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In May 2018 the European Commission set out a two-staged target for the reduction of CO2 emissions produced by heavy-duty vehicles including heavy-duty trucks, buses and coaches. By 2025, OEMs are required to reduce the amount of CO2 released by their entire fleet by 15% and 30% by 2030. In addition, manufacturers will receive ‘super credits’ for the production of zero-emission vehicles which allows for a level playing field among OEMs who would otherwise be less willing to invest in electrification programmes.
In line with Europe’s commitment to clean transport coupled with the rapidly declining cost to manufacturer lithium-ion batteries, the European electric medium and heavy-duty truck market is set to enter a period of high growth. In 2018, nearly all of the major European OEMs had announced at least one battery electric model and by 2025, Interact Analysis forecast that approximately 40,000 electrified medium and heavy-duty trucks will be delivered annually in Europe.
A market driven by application
In its early years, the battery electric truck market will be driven by specific applications which lend themselves to electrification. Hub-to-hub, hub-to-spoke and last mile applications have seen the highest penetration rates for battery electric light-duty trucks and the same will be true for the medium and heavy-duty segments. The stop-start nature of the duty cycle maximises the efficiency of the trucks as they’re able to recuperate their energy via regenerative breaking. Furthermore, the implementation of stringent emission restrictions, such as the Ultra-Low Emission Zone (ULEZ) in London, will promote the uptake on battery electric trucks within Europe’s major city centres.
From an economic perspective, it makes sense for a light-duty fleet to shift to electric powertrains due to the relatively small investment required and the operational savings which can be achieved from using cheap electricity rather than diesel. As you increase the weight of the vehicle, however, the battery capacity required to drive an equivalent unit of distance rapidly increases. This makes it difficult to electrify medium and heavy-duty trucks without having to install large battery packs.
With this physical constraint in mind, DAF recently developed a heavy-duty distribution truck with a 170kWh battery pack and a range of just 61 miles. On the one hand, this limits the applications which the electric trucks can be used for. On the other hand, however, the lower CAPEX required for the trucks will enable higher penetration within the applications they’re designed for.
Higher penetration rates for hybrid trucks in the heavier segments
The cost difference between a battery electric and hybrid light-duty truck is marginal, however, the difference increases as you increase the weight of the vehicle. A hybrid medium and heavy-duty truck will have a significantly reduced up-front cost compared to a battery electric equivalent model because of the size of the battery required. For example, Scania’s plug-in hybrid heavy-duty distribution truck has a 7.4kWh battery costing approximately $1500 excluding the battery management system, whereas a similarly sized battery electric DAF LF has a 222kWh battery which costs $45,000 assuming the battery costs $210/kWh.
Despite the overall cost savings which can be achieved throughout the lifetime of a battery electric medium- and heavy-duty distribution truck, the reduced CAPEX required for a hybrid equivalent solution will be a strong market driver; especially in markets which experience higher levels of cost-sensitivity.
Fuel cell trucks are best suited for long haul applications
The size of the batteries required for long haul applications will limit their uptake; Freightliner’s eCascadia, developed for the US market, uses a 550kWh battery providing 250 miles of range. Given that a typical long haul truck travels between 300 and 400 miles in a day, the integration into existing duty cycles will prove to be challenging as drivers will have to plan their driving breaks to coincide with available charging stations at least once a day.
With an extended range and smaller batteries, fuel cell trucks are better suited for long haul application, but the cost of manufacturing fuel cells will have to be significantly reduced before they can become commercially viable. That being said, with the right legislative environment and financing options, the fuel cell truck market could take off sooner than expected. Nikola Trucks is adopting a subscription based model which includes the hydrogen fuel and has already received over 11,000 pre-orders with a large portion coming from Europe, particularly from Norway and Austria.
Furthermore, in 2018, Hyundai Motors signed a contract with a Swiss hydrogen producer H2 Energy to supply 1,000 fuel cell electric long haul trucks over the next five years. Confirming Hyundai’s commitment to fuel cell technology, it announced in December 2018 that it would invest $6.7 billion in fuel cell technology through to 2030 and produce 700,000 fuel cell systems annually.
The application in question will dictate the extent to which it adopts electrification and the drivetrain technology used to electrify it. Heavier segments will experience higher levels of hybridization and long haul applications will likely require alternatives to battery electric drivetrains. With the right legislative environment and favourable business models, however, fuel cell trucks could fill this niche sooner than expected.
Distribution trucks will be the prime candidates for electrification in Europe. A combination of stringent urban emission restrictions, lower daily mileage (and thus smaller batteries) due to dense urban environments and the rapidly declining costs to manufacturer batteries will be the driving force behind the growth of the market.
“Hybrid & Electric Trucks and Buses – 2019”, The hybrid & electric truck and bus market is extremely dynamic and dependent upon factors including legislation, battery prices and the relative prices of electricity and diesel. The rate at which any given segment will grow is dependent on the interaction between these determining factors. This report breaks down the contributing growth factors and provides a credible market forecast based on the interacting variables derived from more than 40 hours of interviews. Click here
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