One of the most recent warnings came from above!
“China’s policies could simply flood our market with their vehicles, posing dangers to our national security,” President Biden said in a statement, adding that this would not happen under his leadership.
Western fears of a wave of highly subsidized Chinese battery electric cars (BEVs) have been brewing for some time. It is estimated that one in four electric cars sold in the European Union (EU) this year will be made in China. Large subsidies from the Chinese state have led to price distortions, giving Chinese brands like BYD unfair merit over their Western competitors. But that’s only part of the truth. By developing corporate control over the entire electric power price chain, especially batteries, China and its automakers have kept up with (and in many tactics have surpassed) Western traditionalists in terms of car functionality and quality. And the import value lists of 27. 5% of Chinese cars entering the U. S. The U. S. nuclear power supply may not be high enough, posing a real and imminent threat. wasted floor in an industry that accounts for some 9. 7 million jobs, or 5% of U. S. personal sector employment. In Europe, there are thirteen million jobs, or a percentage of 7%.
However, in the wake of the race for geopolitically charged leadership in the passenger car industry, transformation is quietly advancing: the electrification of medium and heavy-duty trucks (MHDs) and the status quo of the underlying charging infrastructure.
The implications will be enormous!
The trucking industry is shaping global chains and driving decarbonization
On the one hand, road freight transport is the backbone of global trade. Trucks are guilty of hauling the most of our daily necessities, from food and electronics to appliances and clothing. In 2023, approximately 12. 1 billion tons of U. S. domestic shipments will be shipped to the U. S. Shipments in the U. S. (total ≈17. 8 billion tons total) shipped via truck. That’s a maximum of 80%. This translates to prices of nearly $12. 2 trillion out of a total of approximately $16. 3 trillion, or 75%. And according to forecasts from the U. S. Department of Transportation, the tonnage and price of truckload shipments will increase by approximately 70% and 60%, respectively. The scenario is similar in Europe, where trucks have recently transported a maximum of 80% of all cargo shipped in the country.
Next, let’s take a look at emissions. Despite accounting for only about 4% of cars on the road, cargo trucks and buses are to blame for around 36% of on-road greenhouse fuel emissions, or around 5% of global CO2 emissions (2019). The decarbonisation of transport, which (with emissions falling by around 2% per year) is not progressing as fast as desired. Staying on track to achieve the net-zero emissions situation of the Paris Agreement by 2050 will require reducing emissions by 15% over the course of the year. 2030.
“Zero emissions” displayed on a second-generation BYD 8TT electric semi-trailer at Hight Logistics inArray. Long Beach, Calif. , Monday, Dec. 5, 2022. Forum Mobility is replacing diesel trucks, a major source of toxic emissions, with electric models for a monthly fee. Photographer: Bing Guan/Bloomberg
Therefore, in 2021, at COP26, a global Memorandum of Understanding (MOU) was signed setting the target of 30% zero-emission truck (ZE) sales by 2030 and one hundred percent by 2040. It has been signed in 26 countries, with the addition of the United States.
With this in mind, at the end of March 2024, the U. S. Environmental Protection Agency (EPA) will announce that it will be able to implement the issue of the U. S. Environmental Protection Agency (EPA). The U. S. Environmental Protection Agency (EPA) followed a general rule for exhaust emissions from trucks, buses, and other heavy-duty vehicles. While it does not include a mandate for an express ZE technology, the rule sets strict emission reduction targets through 2032 across a subcategory, ranging from 30% for “heavy-heavy-professional” trucks to 60% for “light-heavy-professional” trucks.
In Europe, the European Commission has already proposed a revision of the CO2 emission criteria for heavy-duty cars in 2023. In early April, this law was passed, requiring truck brands to reduce average emissions from new cars by 45% by 2030, and by 65% by 2035. and 90% by 2040.
European Commission President Ursula von der Leyen speaks to the media in Berlaymont, the headquarters of the European Commission. [ ] on 1 February 2023 in Brussels, Belgium. Today, the Commission presents an industrial Green Deal plan to boost the competitiveness of European net-zero industry and help the immediate transition to climate neutrality. The plan aims to provide a more conducive environment for the progress of EU production capacity for net-zero technologies and products needed to meet Europe’s ambitious climate targets. (Photo via Thierry Monasse/Getty Images)
In addition to these recent policies to reduce CO2 emissions, administrations on both sides of the Atlantic have taken decisive steps to stimulate domestic production. While the U. S. Inflation Reduction Act. In an attempt to attract brands with generous tax credits to production, the EU has enacted its Net Law. -Zero Industry Law, which sets the goal of gathering 40% of the European demand for so-called net-zero technologies from national production. Electric vehicle batteries included.
The bottom line is that zero-emission trucks will arrive by the end of this decade.
As the truck market continues to grow, Chinese and European OEMs are betting on electric batteries.
In 2023, around 2. 3 million and 1. 4 million medium and heavy-duty trucks were sold in the EU and the US. U. S. Centers for Disease Control and Prevention, respectively. The U. S. market for this segment is valued at $300 billion (2021) and is expected to reach $480 billion (2027) at a CAGR of 8%.
Against this backdrop, sales of zero-emission vehicles continue to rise.
In the heavy-duty vehicle segment, China has been the dominant market for years, both in terms of production and adoption. In 2022, around 110,000 ZE HD trucks were sold in China, accounting for 81% of the market. In the EU, the number of light and heavy-duty electric trucks will increase by up to 50% and 150% respectively between 2022 and 2023. The U. S. is still lagging behind, but California’s sales and procurement quotas of 5 to 9% will soon take over.
OAKLAND, CALIFORNIA – MARCH 31: Trucks pass through the Port of Oakland on March 31, 2023 in Array. trucks in the state and that it will require truck brands to sell more zero-emission electric trucks. Half of all heavy-duty truck sales in California will have to go electric by 2035. (Photo via Justin Sullivan/Getty Images)
For the U. S. market, there may only be a combination of battery power and mobile fuel power, with the fuel mobile being more applicable on long hauls. However, in China and the EU, the roadmaps are transparent and are battery electric. In China, for example, 96% of ZE heavy-duty truck sales in 2022 were battery electric.
As global sales of ZE MHD trucks accelerate, the generation has become dramatically complex. Volvo Trucks, for example, recently announced a range of 280 miles (450 km) for its 17-ton truck and a range of 190 miles (300 km) for a 44-ton truck. This is all the more true given that 45% of goods transported in the EU are transported less than three hundred kilometres. Scania aims to sell 50% electric trucks by 2030 with a battery life of 100,000 miles (160,000 km). In the United States, the largest OEM truck manufacturer, Freightliner, has announced its new 18-wheeler eCascadia truck with a range of 230 miles (370 km).
A motive power drives an all-electric Daimler Freightliner eCascadia semi-trailer, a MeijerArray. [ ] in Bath, Michigan, USAThe U. S. Department of Transportation, Tuesday, Feb. 14, 2023. La Grand Rapids, Michigan-based store is the first nationwide to track the functionality of Freightliner eCascadia semi-trucks in a cold-weather environment as part of a grant from the U. S. Energy Breakdown. U. S. Photographer: Emily Elconin/Bloomberg
Obviously, this market expansion will continue, as the demand for road freight is expected to increase globally – by 46% between 2022 and 2040. And with that will come a major overhaul of the underlying infrastructure!
Infrastructure investments of up to $450 billion needed
According to McKinsey, construction (re)construction infrastructure for zero-emission trucks will require combined investments of up to $450 billion through 2040. Much of this will likely be concentrated in China, with its huge fleet of trucks. But it will also reach the United States, where investment in infrastructure to achieve a 100% battery-electric truck is expected to reach just about $100 billion. As a result, the Biden administration recently developed a new four-step strategy, the “National Zero-Emission Freight Corridor Strategy,” to scale truckload infrastructure through 2040.
Long Beach, California – July 24: A semi-truck and charging station at the Port of Long Beach where WattEVArray. . . [ ] opened the nation’s largest charging station of its kind for heavy-duty electric trucks on Monday, July 24, 2023. (Photo via Mindy Schauer/MediaNewsGroup/Orange County Register Getty Images)
With such gigantic sums needed, the question arises: can it be cheapened?For battery-electric trucks, the Western world is currently focusing on wire charging. And the most recent innovation is called the “Megawatt Charging System” (MCS), which pushes the limits of existing charging capacities to charging time from > 8 hours to < 1 hour. Daimler Truck, the TRATON Group and the Volvo Group have formed a joint venture called Milence to work on commercialising this technology.
China, however, has answered this question in very different ways. In addition to wired charging, the country is rolling out battery swapping for advertising trucks, a generation that can charge times as little as five to ten minutes.
China’s CATL Redefines Battery Swapping Standard for Trucks
Changing the battery soon sounds familiar. In the U. S. , Ample operates 12 battery swapping stations in San Francisco and recently secured a $15 million grant from the California Energy Commission. And in Europe, Nio opened its 30th European battery swapping station expired last year. But those are passenger cars.
When it comes to MHD vehicles, the Western world is quiet. This is in stark contrast to advances in China. In 2023, almost a portion of the country’s heavy-duty trucks were “marketable,” up from 34% in 2022. CATL dominates the source of swappable truck batteries in China and has an 85% market share of heavy-duty truck batteries, sourcing from XCMG, SANY, FAW Jiefang and others. Thanks to this pole position, it is less difficult to establish the battery criteria (282 and 350 kWh), which allows a universal and express infrastructure for manufacturers.
A production facility of Contemporary Amperex Technology Co. (CATL) in Shanghai, China, on Sunday, April 16, 2023. CATL is scheduled to report earnings on April 20. Photographer: Qilai Shen/Bloomberg
The truck battery replacement procedure is done from “bottom/side” or “back”. In China, the “rear” semi-automatic battery change procedure has been implemented through SANY, the country’s largest heavy-duty truck OEM. China and the largest in the world. However, in June 2023, CATL introduced Qiji Energy, a battery switch solution for bottom/side heavy truck chassis.
Bottom/Side Battery Replacement: Significant Benefits Across the Entire Value Chain
This is a first step forward for two reasons. For one, it does not charge the duration of the truck, which is in regions like the EU where there is a duration limit. And secondly, the battery switch from the bottom/side makes the Truck Chassis compatible with literally all Western cab truck platforms.
Beyond the technological dimension, it is even more vital to perceive “who will win” from these advances. Bottom line: all of them!
For fleet managers, some of the benefits include longer daily run times for vehicles, fewer restrictions to match driver breaks with constant charging issues (i. e. , steering flexibility), a smaller fleet due to higher utilization, and lower upfront investment costs. Battery-powered. It is rented. For the driving forces, some of the above benefits are passed on, but the (battery) protection will also be reduced. Faulty batteries can be replaced smoothly and quickly, which will correlate with superior battery management criteria. Lower charging speeds than wired charging can also be used. Battery life.
Utilities or battery switch manufacturers can charge more for this convenience and secure more profit streams, e. g. around energy arbitrage, reduction of peak-hour network calls, capacity bills, and ancillary vehicle-to-grid services. Battery suppliers, such as CATL, will also gain advantages by selling more batteries, as battery swap stations will require approximately 45% additional or spare batteries per station. OEMs will win by improving the constant attention of visitors, securing a premium logo position, and ultimately promoting more products.
Given such broad benefits, it’s no surprise that in China, the number of battery swapping stations has fallen from 555 in 2020 to 3,567 by the end of 2023. And projections in press releases recommend finishing a building of up to 37,000 by 2025. That’s a 10-double accumulation in less than two years!
A battery swapping facility in China.
Study Shows: 2. 5% to 10% Reduction in Total Cost of Ownership with Battery Replacement with MCS Cable Charging
To further explore the economic benefits, EIT InnoEnergy and a global strategy and control consulting firm tested the overall cost of ownership (TCO) of battery swapping compared to MCS for MHD trucks. The initial results of their study (soon to be published) are revealing. It was assumed that 45% of collection calls occur in a two-hour peak. Therefore, the study design was to service nine vehicles per hour for two consecutive hours at a single charging point, or 40 trucks per day total. The truck driver could simply use the MCS, which would need to be aligned with a one-hour break and would take 40 minutes to reach an 80% rate. Or, they can simply choose to change the battery and reach a constant hundred percent in five minutes. The tester’s actual (nominal) capacity (kW) for both opportunities was the same, as was the electrical power supplied. Although this resulted in an approximately 30% increase in CAPEX for the switching station, adding additional prices for additional/spare batteries, network demand decreased by almost 60%. More importantly, once this cycle continues for 24 hours, replacing the battery would only require two stops of five minutes each, compared to an MCS tariff with 3 stops of one hour each, resulting in less overtime. of use of almost 3 hours. , or an approximately 10% lower overall property charge. For the lowest use cases (e. g. , 10 hours a day), the total cost of ownership was still about 2. 5% higher than battery replacement.
The bottom line is this: battery swapping has clear economic benefits and roadmaps to commercial scale in China. And given the length of its market and its dominance in the battery and HD truck sectors, what China does will have a profound impact on the entire trade price chain globally.
Brief window of opportunity for U. S. and European trucks to adapt their roadmaps
The Biden administration and the European Commission have taken significant steps to provide regulatory certainty and create strong incentives for brands to decarbonize and increase their domestic production of blank technologies.
However, it is up to Western truck brands to bet on the right technological horse. NOW there is a window of opportunity to adapt roadmaps and integrate this new generation. And, in fact, be part of the expansion and have a voice as the generation evolves.
The choice is very clear. Chinese OEMs will be happy to package their eTruck fleets with the interchange solutions, gain market share, and implement charging infrastructure.
Given Western considerations about China’s waves of imports of battery-electric passenger cars, the question will have to be asked: what do we make of the prospect of overwhelming Chinese dominance in a sector that transports 80% of our daily goods?