With the convergence of several powerful trends and the ever present need to drive efficiency, the commercial vehicle (CV) market is set to make a bold leap straight to full electrification, as opposed to the more gradual approach taken by the passenger car industry.
What’s driving the switch to pure electric power?
With fuel costs making up nearly 40% of operating costs, vehicle efficiency is undoubtedly the driving factor. Given high utilization and long service lives, investments in improved fuel economy can be a major competitive advantage. For example, in a typical class 8 truck, a 20% improvement in fuel economy can save $14,000 to $25,000 per year with paybacks possible within the first year.
CV electrification is also being fueled by a faster than expected fall in battery prices. As Bloomberg NEF (New Energy Finance) recently noted, in 2015 the battery made up more than 57% of the total cost of a midsize US electric car. By 2019, that figure had dropped to 33%, and is expected to hit just 20% in 2025. Which means it makes little economic sense for OEMs to invest in hybrid or plug-in hybrid designs as a stepping stone when they can go straight to entirely battery powered vehicles.
The third key factor at work is implementation of ever more rigorous environmental regulations. Until recently, these have prioritized the requirement to cut CO2 emissions, with countries that include the UK, Sweden and Norway already legally committed to carbon neutral status by the middle of the century. China, meanwhile, has pledged that its CO2 emissions will peak no later than 2030. Furthermore, with transportation identified as one of the main sources of climate changing gases, sector-specific regulation is also becoming more demanding. The EU is looking for CV OEMs to reduce overall emissions from their fleets by at least 15% by 2025, and 30% by 2030 (based on 2019 levels).
Cleaning up in the city
However, reducing CO2 is no longer the full story. The impact of poor air quality on public health has also climbed the political agenda, with vehicle emissions again identified as a major contributor to the problem. Across Europe, numerous municipal authorities have now either imposed restrictions on diesel vehicles entering city centers, or have advanced plans to do so. Indeed, according to recent research by Bloomberg, 24 European cities will have implemented bans on diesel road vehicles within the next decade. In Paris alone, that means some 3.3 million vehicles affected by 2030. At present, the focus is on older engine technologies. To take just one example, London’s mayor has recently introduced a ULEZ (Ultra-Low Emission Zone) that will see some of the most heavily polluting CVs charged up to £100 ($125USD) every time they enter the city center. In China, July 2019 marked the starting point for implementation of some of the world’s toughest emission standards for new vehicles, the ‘China 6’ requirements. Noise is also becoming an issue for urban authorities, with conventionally powered trucks again high on the list of targets for tighter regulation.
In some cities, we are already seeing full electrification of heavy duty trucks that have relatively low daily mileages. Last-mile delivery trucks, off road, a multitude of agricultural, construction and industrial vehicles are also good candidates for swift electrification. Looking further ahead, long haul trucks will ultimately follow the same path, once longer ranges become feasible and national charging networks that can accommodate the size and number of vehicles involved are widely deployed.
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SOURCE: Aptiv
