolley line. We address the world's energy challenges by, for instance, what you have described, offshore construction vessels that build these offshore wind farms more energy efficiently and more agile, than alternatives would. We help to transform industries by basically combining the power and the Process Automation under a single pane of glass in one system that reacts within milliseconds to reconcile the reliable power needs of the process-type industries with the volatility of renewable supplies. We embed sustainability.
If you look at the picture with the drone, again, this is real. If you take natural gas as a substitution for coal in many areas, then natural gas has about half the emissions as long as you don't have leakages. As soon as you get leakages, you got a safety hazard, and you got a greenhouse gas that's about 30 times more potent than CO2. What this application does, this analyzer that we can put on a drone or on a car and combine it with a digital solution, it actually precisely locates these leakages in order to avoid the safety and sustainability hazards that result from it. Finally, we are leading with technology. You saw what Juha presented, our 30 years of advancing and inventing hybrid propulsion, and then also increasing the electrical and alternative fuel-based vessels.
With that, I hope we have some time left for questions and answers.
Yes, we do. We open the telephone lines immediately. James, from Redburn, your line should be open now, I hope.
Yes, thanks. I have two questions on Process Automation, one on Marine and one on general growth of the whole business area. On Marine and Ports, I think your divisional revenue is roughly flat from 2008, down 20% since 2014. It's nice to hear about some growth segments, but what do you see as the through-cycle growth potential for Marine and Ports? That's my first question. Secondly, perhaps more broadly on Process Automation as a whole, can you talk a bit about the through-cycle growth target that you see within the group's 3%-5% organic, and how do you see that differ between the other segments of Process, Energy, Measurement, and Marine?
If I may start from the marine part. Actually, quite the large portion of our revenue comes from the service business, and that obviously was very much impacted by the COVID situation, given the fact that well, some of our customer segments such as the cruise was really suffering as these ships were not in operation. That has already now recovered. We are back in the level of 2019 revenues in service side. We still have a very strong backlog in that segment as well as many other segments to drive the revenue growth going forward.
If I then continue with Process Automation as a whole, then it's clear that we are both serving some strongly growing sectors, and we talked about some of them today, as well as we're serving parts of the energy industries, if you think of fossil-fired power generation as an example, that are clearly not growing. The combination of serving a few markets that are actually not growing with some markets that are indeed growing. As you've also seen in the chart that Björn and Timo showed earlier in terms of the profitability versus growth focus, we clearly balance, and we have a number of areas in which we rather focus on the profitability, on higher value-added solutions, higher software content.
Where we would also say no, if it's just an undifferentiated, kind of run-of-the-mill electrical integration job without much value-added potential in terms of understanding the domain, combining it with automation or digital offerings, then we will take a more critical look whether that job is for us. On the whole, for us, clearly, we have areas of driving mainly profitability improvement and others growth, but we're slightly overweighted on the profitability improvement.
If you're waiting on the profitability side, I guess you're gonna have 100 basis points or more dilution from the disposal of Turbocharging next year. When you think about hitting, say, the midpoint of your range over the next couple of years, could you say which divisions or even product lines are gonna have to be the biggest contributors to increase?
No, I think we're not guiding on that level. As you rightly pointed out and as Björn and Timo already shared, the expected exit of the Turbocharging business is indeed something that over the last 12 months was 180 basis points of margin different for us once it would be out. Beyond that, we're not disclosing margin at the division level.
Well, I wasn't asking for the margin, just which areas are going to be the biggest driver of improvement from the rebased level.
Biggest driver of improvement? If we just look at the COVID crisis, then clearly we've seen our service business across the different divisions suffer. You have alluded to it already, when people couldn't travel, that did two things to us. On the one hand side, it meant that, for instance, cruise vessels on which both our marine business as well as our turbocharging business actually have quite substantial service exposure, those vessels weren't operating. That was one factor. The other factor was that our service people couldn't get to site, couldn't get to the customers in the same way as before. Across the board for PA, which is a very much sales after service and service after sales proposition, we couldn't go to customers in the same way.
That is why service actually across what we're doing was suffering the most.
Thank you very much.
Thank you. I have a few questions here coming through on the chat. We'll take one here on the eMine. It says, what is the competitive advantage in this space for ABB? There are equipment suppliers such as, well, Epiroc or Sandvik are mentioned here, and they are claiming similar digital offerings.
Well, I think eMine for us is the combination of electrification and automation offering for the mining industry. You always have, in such markets, the competition between a single vendor standard aiming at creating more of a customer dependency in the long run versus an open architecture that provides customers with optionality. We have heard loud and clear from the customers we are serving that they look for optionality, open architecture, rather than deciding once to go with a single vendor and then not being able to back out of such a decision. As in many other areas, as with our digital offering, as with many areas in which we also combine power and process automation, we're committed to open standards here and rather provide an open ecosystem than a vendor lock-in.
We'll take another question from the telephone line. Andreas Willi, your line should be open now, please.
Yeah, good afternoon. I have a question for Juha on Marine. If you could elaborate on two things, please. One is, you mentioned that the service business there has by now kind of recovered. Can you maybe explain that a little bit in relation to cruise ships where still a pretty large chunk, 30%-40% of them are still not running. Have you seen therefore already kind of some service activity coming back before they actually go back in operations? And the second question on the marine outlook, more in terms of the equipment sales, what are you seeing there? Obviously, you've had a very large backlog, you built up in areas such as cruise before COVID hit. How far out does this backlog stretch?
Because obviously the new orders have largely disappeared.
Thank you for the question. Starting from the service side, even though not all the cruise ships are in operation yet, but all of them are preparing to start the operation, and that has really driving our service growth. By that, we are already back at the level of 2019 when it comes to the service business. Then the second business, yes, you are right. I think our order backlog, especially in the cruise ship building, has been stretching. The good news is that none of the projects are being canceled.
We have some strength, which means that our growth is more balanced going forward. Again, you know, no cancellations, and that's the way it's. We have a solid order backlog.
We finish off with another question here from the chat tool, and it's sort of a follow-up on the previous discussion on the profitability mandate, et cetera. It says, you did a strategic review of Process Automation recently. Were there any changes prompted on the back of it, accelerating the strategy for PA to improve returns?
I think it was rather an emphasis on the changes we have already initiated. The exit of Turbocharging, finding a new home for turbocharging is clearly one, if you look at an entire division level, and then in each of the areas within Process Automation, and I think it was Timo who said we've been conducting portfolio management all the way down to. Or was it Tarak who said all the way down to the single SKU. In each of our divisions, we have basically looked what is the offering, what are the portions of the offering, that make sense for us to continue offering, and where do we make a different, growth versus margin, trade-off today in the context of the renewed ABB strategy, that we would have made differently in the past.
Clearly, software and digitalization continues to be important for us. We continue to invest organically in this area and build business organically just because we actually find alternatives that would come from the outside quite pricey in terms of multiples for the time being. I think there's a lot we're emphasizing on pruning the offering at the more detailed level, but there's no big news that we would have to share yet.
Thank you very much, Peter and Juha.
Thank you.
I know that some of the members in the oncoming business area management team argued that today we have saved the best for last. There is a little bit of a pressure on Morten Wierod, head of the Motion Business Area, as he comes on stage to finish off with the last session for the day.
Thanks a lot, Anssi. A warm welcome also from my side, and finally, the world of Motion and sustainable transportation. I'm very happy to have that opportunity to present what we do because most of you know probably what we do in traction in our rail business. We do a lot more. This is great to have that opportunity to show what a very passionate team of the Motion business area and highly competent people, how they are able to make the world turn while saving energy every day, as we say in motion. We truly believe that the future of transport is electric. We say that how we work and how we are successful in the field of sustainable transportation? It starts, as always, with our pioneering technology leadership.
This is the cornerstone of our success. As a motion business, we invest more than $250 million every year in R&D. When you add that together over this longer cycle, you're able to develop a huge portfolio and a common modular platforms that we can then redeploy across applications and across industries. When we add the software over high-performance controls and also our digital solution, because today most of the motors and especially also the drives, they are coming already IoT-enabled. That means they can automatically connect to the cloud, that via the ABB Ability Cloud or our customers' preferred cloud solution if that is something else or they have their own solution, or to an edge device. We are agnostic when it comes to that. We let the customer decide. These technologies, that is what is the foundation.
Of course, it's not just about technology. It's also about the domain expertise and that having people with big ears. That means people who listens, who are able to understand what the customers are looking for, what makes it different, how do we become more successful working with Motion and ABB than working with somebody else. That's the feedback that I am very proud when I hear from customers what they tell me, that that's why we work with you in the Motion team. We add those two things together, our technology leadership and the domain expertise, we are able to put the building blocks that we use in sustainable transport together, drives and motors. Traction motors and also part of our industrial motors portfolio, but also the drives portfolio with the industrial side, with modules, complete drives, but also and the traction converters.
We're adding even battery energy storage systems, which is a new part of the portfolio that sits on the trains or the buses or the transportation units of the future. When we put all these together, we are able to have a complete offering. Some customers would like to buy a single product, maybe just a motor. Somebody want to have a complete, aligned propulsion system, a driveline, and even adding the battery storage systems. We let the customer decide, and we are able to support them along that direction. Sometimes we are also working very closely with our process automation colleagues, like Juha Koskela, Juha was telling here on stage what we do in the Azipod business, where we are the component suppliers for the great Azipod solution of ABB.
We're also working with third-party system integrators across the world because the scalability and having access to all types of customers, small and large, is vital to our success. With that, and how do you decide? It's really about setting it up like the customers want to be served. That is our guiding principle. Let me rather give you, now take you on a journey around the world in the field of Motion, so you can see in real life what this is all about when I'm talking about the building blocks and applying technologies into different applications. I want to take you on a journey, and let's start here in Zurich, because I hope that many of you came this morning when you arrived here by train.
It was powered by one of the locomotives that, what you see here on the screen. It is the fleet of SBB, where they have a large upgrade program. The train, the locomotive itself, is still in very good shape. Even after running more than 20 years in operation, all the mechanics are really in great shape. The converter technology in the field of power semiconductors has happened a lot during that same time period. We can come there and replace the old converters with new technology, replacing the oil cooling with water cooling to have a better environmentally friendly impact. Maybe more important is to have the energy saving, the higher energy efficiency of the new technology, being able to save 30 gigawatt hours of power over every year.
To put that in perspective, it's around like 10,000 Swiss households. When we add the reliability that comes along with the new technology, it makes that SBB, as an operator, can do what they're best at and what they want to do, is to, as we always know in Switzerland, is to arrive not too early, not too late, but just on time. With that, let's move on to the next country, and it's a, an example from the Netherlands. In Amsterdam, we have the first electric ferry that crosses the canal. It takes about 10 minutes to go across. It loads a lot and comes back again. Then it stays for three minutes. In those three minutes, it needs a power boost for the battery.
You can use our industrial portfolio of converters and drives that are able to give that massive power boost in those three minutes. Then it goes over to the other side again and back. That is the part where we as Motion, again, using our technology to make this happen. Now we're talking about transportation of people and goods. We can also talk about the transportation, for instance, of minerals. If we travel up to the north of Sweden, Boliden, they have one of their copper zinc mines, where they have a very high ambition, a very tough ambition about emission-free mining. How we can, as Motion, are playing a role here is to work with the equipment suppliers and the manufacturers of the mining equipment.
This example is with Epiroc, who is there making their mining trucks, now they're moving from diesel combustion engines to full electric. What we do, in addition to provide the building blocks again of motors that fits two on each axle, one for each wheel, and also the drives, the converters that is powering with the right frequency and voltage and current at the right time, so we are able to move here emission-free. It's not just about these products. We also are the technical advisor and helping Epiroc coming up with that kind of new complete solution. Playing overall in helping Boliden moving towards the emission-free mining in the north of Sweden. Again, if we move across the border, we go and you may know, or if you don't, we'll move to my homeland of Norway.
I'm sure you know that Norway has been one of the leaders in the applying electric vehicles across the country. Now the next step, of course, where more or less everybody, or at least 70% of all the new cars today being sold being full electric, now the next step is what can we do more? Here, emission-free building sites is one of the projects that is now being looked into and say because we see that here we have still large emissions on building sites. So what do we do then? We would help retrofitting an existing diesel combustion excavator and putting in our electric drivetrain. Again, having the building blocks, but also the local know-how to be able to speak with the companies in Norway who's doing this retrofit.
Of course, the next step, having also the capabilities and the know-how to talk with our large, the OEMs that builds now the new generation of full electric excavators. This is what we do in Motion. If we move over, this is for three examples from Europe. Let's move over to the other side of the globe, over to China, to Asia, and the green ports of China. This is the shore to ship connections. As Juha was also presenting what we can do here in this field, we provide some of the building blocks that makes the shore to ship make it how we make it happen.
It's about having, again, applying the technology of drives so that you can turn off the diesel generator on board that produces electricity and using the power grid on land with the right conversion of frequency and voltage, so it fits with the equipment that sits on board. What we can also do here, and what we are doing, is to connect all these drives to our cloud solutions and help them, the port operators, with digital services. That means we are online and seeing the status of the drives 24/7. That we can also help, and we also can avoid downtime of these things.
We know that if something goes wrong, we need to send the maintenance engineer before something happens and not afterwards to fix it. As we are at the port, let's move on further south across the Pacific on the ocean and over to Latin America, and over to Chile and fish farming. This example could also have been from here in Europe because here we are really looking at the same technology being applied. You heard it already about the ability to maneuver with electric propulsion is superior to diesel.
Here you will also see that you're able, in rough sea and where you have to stay still around next to the fish farm, you're able to operate safely and better than with traditional combustion system now with electric propulsion and as a very nice reward or the next premium, you get a 20% saving of diesel. Another great example of how you can turn to do the decarbonization of the marine sector also is from the fish farms. My next example is up in the air, out from the sea. We're not flying, but we are on a cable car.
If you take a ski lift or a cable car, and it doesn't matter really if it's in the Rockies, in Appalachia, or here in the Alps, it's very, very high likelihood that it's ABB motors and drives that makes you come safely to the top and back again. Here is an example from Zugspitze in Germany, the highest point in Germany, where even this, these examples have three records. We are very proud to be part of it. First of all, it's the highest steel columns that is built for this kind of application with more than 130 meters. It also has the highest elevation from the bottom up to the top. We're talking about 1,950 meters. It's a really steep journey.
Third, it's the longest span and the longest journey with cable car in the world. This is a very smooth ride that makes you come up to the top and down again. Here, reliability, safety is key factor of any kind of application. This is what we want to discuss in flow of the message. That's basically those trusted partners for the ski lifts and the cable car industry for many, many years. Zugspitze, a city high up, 130 meters above, well, that's where we can find it amazing. It was very fresh. Back in Zurich, and what I especially like for the city, we're able to avoid the noise of buses. At least when you're talking about line 83, which is the e-buses, here from supplied with complete ABB setup.
Where we have the full portfolio from motors to the drives, the converters, the batteries system, and the chargers. The whole electrical system designed and supplied by us working with the bus OEM who makes the complete bus to the city of Zurich. This is working well, and it's not just to kind of. It reduces the noise on the ground, it reduces the diesel emission when it comes to the NOx and, I mean, the local pollution, but also the global pollution. We're talking about the saving of 200,000 L of diesel with these eight buses as of with this one example. We have hundreds of buses running with similar system around in Europe today.
I hope you see some of these examples is how we use our technology, our key building blocks, and together with the know-how of our team to be able to decarbonize the transportation sector and making it more emission-free. You'll see also here that we are really represented along the maturity curve. The rail and the ski lifts being more the mature businesses that we have been in many, many years. We use the know-how and the portfolio to be the go-to partners also to all the new applications which we want to serve and the new customers which is coming up quickly. Some already emerging, and we see a good progress already, and some which is still in the early days are still in the cradle.
We know in a few years, they will be up walking and then finally running around. That's why it's important to be the go-to partner early on because that sets standards in this industry. That's what we have learned across the board. You need to be the first mover and playing on a wide scale, and then you'll be able also to buy, let's say, buy the tickets in all the different lotteries. That's the advantage of having a wide portfolio and have done the investment in the past. Today, sustainable transport, it's about 15% of our order intake in Motion. The margin is they are in line with our expectation and the Motion average.
We've come from a very strong backlog because as you've seen, our market here when we compare, we're looking about the 7%, but we have been growing almost double of the market. When I look into the future, and I see with the urbanization trends and how the society is developing, the modernization of public transport, that will continue to grow what you see today. On top, we are adding decarbonization and the need for decarbonizing the whole transport sector. With that, energy efficiency is also a must. When you take all this together, then we have a very interesting future ahead of us. We as Motion, I think we're really well set up to drive it, and we have the right starting point.
I'm confident also that together with the team, we will also capture those opportunities in the future. With that, I would like to end also with a video, but also to say I hope you're fully convinced as we are, that the future of transport is electric.
Energy is transformed into motion everywhere, all the time. Transportation, getting from A to B, should be smooth, comfortable, safe, and energy efficient. We climb aboard, take a seat, and let our minds settle on something else. Electric traction chains power our trains, buses, and ships, each one unique with its specific purpose. Variable speed drives control the motors and regenerate braking energy, getting you there efficiently in one of the most environmentally friendly transportation modes on the planet. Electric motors and drives enable us to move, produce, grow, and thrive. To do all that, we need energy, a lot of it. With our growing population, urbanization, and rising living standards, we'll need even more. At the same time, to fight climate change, we need to reduce carbon emissions. The good news is, we can do better.
With that, we open up for Q&A. As per norm, we start with a question from the conference call. Joe from Cowen, your line should be open.
Hey, thanks, Anssi. What percentage of your of these drives and everything that would you think is digitally connected in your installed base? Maybe how would you compare that to what you're currently selling right now as a percentage of, like, new sales that are going out the door?
Right. Thanks, Joey. What we do today, first of all our drives or large drives that we deliver on today are already what we call IoT enabled. Still a relatively small percentage is connected at first. We have seen now over the last couple of years during COVID, that the acceptance for remote digitally connected devices has increased a lot. Some just do because people are not allowed to go on site, and therefore, kind of in desperation, you're able to say, and then when you see you're connecting, and then you're also seeing the benefits, and then you don't want to disconnect afterwards. I think that has been the big adaptations.
Today we're talking probably on the large drive, we're talking around 20% that is or being connected. We see now when we're coming up with the new technology and there's really a plug-and-play solutions. We are also very proud that we launched this year the self-connecting drive. That means that it's automatically just by pushing or clicking on, you're able to automatically connect to the ABB Ability Cloud or also the preferred cloud if that is some other preferred cloud of the customer. That is something we've launched this year, and it's something that I have great faith that we will see a much faster adaptation and a more rapid adaptation in the coming quarters and years. Because this is.
If you make it plug and play and you make it easy, then you will also see that adoption rate will go up also on the smaller equipment.
Can I just clarify quickly that that 20%, that's on, like, new drives that you're selling now? If they click it on to connect to ABB Ability, I assume that opens up like a recurring subscription-based revenue stream.
That would be correct. Because what we do during, of course, during warranty, we could use this to help our customers online. It's up to us to show the value during that period, so that nobody wants to disconnect in the future.
Okay, I assume he was happy. He's gone quiet. We have a couple of questions here.
Yes, thank you.
From the chat tool. One here is on growth, and it says, "With your excellent exposure to global mega trends, including energy efficiency, do you expect growth to accelerate going forward?
Short answer is yes. I think we've shown that also, both with the last year's performance. I mean, if you look at the cycle over the last four years, most have been pretty close trajectory or on good track. Most of it is still going to invest for years. Last year we did not have any, as you see most of this this quarter. This year, most of our customers see that. There's also the Electrification, the ability to see this actual impact in the advantage. For most customers, this would have very similar appeal, of course, because for us, most of our would be high, which is the highest energy efficiency level in this space. But also for us, it is really energy efficiency for all of that, you know, all the users are optimistic about the future.
Let me just double-check. Are there any questions here in the audience in Zurich? No. We'll take another question here that's come through on the chat from Anders Roslund in Stockholm, and it sort of refers to new potential markets. He wants to know if and where you enter into, for say, the heavy truck market where you do not seem to be present right now.
No, we are working with some of the truck manufacturers. I think they've kind of. But I also see that there is a balance here where it's our expertise and our kind of where we are really strong is when we are talking about more engineered solution where you need to and having a close collaboration with an OEM to understand their cost levels, to understand, you know, their challenges and how we can help. When you're able to have that kind of working relationship, then you're able to. Also, we have shown that we are very successful. Become more on the pure automotive side, it's a bit of a different working environment. For those who have been exposed to the automotive industry will know a bit the difference.
I think the truck is a bit of kind of in the middle of those. We do have collaboration in some areas. We have even some trucks, for instance, you can see the ABB Scania truck that is running to and fro between our logistics centers and our factories here in Switzerland, in Baden, that people in Baden can see on a daily basis. We have trial installations and piloting, but here we have still some more work to do on the truck side.
I'll carry on here because they keep coming through on the chat here. Now I lost my way. Here, yes. It's asking about assuming supply chain impact normalize, what is the margin potential for motion in the next years? Can you further increase from here, and what would the drivers be?
I think I mean, we have, in line with what we have said earlier over Capital Market Day, we have an ambition both to grow but also to improve our product profitability. That those statements, what we made before still stands. That is clear. How we do it is quite simple in some ways, that our seven division in motions, if they deliver, and as I'm confident they will do on their strategic mandate. You know, I still have two out of the divisions is about improving profitability, and they have some more cost actions and actions to follow on that side. While the five other divisions is all about profitable growth.
That if all follow, and which I am confident they will do, they will follow up on their strategic mandate, and that's what we follow up every month, then the quality of revenue will go up just as the most profitable businesses will grow more than the others, and we are able to get the improvement on margins of those who have still some work to do. I can confirm our earlier statements that we will also improve the profitability in the coming years.
I think that's a fine way to end this Q&A. Thank you, Morten. We should welcome Björn back on the stage to close this day.
Thank you very much. It's been a long day. A lot of information, a lot of exciting stuff from ABB. I take the opportunity to thank you all for bearing with us and hanging in there during the whole day and the whole afternoon. Just a little bit of a summary from this. Of course, this last part of the presentation here, what we've seen from our business leaders that make things happen in ABB. We've been talking about innovation, about new technology, but we also talked a lot about domain expertise, the expertise that we have in all the areas where we operate, among our customers and the long experience. The third part is the scalability, how we bring our solutions, our products to scale, into different operations, but also move between different kind of segments.
I think it's been a day where we've seen the real ABB and what makes ABB tick. This sustainable transport is an area where ABB is contributing, where we are investing a lot, but we're also outgrowing the market. It's also probably the part which is growing the fastest, and in the future will be a bigger part of the ABB portfolio. The development towards electrification and the automation, which is actually the core of the purpose of ABB. This development is actually going to support the growth of ABB and also the security to deliver good financial performance also in the future. Once again, everybody that has been presenting, the whole team, everybody that has been supporting us and making this day a great day. Of course, me as CEO, I'm extremely proud to be part of this team.
Thank you very much.