DUBLIN--(BUSINESS WIRE)--The "Commercial Vehicle Electrification: To Charge or Not to Charge" report has been added to ResearchAndMarkets.com's offering.
After a six-month research effort into the intermediate-term prospects and long-term potential of commercial vehicle electrification, the research team reports these key findings:
Base Case Commercial Electric Vehicle (CEV) market volumes - We estimate that in the base case/most likely scenario, CEV unit volumes in the U.S. and Canada for GVW Classes 4 to 8:
- Start below 2,000 units in 2018
- Reach over 22,000 in 2020 (about 4% of the total market)
- Exceed 40,000 in 2025 (about 7% of total)
- Should roughly double to 80,000 in 2030, achieving a 13% share of the market by the end of the next decade
- While growth will then slow in both rates and per annum unit incremental gains, we see over 100,000 CEV unit sales and production by 2035, reaching about 16% market share.
Battery technology has and will continue to progress - We are presently at a stage where -- for a limited array of CEV applications primarily oriented to short-haul, highly uniform operations -- a favorable business case can be made relative to the incumbent internal combustion engine (ICE). This is true even without governmental assistance.
Battery cost path - One of the most important factors driving the relative costs of CEVs versus ICE-powered CVs is the cost of batteries and particularly battery pack cost. While there is sufficient data in the public arena to form fairly reliable estimates for PV's, the earlier stage of development for CEVs, and small production of packs now and in the near term make estimation speculative. Even more, so is the uncertainty in plotting a future trajectory. Our best estimate for current pack costs is $225 per kWh, steadily declining to $188/kWh in 2020 as some scale benefits take hold. We see further reductions to $120/kWh by 2025 as production volumes rise, battery chemistry (solid state) advances to commercialization, and packing improves. By 2030 we project $100/kWh, and then $80/kWh in 2035. This cost trajectory is a fundamental basis for the market projections of the study; the rationale is reviewed in depth in the Battery section of the report. Also, the base case projection is bracketed high side and low side in our alternative scenarios.
Battery storage density will improve, enabling market share gains - Costs will decline and capabilities increase as advances in battery chemistry boosts density. This will broaden the scope of applications CEVs can handle. The first markets to benefit will be bus and medium duty trucks, and later improvements will narrow the competitiveness gap of CEVs in traditional heavy-duty Class 8 markets.
Governmental assistance will have an important influence on CEV share and sales outcomes - In the form, either of subsidies directed to CEV or as restrictions placed on ICE power, federal, state and provincial, and local governments are likely to tilt the playing field in favor of more rapid CEV adoption. This is especially critical in the early takeoff stages of electrification technology (the next five to seven years). California is an example of a state with a sizable CV population and ambitious environmental goals. It is offering aggressive subsidies. California vouchers reach into the high 5-figure and 6- figure range per vehicle as part of a $200 million program directed at CEVs (including transit buses). These will impact fleet decisions for as long as the program is funded.
ICE, notably diesel, has powerful incumbent advantages - From dominant market share to extensive supporting infrastructure, to its long-standing network of truck operators, dealers, OEMs, and component manufacturers, ICE has advantages that will make them difficult to displace. Even at the far reach of our forecast horizon in 2035, diesel is likely to maintain a dominant market share in most segments in our base case scenario. Diesel engines are also a moving target that will have improved fuel efficiency and emission performance over time.
Infrastructure issues will be key - ICE has had decades to build out supporting fueling and service infrastructure. While we believe utilities have power generation capacity to support greater take-rates for electric vehicles (both personal and commercial), addressing the last mile problem for electricity distribution and recharge facilitation could be vexing and costly. The extended time it takes for battery recharge compared to the relatively quick hydrocarbon refill is a contributor, and the current low volume (= high costs) for commercial recharging facilities is another. Which agent (Utility? Fleet operator? Commercial/public recharge station?) ends up taking on which role, and how much it will cost, will be an evolving story. Solar or wind power, supplementing or bypassing a utility entirely, may also come into play for some CEV operators.
Scale associated with personal vehicle electrification is important to CV - The volumes of PEV (personal electric vehicles) production backed by their battery R&D is an important contributor to CEV progress. Elevated volumes and share of electric light vehicles can push the performance and production curve for batteries to higher levels while lowering battery costs. We note one potential new CEV OEM and many traditional CV OEMs have a direct link, or a strong strategic tie, or a legacy connection to a light vehicle PEV manufacturer. Additionally, we note the synergies between CEV and PEV were (are) absent in boosting alternative CV clean fuels like CNG, LNG, or propane.
The CEV buy decision is different from the PEV buy decision - To state the obvious, in almost all circumstances the CEV purchase is a business decision, based on dollars-and-sense profit implications, measuring payback and ROI. In contrast, many PEVs purchases are household decisions based on consumer preferences. In these cases, individual taste, green criteria, peer status and pressures, plus image considerations can take a prominent role over economics as influences on the decision to buy.
Target markets for fastest adoption - Fastest adoption will be in segments such as Class 4-5 Step Van, Class 6-7 Low Cab Forward, Class 8 Transit Bus and Class 8 Yard spotters. All these are highly conducive to electrification: they are characterized by short-range operation, often highly regular routes, and return-to-base for overnight charging. These play to the cost-benefit strengths of battery vehicles - fuel cost and repair advantages - and minimize range, weight, and density shortcomings, especially important in the near-horizon.
Lagging markets, slow to leave incumbent power sources - Slowest adoption will be in segments such as Class 8 sleepers, Class 8 straight trucks, and specialty medium and heavy segments such as RVs. In these segments, the high cost of batteries contributes to a higher-than-diesel upfront purchase price. Unlike the prime target markets cited just above, range limits, weight penalties on payloads, and extended time to recharge come into play in these segments. They contribute to high operational costs that make payback prohibitively long, so the upfront purchase price barrier does not get an adequate operational cost offset. Even with reductions in battery cost and weight, and performance gains over the next 15-20 years, we don't anticipate market shares very much in excess of 10% in any of these segments by 2035 in our base case.
Alternative scenario/Rapid Adoption - We bracketed our most likely base case with two alternatives. Our rapid adoption alternative is based on total battery pack costs moving from $200/kWh this year down steadily to $100/kWh in 2025, $90 in 2030 and $80 in 2035; diesel costs rising to about $5/gallon by 2025, then $6 in 2030 and $7 in 2035; and electricity costs falling from $0.10/kWh to $0.09 (2025) and then $0.08 (2030 and 2035). This scenario, clearly breaking favorably to a more rapid take rate for CEV, has a roughly a 20-25% probability of occurrence, in our judgment. Under it, the total Class 4-8 share would reach 27% in 2025, 39% in 2030 and 44% in 2035. Gains across segments would generally be strong; for the most favorable segments, shares would reach 40% or above in 2025 and over 50% in the 2030-2035 time frame.
Alternative scenario/Slow Adoption - We also bracketed our most likely base case with a slow CEV adoption alternative. The slow evolution alternative is based on total battery pack costs limited to much smaller cost improvements than base case, moving from $300/kWh this year to $150/kWh in 2025, $125 in 2030 and $100 in 2035; diesel costs declining to about $2/gallon by 2025 and sticking at that level to 2035; and electricity costs rising from $0.10/kWh to $0.18 (2025) and then $0.22 (2030) and $0.26 (2035). This scenario leads to CEVs making glacier-like gains, with market shares stuck in a low single-digit territory other than for those segments (Class 4-5 low cab forward trucks and Class 8 yard spotters and transit buses) most favorably inclined to electrification.
Key Topics Covered
BATTERIES FOR COMMERCIAL ELECTRIC VEHICLES
- Current Battery Technology for Electrification
- Battery Overview
- Range and Weight
- Charging, Longevity, and Replacement
- Cost and Materials Viability Issues
- Recycling and Repurposing Batteries
- Future Electrification Technology
UTILITIES AND COMMERCIAL ELECTRIC VEHICLES
- The Challenge for Utilities
- Clustering and Infrastructure Readiness
- What about CEVs?
- How can Utilities Benefit from EV adoption?
- Offsetting Falling Demand
- Grid Reliability
- Looking to the Future
- Utilities Take Action
- Electricity Costs
- Fleet Installations Costs
GOVERNMENT, REGULATIONS, SUBSIDIES AND COMMERCIAL ELECTRIC VEHICLES
- U.S. Federal
- State of California
- Southern California Edison
- Examples of Other State & Metro Areas
- New York
- British Columbia
- Specific Market Sectors
- Regulatory Impact on Market Development
- Product Development
- Product Acquisition Economics
- Scenario Assumptions
- Baseline/Most Likely
- Rapid Adoption
- Slow Evolution
TOTAL COST OF OWNERSHIP (TCO), SEGMENT SHARE AND UNIT VOLUMES
- Executive Summary
- Class 4-8 CEV Forecasts - Base Case
- Scenario Analysis
- Total Cost of Ownership by Application
- Class 6-7 Local/Urban Delivery Box Truck
- Class 8 Regional & Private Truckload
- Class 8 Long-Haul Truckload
- Class 8 Transit Bus
- Class 8 Less Than Truckload, Pickup & Delivery (P&D)
- Class 8 Less Than Truckload, Linehaul
- Class 8 Straight Truck, Construction
- Class 8 Yard Spotter
- Class 6-7 School Bus
- Class 6-7 Beverage Truck
- Class 4-5 Parcel Delivery Truck, Short-Range
- Class 4-5 Parcel Delivery Truck, Long-Range
- Class 4-5 Utility Trucks
- Hydrogen Fuel Cell Powered Vehicles - Always part of the future, always 10 years away
- Range Extenders - Training wheels for electric vehicles
- Diesel Engines - The King is dead. Long live the King
- Used vehicle markets and residual values - Unknown territory
- The Voice of the Customer - Healthy interest, prudent caution
- Appendix 1 - Glossary, Abbreviations, and References
- Appendix 2 - NACFE CEV Survey Summary
- Appendix 3 - Lithium Ion Battery Trade-Offs
- Bharat Forge
- Cummins Inc.
- Curtiss-Wright Corporation
- Daimler AG
- Meritor Inc.
For more information about this report visit https://www.researchandmarkets.com/r/63h52w