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Alastair Hayfield Administrator
Senior Research Director – UK
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Alastair has over 10 years’ experience leading research activities in scaled, high-growth industrial and technology markets. At Interact Analysis he is responsible for electric trucks and buses, autonomous trucks and off-highway electrification. 

Recent pictures coming out of Delhi portray a city transformed. Renowned for having the dirtiest air in the world, the total lockdown in India has brought back clear blue skies and a pollution-free atmosphere in this city of 30 million people.

Nature has certainly seen a world-wide transformation, which may well inform and influence human economic activity in the future, but in the here and now, in the midst of this terrible pandemic, what are the prospects for the commercial vehicle sector, an area which provides vital support to our economies and our lives?

Bus companies in intensive care, but this vital piece of transport infrastructure will pull through.  

As people have stayed at home during national lockdowns, UK bus companies have seen passenger numbers reduced by 75%. In Germany that figure stands at 40-60%. In China there has been a total shut-down of public transport systems in some areas. What is this going to mean for the future of the sector?

On 3rd April, Sky news reported that the UK government intended to ‘protect crucial local transport links’ by injecting £167m into the bus transport network. This is expected to fund up to 50% of normal service levels. But what of the £5 billion of new funding (for bus and cycle networks) promised in the pre-Corona virus budget? There are serious fears that the government will no longer be able to honour this promise, which included a commitment to funding 4,000 ‘zero-carbon’ buses in England and Wales. We anticipate similar funding difficulties in many other countries in the Western world.

Many issues seem to inter-connect here. The bus network has always been vital for many people, both for commuting and for leisure. At present, its prime function across the virus-hit globe is to get essential workers where they need to be. But will Covid-19 have a long-term effect on travel habits? Will people shun public transport in favour of the car or the bicycle, or working from home? Will social distancing have embedded itself in the human psyche? How will public transport strategists and manufacturers respond to the challenge? Will they move away from the concept of mass, close-quarters transit, reflecting, to some extent, the distancing arrangements introduced on many networks during the crisis? Or will we revert to the ‘pack’em in’ philosophy? These are some of the questions that lie ahead. One thing seems certain, though. Governments will need to think through long-term funding strategies to support bus companies. This may not be such a challenge in China, with its relatively low national debt, and already established high levels of funding for public transport, but Western democracies will need to plan carefully and prioritise. Another aspect to consider is the blue skies and pollution-free cities during the pandemic we mentioned in the opening paragraph of this piece. China will doubtless continue to race ahead with its electric buses programme. It is inconceivable that transport planners in the West can ignore the importance of electrification where our environment is concerned. We must expect an acceleration in this area.

Road haulage: a mixed prognosis.

Road hauliers in many countries have played an important part in the fight against Covid-19. By 21 March, for example, in China, trucks had delivered a total of 391,300 tonnes of essential medical supplies such as masks and protective clothing as well as vital household goods to the worst affected province, Hubei. But trucking operations across the world have been hit as the virus took hold, and lockdown measures were introduced. For example, only a matter of weeks ago, in certain provinces of China, a mere 10-20% of trucks were operating. The good news, though, now, in China, is that up to 80% of trucks are back on the road. However, according to BIFA (British International Freight Association), the European freight market could sustain a 20% hit over the rest of this year, with Germany being at the forefront of this loss.  This damage could be prolonged into the longer term, if the virus tips countries into economic recession, as many forecasters predict. The likelihood then is that fewer trucks will be needed, and hauliers will invest less in expensive new technology, for instance electrified vehicles, which are more expensive up-front, but pay dividends in terms of total cost of ownership (TCO).

A strong upside for electrification in the haulage sector lies in the ‘last mile run’ from local distribution hubs to customers’ homes.  The Covid-19 pandemic saw an explosion in the numbers of online shoppers. For many people, this will be habit-forming over the long term. In recent years, this ‘last mile’ has naturally had an impact on traffic, as logistics firms work to meet increased demand. This, in turn, has had a negative effect on air quality in densely populated areas. Understandably, governments across the globe are keen to mitigate this, which has led to the introduction of low-emission zones in many major cities. Low emission zones and truck electrification go hand in hand. Last mile vehicles travel short distances on what is known as a hub and spoke arrangement, the hub being the local warehouse, the spokes being the delivery routes. Charging infrastructure is concentrated in the hubs, so these vehicles are not limited by a requirement for on-street charging facilities. Many electrified last-mile vehicles have already reached TCO parity with diesel trucks.

The direction of travel is clear. Amazon’s 2019 order of 100,000 electric delivery vans from Rivian demonstrates the commitment of key players in e-commerce towards ‘last mile’ electrification. Note that during the Covid-19 epidemic, Amazon and other distributors have taken on thousands of new employees, for warehouse and delivery work. Another example is UPS, which has ordered 10,000 bespoke electrified last mile delivery vehicles from Arrival, with an option for a further 10,000. These are bold moves, and they give confidence to suppliers of electric and hybrid vehicle manufacturers that these emerging technologies are here to stay, and that logistics firms will be amongst the most important of early-adopter customers.

It’s time to give electric vehicles full ventilation

Research at the Martin Luther University of Halle-Wittenberg, in Germany, has concluded that high levels of air pollution may be one of the contributors to deaths from coronavirus. Analysis of data from across the EU has concluded that 78% of Covid-induced deaths occurred in the five regions registering the highest concentrations of No2 in the air. No2 is a toxic gas which can inflame the linings of the lungs and reduce immunity to lung infections. A correlation has been found; no causal link is postulated, but the implications are clear. The general public may well also have appreciated the benefit of reduced pollution due to the lockdown, with clearer skies increased birdsong and booming numbers of wildflowers and insects. The case for widespread electrification is strong.

In the UK, there are lots of innovative start-ups specialising in electric vehicles: Tevva Motors, Avid Technology, Yasa Motors, for example. A major policy shift towards electric would give these companies a big home market and they would grow fast, creating an exciting vibrant new manufacturing sector. The same would be true in many countries. There are many such start-ups around the world, and such policy direction fits with the aspirations of many governments, who, in the face of perceived shortcomings of globalisation, coupled with the threat of world shocks such as the coronavirus, want to re-shore, and reinvigorate domestic manufacturing.

Electrification of commercial vehicles, indeed of vehicles of all types, should be a major feature of our post-Covid-19 world. After all, having seen the light, do the people of Delhi really want to go back to an urban environment choked with fumes?  Do any of us?

For more information on our research in this area, please visit our Hybrid and Electric Trucks & Buses report page, or contact us on info@interactanalysis.com to speak to our analysts.

Posted by Alastair Hayfield

Alastair has over 10 years’ experience leading research activities in scaled, high-growth industrial and technology markets. At Interact Analysis he is responsible for electric trucks and buses, autonomous trucks and off-highway electrification. Read More