2018 Is the Tipping Point for Commercial Vehicle Electrification

July 02, 2018 by John O'Dell

Motor carriers and shippers have placed 15,325 confirmed orders for electrified commercial trucks and buses worldwide for delivery between now and 2021.

The tally by Interact Analysis is an early attempt to quantify the steady stream of orders that has many in the trucking industry speculating that the tipping point for truck electrification has arrived.

Alastair Hayfield,

Alastair Hayfield

Most of the volume is accounted for in non-binding orders reported by hydrogen fuel cell electric truck maker Nikola Motor Co. and by customers of battery-electric vehicle builder Tesla. Interact believes they are a valid indicator of market direction, said Alastair Hayfield, the company’s research director.

“There are multiple billions of dollars being invested in battery development and production, and there are heavy electric truck and bus subsidy programs in China, Europe and parts of the U.S.,” Hayfield told Trucks.com.

“Costs are coming down and emissions standards around the world are getting harder to meet with diesel engines,” and it all adds up to “significant growth in hybrid and fully electric commercial vehicles for the next five years,” he said.

China grabs much attention for its aggressive vehicle electrification drive, but almost 60 percent of the commercial vehicle orders tracked by Interact are in the U.S.  China is the second-largest market, with 23.7 percent of the confirmed orders.

A large portion of the Chinese orders was for domestically produced hydrogen fuel cell trucks and buses, according to the Interact report on commercial vehicle electrification.

The large number of orders for fuel cell vehicles is “surprising,” Hayfield said. It is based primarily on startup Nikola Motor’s apparent success in whipping up interest in its long-distance fuel cell truck.

But there also is new interest in China and Europe with several big fuel cell projects coming in the next few years, he said.

Additionally, South Korea has announced plans to replace all 26,000 of its natural gas-powered buses with fuel cell buses by 2030, Hayfield said. Those buses aren’t included in the 2018-2021 commercial electric vehicle tally.

The investment in fuel cell systems for large buses can translate quickly and easily into fuel cell systems for large trucks, he said.

The truck and bus orders tallied by Interact include nearly 10,000 reservations for Class 8 trucks reported by Nikola and Tesla — most of them Nikola fuel cell models.

That lopsidedness is an anomaly, though, Hayfield said.

“The overall trend will be dominated by battery-electric technology. The numbers are skewed toward hydrogen now just because of the initial burst of Nikola orders,” he said.

“There is a fairly good future for hydrogen after 2024, because it is a good solution for long-range needs. But battery technology is relatively mature now and costs are coming down, so it makes a lot of sense for many truck and bus uses to favor battery electric over fuel cells,” he said.

Hydrogen truck orders in the U.S. are the principal reason commercial vehicle electrification is taking off this year, according to Interact Analysis.

Hydrogen truck orders in the U.S. are the principal reason commercial vehicle electrification is taking off this year, according to Interact Analysis. (Graph: Interact Analysis)

Nikola is testing its fuel cell electric truck and has reported several significant investments. The Utah-based company also has logged large orders from major shippers, including U.S. Xpress and brewery giant Anheuser-Busch.  Nikola has said it will begin production next year.

Tesla has displayed prototypes of its electric Tesla Semi and has advance orders from UPS, PepsiCo., Anheuser-Busch and Sysco, a major food services company. Tesla has not announced any orders, but multiple motor carriers and shippers have disclosed their plans to purchase its electric trucks.

Tesla Chief Executive Elon Musk has said production of the futuristic Class 8 truck will begin sometime next year. But Musk is notorious for missing announced production timing on Tesla’s passenger vehicles, and most analysts have taken his truck production guidance as a hope rather than a promise.

“We are pretty confident Nikola can execute on their plan” but “there should be a question mark on Tesla’s deadlines,” Hayfield said.

Major truck makers, including Volvo, Daimler, Navistar and Paccar, also have announced plans for future electric trucks, Hayfield said. The big established companies need to start ‘talking up their products to gain visibility” or risk being overshadowed by Tesla and Nikola, he said.

Heavy-duty trucks account for the bulk of the orders Interact has counted. But the regional and local delivery truck and work truck segments are active as well. Many analysts have said they believe that commercial truck electrification will blossom first in the medium-duty segments.

Numerous players, including startups such as Workhorse, Motiv, Chanje and Lightning Systems, and established vehicle makers such as Ford and  Mercedes-Benz, are offering or preparing electric medium-duty vehicles.

The bulk of new electric truck deliveries through 2021 will be in the heavy-duty models, according to Interact’s report. Hayfield said he agrees, though, that it will be in the much larger medium-duty arena that zero-emission trucks and vans will come to the forefront over the long term.

The rise in online commerce is spurring demand for growth of delivery fleets in all class sizes to handle the flow of goods from manufacturers to retail customers. Adding needed trucks to the world’s fleets affects air quality, Hayfield said.

“There is a strong societal push for low- and zero-emission vehicles in the delivery fleets. Diesel is far from dead, but there will be more and more electrification” as new commercial vehicles are launched, he said.

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One Response

  1. lisa zhaohj

    Diesel is far from dead, which impressed me. I am working in China and shall investigate this market further.

    Reply

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