The Future of Commercial Vehicles
July 2022
Commercial vehicles are essentially productive assets, often part of fleets. Consequently, decision criteria to deploy new technologies are largely based on objective, operational and financial analyses rather than subjective criteria as it is mostly the case for personal vehicles. This dichotomy is an essential driver for the ramp up of electrification, autonomous driving, consumption models or vehicle connectivity.
Commercial vehicles include mainly heavy trucks, light commercial vehicles (LCV). Depending on whether they operate in urban environments or on highways, these vehicles face very different opportunities and constraints which justify the deployment of certain technologies.
For instance, many cities are progressively limiting access to urban centers to only clean vehicles as last-mile deliveries continue to grow. Conversely, long distance trucking operates on divided highways where interactions with other road users tend to be more limited than in metro areas. This, combined with a shortage of truck drivers, makes autonomous driving an appealing option.
I previously wrote on these topics in 2020 and 2017 and invite you to read The Future of Trucking (Mar 2020) and Commercial Vehicles go Electric, Autonomous, Connected and Shared (Dec 2017) for earlier perspectives. Let’s assess where we stand today.
Electrification Ramping up Across All Use Cases
Demand for urban last-mile delivery is expected to grow by 78% by 2030, leading to 36% more delivery vehicles in the world’s top 100 cities according to the World Economic Forum, should we continue to operate the way we are currently.
This would obviously lead to a significant increase in green-house gas emissions as well as in congestion. Solutions to avoid this unacceptable future include the partial replacement of delivery LCVs with electric cargo bikes – or other light cargo vehicles – and their electrification when bikes don’t make sense given the cargo to be transported.
The former option is already becoming increasingly ubiquitous in cities like Paris or London, where a series of policies are forcing this shift towards light vehicles, causing various types of form factors and business models to emerge. See also the article I wrote on this topic in Oct 2021.
The full electrification of LCVs is being progressively required for operators to access urban centers. However, operators are also making this shift as it results in lower total cost of ownership. In 2021, 47k plug-in LCVs were sold in the EU, up 63% year-on-year, still representing only 3% -- vs. 18% on the passenger vehicles market. This gap can be explained by a more limited product offering and to a lesser extent the higher upfront cost.
Given the above, new players are entering the electric delivery vehicle market, challenging the incumbents. Rivian has a deal to supply 100k e-vans to Amazon and Arrival will provide UPS with 10k e-vans. Interestingly, GM is making a comeback on the commercial vehicle market with Brightdrop, a subsidiary dedicated to EVs for this market. Deutsche Post’ former entity StreetScooter re-emerged as B-On.
If LCVs are prime targets for electrification, heavier trucks will follow a similar trend for most applications, starting with shorter distances. Incumbent players such as Mercedes Benz Trucks, Volvo Group or BYD are already offering full electric medium and heavy trucks, essentially for urban and suburban use cases. But they will not be alone. UK-based startup Volta Trucks will start delivering its first vehicle, a 16-ton e-truck in 2023 (image at the top). In the USA, Nikola Motor delivered its first heavy duty e-tractors earlier in 2022 and Tesla is now expected to introduce its Semi in 2023 or 2024.
The specific charging needs for these vehicles’ multi-hundred kWh batteries are being address in parallel. The CharIN community recently unveiled a standard for megawatt chargers allowing for up to 3.75 MW (at 1250V) vs. a maximum of 350 kW for light vehicles today. Specific truck charging stations are planned by companies like WattEV to serve the nascent market.
Battery electric solutions are ideal for shorter distances, but they are not for long distances. Battery weight (approx. 5 kg per km of range for a heavy truck) and their upfront cost (approx. $100 per km of range) are major constraints. Hydrogen fuel cells (FC) offer lower marginal cost and weight per extra kilometers of range vs. battery EVs. More details can be found in the analysis I made in May 2021.
However, the cost of FCs and that of hydrogen fuel will have to come down for this solution to become competitive. Likewise, expensive fueling stations will need to be deployed at least on high-traffic trucking corridors or at depots. Nevertheless, incumbents such as Mercedes and Volvo (jointly developing a FC) as well as Hyundai and Toyota are forging ahead.
FC-powered commercial vans also offered by both Renault (via Hyvia JV) and Stellantis (in Europe) as alternatives to battery electric solutions. They offer faster charging and potentially longer range than BEVs.
Finally, an array of options has emerged to retrofit LCVs and trucks with an electric powertrain. This makes sense for recent vehicles that have a high mileage and operate in emission-constrained zones. Renault’s in-house entity Re-Factory or companies such Phoenix Mobility provide full retrofit service.
Autonomous Driving: Preparing for Commercial Launch on Highways
Most efforts towards developing autonomous driving (AD) solutions first focused on robotaxis and shuttles. However, several startups have emerged since 2015 that focus exclusively on the trucking segment, such as TuSimple, Embark, Plus or Kodiak. In parallel, Waymo and Aurora, some of the most advanced AD players, created then accelerated their autonomous trucking activities, sometimes at this expense of their robotaxi development which started first.
Whereas AD solutions aimed at transporting people focus on urban applications, those aimed at transporting goods focus on highway driving. Reasons for the latter are multiple. Removing the driver’s cost and addressing a chronic truck driver shortage deliver economic benefits. In addition, driving autonomously on highways is to some extent easier than in an urban environment – fewer interactions – though it requires to see farther given the need to anticipate at higher speed.
Today, the most ambitious truck AD developers announce commercial launches for end 2023 or 2024 – though in reality it may not be the case. For Aurora and TuSimple, this means recurring trucking operations starting in Texas and Arizona where both the weather and the regulatory framework are favorable. But we have yet to see when safety operators will be removed.
Since the two companies focus on the software and system integration like their peers, they have partnered with Volvo Group and Navistar (VW/Triton Group) to integrate their sensors as well as redundant x-by-wire and compute hardware in the tractor. Likewise, Waymo is collaborating with Mercedes Benz Trucks.
Incumbents are not the only ones working on the vehicle itself. Sweden-based Einride has already been operating its own autonomous trucks for several years – though essentially as pilots – in Europe and is now coming to the USA. Solo AVT was founded in 2021 to develop a truck platform designed from the ground up to be electric and pre-disposed for Level 4 autonomy.
Whereas the above applications focus on highways (and possibly logistics yards), I expect urban deliveries to be eventually served by derivatives of robotaxis which will be modular enough to transport either passengers or goods – even possibly switching during the day. They too will be electric!
Marc Amblard
Managing Director, Orsay Consulting
Feel free to comment or like this article on LinkedIn. Thanks!