Jamie Fox Author
Principal Analyst
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Jamie is based in Chile and has worked in market research and analysis for 15 years covering semiconductors, components and technologies. Jamie is now focused on components for commercial vehicles including electric vehicles. He has produced many custom and consultancy studies during his career. Jamie has a BSc in Physics and Astronomy and an MSc in Nanoscale Science and Technology.

Market intelligence company Interact Analysis’s latest report on the electric truck and bus powertrain market describes a sector showing consistent growth over the next decade. Electrification of vehicles is still in its relative infancy. But as governments strive to exert environmental controls on industrial economies in the face of the threat of climate-change, technological developments will continue apace. Currently the electric truck and bus market is dominated by the light-duty truck sector, but the report concludes that mid-way through the next decade we will see more and more hybrid and full electric medium and heavy-duty vehicles on our roads, bringing significant revenue flows for powertrain manufacturers.

Significant short- and longer-term growth forecast for hybrid and electric vehicles

The research points to a massive expansion in the market for both hybrid and electric commercial vehicles in the next few years. We need look no further than Amazon, who have just made a huge investment in Rivian, the electric van start-up company. Rivian has a contract to supply 100,000 electric vans by 2030. Projected production figures for all classes of electric commercial vehicle indicate that the strongest growth will be in 2021, 72% up on 2020. From then on until 2030, percentage growth will reduce slightly year on year, but the net result will be a figure of 1.4 million vehicle shipments in 2030, 26 times higher than the figure for 2019.

The above graphical representation of projected figures demonstrates how light-duty trucks dominate the vehicle shipment numbers, and that medium/heavy duty trucks will be more of a factor in the second half of the decade, while bus production is forecast to be much lower than that of trucks. There is plenty of opportunity here for manufacturers of powertrains. Interact Analysis calculates total electric truck and bus powertrain market revenue for 2020 as being under $1bn – it is forecast to grow to $23bn by 2030. A massive increase. And don’t be fooled by the seemingly low medium and heavy duty truck figures: they hide significant revenue potential.

High level price trends hide some significant price erosion

The data in this report indicates that, where overall average pricing is concerned, price reductions of powertrains do not appear to be very severe. This is because over time, with the onward march of technology, better quality components will enter the market and more heavy-duty vehicles (with more expensive components) will be produced. This especially applies to the Americas, where prices are higher anyway, due to the competition of internal combustion engines owing to the low cost of diesel. So, the average price falls slowly, even as the price for each given region, powertrain and vehicle type is falling more quickly. Readers of the report should view the high-level price trends in this report with some caution.

Interact Analysis predicts that most powertrain components will see very high price erosion in the market, with 2030 prices typically being under half of 2020, even after allowing for the improving quality of components over time. However, the scenario re battery-pack pricing is a little complex.

Battery packs will continue to be by far the most expensive component

In 2019, the battery pack in a BEV powertrain accounted for 59% of the total cost of the powertrain. By 2030 its share will increase to 67% of the total cost. The average price of the battery pack in 2019, for all powertrain types, was $8,000. This will rise to $8,600 by 2025, defying the usual trend of price reduction as time passes. This is owing to the fact that the average pack size will increase as more medium and heavy-duty electric vehicles enter the market. Conversely, battery packs for pure battery electric vehicles will see a gradual price reduction, from an average of $14,000 in 2019, through $12,000 in 2025 to $10,000 in 2030. Not a significant drop, but a reduction nonetheless, reflecting the fact that many pure BEVs will be cars and light commercial vehicles, requiring smaller battery packs than large vehicles. But as the prices of other powertrain components also drop, the battery pack remains the high-value component.

Fuel cell systems, currently found almost uniquely in buses, cost a hefty $96,000 in 2020. But the research forecasts a dramatic decline in fuel cell prices up to 2030 (in $/KW) as their application spreads in a range of heavy-duty vehicles. 53,000 shipments of fuel-cell systems are forecast for 2030, when prices are predicted to average 23% of the 2019 figure – a more dramatic decline than any other component in the report.

Non-battery powertrain components set to see a significant price-drop

While the prices of battery packs and battery-related equipment such as battery management systems will hold up over the forecast period, where the whole powertrain is concerned, there will be a strong decline in prices for all categories of vehicle. Tough competition causes strong price erosion, and machined processes for equipment such as transmissions allow less expensive production when volumes become larger. As an example, the average cost of an eAxle was $5,000 in 2019. This will drop to $1,800 by 2030, even taking into account the anticipated proliferation of medium and heavy duty vehicles over the time period. Interact Analysis concludes that the average cost of the powertrain for a full electric medium or heavy duty truck will drop from $105,000 in 2019 to $50,000 in 2030 but, as previously said, the overall average price for all categories of vehicle powertrain will actually stay flat, as more and more heavy electrified vehicles come on to our roads.”

Medium/heavy-duty powertrains forecast to see revenue-boost midway through the decade

The majority of the revenue for the electric truck and bus market in 2019 and 2020 was in BEV light-duty trucks (due to the high vehicle volumes) and urban buses (due to the high powertrain value per vehicle). In 2030 revenues will be more equally balanced between light-duty trucks and medium/heavy duty trucks. Medium/heavy duty trucks have a higher forecast growth to 2030 than buses, and so are forecast to overtake in overall revenue during the forecast period.

From 2026 to 2030, medium/heavy-duty trucks are forecast to generate higher revenues than light-duty trucks, even though the vehicle shipments are much higher for the latter, as we saw earlier. This is due to the much greater upfront costs for the larger vehicles.

Interested in reading more? Please contact the report’s lead author Jamie Fox directly – jamie.fox@interactanalysis.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Posted by Jamie Fox