If necessary, they may have dual power systems—electricity in city streets and diesel in more rural environments. Occasionally, trams also carry freight.

Modern trams primarily run on electricity, typically drawn from overhead wires (catenary systems) via a pantograph or, in some historic or aesthetic cases, a third rail or ground-level power supply. This makes them significantly more energy-efficient and environmentally friendly than internal combustion vehicles, as they produce zero local emissions. Historically, early trams were horse-drawn, while some late 19th-century models used steam or even compressed air. In the early 20th century, some systems used gasoline or diesel engines, but these were largely phased out in favor of electrification. Today, "trackless" trams or rubber-tyred "trolleybuses" also use electricity but follow a road rather than rails. Some modern "hybrid" trams use onboard batteries or supercapacitors to travel short distances without overhead wires, especially in historic city centers where wires might be considered an eyesore.