Economics Will Push Adoption of Self-Driving, Electric Trucks

August 08, 2016 by Jerry Hirsch, @Jerryhirsch

Look for semi-trucks to become more intelligent and electric.

That’s the assessment of Morgan Stanley Research analyst Ravi Shanker.

While there are hurdles, Shanker argues in a recent report to investors that powerful economic and regulatory forces will push the trucking industry toward electric, self-driving trucks.

Look for autonomous trucks to be introduced in 2020, “around the time we expect to see the launch of electric semis, right as the new fuel economy and emissions regulations for commercial trucks gather steam,” Shanker said.

Established truck manufacturers and start-ups are already moving in that direction.

Daimler Trucks, the Mack division of Volvo Trucks and Tesla Motors all are developing electric trucks.

Chinese vehicle maker BYD has more than $15 million in contracts from environmental and energy agencies and other organizations in California to build 64 electric trucks. Nikola Motors, a start-up in Salt Lake City, is developing an electric big rig that it plans to unveil in December.

Regulation is expected to push demand. The California Sustainable Freight Action Plan, an environmental blueprint, for example, calls for the deployment of more than 100,000 trucks and other freight transporting equipment capable of zero-emission operation by 2030.

BYD T5 electric service truck.

BYD T5 electric service truck. (Photo:BYD)

For now, battery size and cost are the biggest barriers electric trucks must overcome.

“The battery alone will cost $75,000 – or about half as much as a whole tractor today,” Shanker wrote.

That assumes a big rig will need a 500 kWh battery – five and half times the size of the biggest battery in a Tesla electric car.

Range is another issue.

Daimler’s eTruck is slated to run for 125 miles between charges. Such a range covers about one-third of heavy-duty truck routes, according to Shanker.  A big carrier such as Werner Enterprises Inc., an Omaha, Neb.-based company with 7,300 trucks in its fleet, carries a typical load 500 to 800 miles, Shanker said.

Still, an electric truck with a range of less than 500 miles would have appeal – depending on the application – but would only address a limited part of the market, he said.

Shanker expects most electric trucks will come with some form of range extender to increase the number of miles they drive. One version of BMW’s I3, for example, has a small gas engine that can generate electricity to run the passenger car when the battery runs out of charge, extending the range by another 70 miles.

Nikola Motors is trying to bypass the battery almost entirely by developing a natural gas-electric hybrid that uses a natural gas-fueled turbine to generate the electricity to run the truck.

But the dilemma also might be solved by quick battery swapping at truck stops – it could be sponsored by the truck manufacturers, Shanker said.

Tesla, and Better Place, an Israeli company, both tried battery swapping with electric passenger cars without success.

Flash-charging, which takes 15 to 20 seconds and is being tested on public buses in Geneva might be another option, he said.

Electric trucks also must surmount industry cultural barriers.

Truckers value “up time,” or the time the truck spends on the road, “probably more than anything else,” Shanker said. “Asking a carrier to completely switch powertrains and perhaps alter the line haul route itself to accommodate stops for battery charging for instance could be a tough ask.”

But none of these hurdles are deal breakers. Shanker said that once on the market, electric trucks could become an easier sale than electric passenger cars.

“Carriers are likely to see tremendous cost savings,” he said. “An electric autonomous truck could be up to 75 percent cheaper to operate than a regular semi today considering cost savings from labor, fuel, insurance and maintenance.”

While the vehicles will be more expensive – a typical diesel semi-truck costs about $150,000 –savings accruing from an electric truck create an accelerated payback, he said.

The industry’s vehicle replacement rate also favors the adoption of new technology.

Large carriers replace trucks on a three- to four-year cycle, Shanker said.  Smaller companies take six to eight years. But this is much faster than the turnover rate in the consumer automotive market. Americans scrap less than 5 percent of passenger cars and light trucks annually, according to industry research firm IHS Automotive. The average age of a light vehicle on U.S. roads is 11.5 years, according to IHS data.

There is another plus. The architecture of electric trucks makes them better suited for platooning.

Platoon technology allows tightly contained, digitally connected packs of two to five trucks to drive in formation to reduce wind resistance and increase fuel efficiency. The pack can be controlled by a “captain” in the cab of the front vehicle and the rest could follow autonomously. This could ultimately reduce labor costs by reducing the need for drivers.

One technical hurdle for platooning is how to work around the restricted airflow into the engine of the trucks following closely in the platoon. An electric truck doesn’t require an air intake — allowing trucks to travel in tighter formation, which saves energy.

The bottom line is that electric, self-driving trucks have the potential to yield substantial economic benefits for the trucking industry, Shanker said.

“The path and timing of mass commercialization of autonomous electric trucks is by no means certain,” he said. “What is clear is that there is a renewed sense of urgency among (manufacturers) – both traditional and new – toward speeding up the path to intelligent trucks.”

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