It is no secret that trucking, and the transportation sector, have been moving in a sustainable direction. Nearly every industry is trying to crack the nut on how they can go green without hurting businesses. Large fleets especially are on the leading edge of this change. One of the ways that fleets have been reducing their carbon footprint is through electrification.
Although the current political environment does not favor environmental regulations, the world is changing. Many fleets now understand that the root of complying with this change will lie in adjusting their procurement strategy. In order to future-proof their organizations, companies need to innovate and stay ahead of trends and regulations. Electrification is a step in that direction.
Whether it be all-electric or hybrid models, trucking companies are increasingly turning to battery-powered options. And with companies like Nikola and Tesla hard at work making commercially viable electric big rigs, a full move away from internal combustion is only a matter of time.
In fact, finance and accounting firm Deloitte estimates that electric vehicles will represent 10% of the total global market share by 2024. By 2030, we could see that number up to 25% or more. That would represent a reduction in overall oil demand by more than 4 million barrels per day. This alone would make a huge impact in carbon reductions. But is this about more than electric? Let’s take a closer look at the trends.
Wind in Electrification Sails
EV battery technology costs have been dropping year-over-year. Since 2010, the average cost for a lithium-ion battery has fallen by more than 80%! The 2018 average price per kilowatt-hour for a lithium-ion battery was $176. Compare that to 2010 when it was $1,160. It is estimated that by 2024 we could see that price drop to $62. That would put it well below the cost of oil. As of right now, it is expected electric will reach parity with oil by 2022.
But what has precipitated this cost reduction? There are several reasons. First, battery manufacturers have made big strides in battery research and design. One such example is the move away from cobalt-dependent systems. The new element pushing innovation in battery power is now nickel. Why is cobalt such a problem? In short, it’s really expensive.
There is more to it than cost, however. Nickel is simply a superior substrate for use in battery electrification applications. Nickel benefits from a higher energy density and longer life cycle. When you can find something for cheaper that lasts longer and performs better, making the switch is a no-brainer. Companies are just now starting to make these investments.
Another factor contributing to more widespread adoption is shifting industrial policies. Many governments now understand that battery development and electrification technology is strategic in nature. Not only is battery technology appropriate for EV use, but as we have seen in Australia, it can serve many purposes in power generation and storage.
With corporations and governments supporting EV policy, there has been an increase in support from the broader manufacturing and consumer bases. This has, in turn, furthered the reduction in costs we have seen over the past few years. Take the Department of Energy as one example. They have actively worked with national laboratories and universities to increase innovation and battery production.
Want to learn more? Check out their Batteries, Charging and Electric Vehicles Program. But it isn’t just the United States in on the game. Europe has also made big strides in adopting and pushing EV development. The European Commission has even created a Strategic Action Plan for Batteries. This plan aims to attract more investment and further innovation in the European battery sector. Mainly, they want to act as a counterbalance to U.S. and Chinese dominance in the battery space.
The final burst of wind in the sails for fleet electrification is the scale of battery production. There is some speculation that by 2028, there will be enough production output to create 35 to 37 electric vehicles. This would be an amazing feat if it proves to be true.
Electrification in New Applications
The majority of EVs out on the nation’s roads right now are light-duty cars and two-wheelers. Still, that does not mean there are not heavier EV variants on the roads. In fact, in 2018, there were half-a-million electric buses and a quarter-million light-commercial vehicles in operation. And as battery chemistry and emissions regulations change, these numbers will only grow.
Spearheading commercial EV adoption has been the van segment. For companies operating vans in congested city centers, electrification offers a lot of appeal. Many states, cities and municipalities have enacted strict emissions standards in city centers. With upfront costs for electric vans on the decline, motor carriers are incorporating them into city fleets.
Who is the biggest user of electric vehicles? Well, Amazon, of course. They placed a very well-publicized order for 100,000 vehicles from EV truck startup Rivian. But more than that, they have been incorporating electric and robotics-driven solutions into their shipping and logistics operations.
Traditional van OEMs have seen the writing on the wall, with many launching hybrid or all-electric EV models. By some predictions, by 2040, more than half of all light commercial vehicle sales will be electric in nature.
Electric buses have also become more prevalent in the past years. Whether it be for schools or urban transit, bus electrification is proceeding apace. In fact, the global market for electric buses is expected to grow by 28% per year until. It is estimated that 34,000 electric buses will hit the market in 2020. States like New York and California are leading the way in transitioning to electric bus public transportation.
While the market for light-duty commercial EVs has grown at a steady clip, the market for medium and heavy-duty electric commercial vehicles is still relatively nascent. The market that has been hardest to implement electric in has been the long-haul segment. The lower energy density of batteries is considered a restrictive feature, but that is changing.
Take Nikola, Tesla, and Thor as examples. These companies are pushing ahead with electric semis no matter the cost. Big truck OEMs like MAC and Daimler, however, are also jumping on the bandwagon, though many are pushing hybrid variants rather than all-electric models.
How the Market Changes
Early adopters of electric trucks have been mostly city center and urban companies, as well as those working in port operations. Charging is one factor that has pushed these segments to increase their electric exposure. Predetermined routes can be set up with charging schedules, which puts less of a requirement on battery capacity specifically. And with many countries leading the transition to electric, transportation sector operators need to step in and check out the new models.
But what are markets and governments doing? California has adopted a goal of 5 million EVs on the road by 2030. Colorado also announced plans to jump on that bandwagon. Many states are choosing to adopt California’s standards rather than adopt their own.
Even our neighbor to the north is getting in on the action. Two Canadian provinces have set very aggressive targets to reach full EV adoption. British Columbia took a huge step by mandating that 100% of all cars sold in the province be electric by 2040. Quebec has adopted provisions very similar to California’s. When big markets like these make moves, others follow. Even more, industry is forced to react.
Have you heard? Many cities around the world have announced plans to completely ban diesel and gasoline cars by 2030 or sooner. Paris wants all diesel and gas cars banned from the city center by 2030. London and Copenhagen are implementing similar measures. Even Beijing has put its finger on the scales, with over 60% of new plates allocated in 2019 going to EV variants.
With an increase in public charger availability and capacity, there are fewer constraints when it comes to battery capacity. Whether it be an increased network availability or ultra-fast charging stations, trucks have more places than ever before to top up their charge.
The fact is, the future is electric, and with so many OEMs and governments pushing these changes, trucking companies will be forced to follow suit sooner than later. As costs drop, technologies improve, and charging stations proliferate, it will simply make “business sense” to ditch the internal combustion engine and embrace an electrified future.
from Quick Transport Solutions Trucking Blog https://ift.tt/2BWFn4l
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