The Future of Trucking
March 2020
Back in December 2017, I published an article entitled “Commercial Vehicles go Electric, Autonomous, Connected and Shared.” Things have progressed over the last 2+ years, which justifies a new article on this topic. What is the current state of play?
Electrification
The pace of electric vehicle deployment has picked up since Dec 2017. At the same time, the Total Cost of Ownership breakeven points have been brought forward thanks to a faster than anticipated drop in the cost of batteries. This is essential to drive fleet buy-in.
At the pack level, battery cost has dropped from about $1000 / kWh in 2010 to $156 according to Bloomberg New Energy Finance, which sees a promising path to $100 by 2023-2024 vs. $120 by 2030 anticipated just three years ago. Although this has helped grow the sales of passenger EV to reach about 2.2M units in 2019, electric trucks are still by and large just emerging.
Access to urban centers around the world will become increasingly closed off to vehicles with internal combustion engines (ICE) as multiple cities are passing strict regulations, mainly in Europe and Asia. This forces private and public fleets to go electric for urban and regional delivery, as well as garbage trucks (pix below) and buses. Likewise, the European Union has imposed a reduction in the CO2 emissions of heavy duty trucks of 15% by 2025 and 30% by 2030 vs. the reference period of Jul 2019-Jun 2020.
The drop in battery cost, combined with the growing charging infrastructure and the inherent lower maintenance and energy costs, has already brought Total Cost of Ownership (TCO) parity between e-trucks and their ICE counterparts in some urban and regional use cases. TCO parity is even closer than had been anticipated in a report by McKinsey (Sept 2017) because battery cost has dropped faster than was projected.
Long distance trucking is another matter. Long range requires extensive battery capacity, i.e. about 1.3 kWh per km of range for a 40t truck, aka heavy duty trucks (HDT) or Class 8 in the USA. This results in high upfront costs — about $160k worth of battery for 800 km of range at current rate — and extra weight, which leads to a reduction in maximum payload. Consequently, it will take longer to reach TCO-parity for HDTs. For these applications, on-board electricity generation with fuel cells seems like a better option as hydrogen provides higher energy density.
Electric trucks have started to arrive. Volvo began distributing its battery electric FE and FL HDTs in 2019. Likewise, China-based BYD offers several products ranging from 12t to 40t GVWR. Daimler is currently deploying its eActros, eCascada HDTs and eM2 Medium duty truck (pix above). Similarly, MAN or Paccar DAF are testing their own versions. First presented in Nov 2017, Semi, Tesla’s electric HDT, is expected to go into production before end 2020, with up to 800 km of range.
On the fuel cell front, there is one HDT player: Nikola. Back in 2017, the Texas-based startup was planning fuel cell-only solutions with range up to 1200 km for a 40t truck (pix below). The company has since added lower range, battery electric versions for regional use cases. In addition, Toyota just announced the joint development with Hino of a 600 km fuel cell HDT, combining two Mirai stacks.
Autonomous Trucking
Since my Dec 2017 article on the future of trucking, things have progressed mostly as anticipated concerning the automation of truck driving. Conversely, autonomous passenger vehicles have proven to be significantly more challenging than anticipated, and their likely ramp-up projections have been pushed out several years although an estimated $16B has already been invested.
Use cases for autonomous trucks have been redefined to focus on both freeway driving, and low speed, short distance use cases. Remote operation solutions have become the norm across the board as they enable some level of deployment, while machine learning models continue to be trained to handle an increasing number of corner cases.
Several pilots have already taken place. Sino-American startup TuSimple is expanding its partnership with UPS, an investor, to 20 highway-focused trips per week in the USA. These reportedly operate at Level 4, though a back-up driver is still required. Sweden-based EinRide is piloting its cab-less trucks with DB Schenker, Michelin and Coca-Cola in Europe, in low speed applications between manufacturing plants and warehouses. Waymo decided to expand its scope to cover trucking and has started road testing its solution. At the same time, truck OEMs continue to forge ahead with their own approaches. For instance, Volvo is testing its cab-less tractor, Vera (pix below), in a mining environment in Scandinavia.
It is more difficult for other players. Peloton Technologies continues to develop platooning solutions, but the 9 year-old startup has yet to deploy commercially. Founded in 2016, autonomous trucking startup Starsky recently closed their doors after failing to raise money beyond the first $20M. This means VC money will likely be concentrated on fewer players.
Elsewhere in the trucking space, interesting solutions have emerged to automate yard operations. Founded in 2017, Outrider engineers and manages autonomous yards to dispatch and monitor trailer movement (pix below). The startup’s scope starts with the full automation of electric yard tractors, including the connection of pneumatic brake lines.
The future of trucking will be not only be electric and autonomous. It will also include an increasing array of connected services, such as predictive maintenance, driver monitoring, IoT-based track and trace solutions, optimized workflows, vehicle-to-infrastructure-based driving assistance or over-the-air updates. Moreover, the sharing economy is increasingly impacting the world of trucking, as digital freight forwarding services leverage available capacity to increase revenue per truck and reduce freight cost per ton.
This deep transformation of trucking will disrupt the status quo and force both truck manufacturers and fleet operators to embrace new solutions. This transformation will result in cleaner logistics and higher efficiency.
Marc Amblard
Managing Director, Orsay Consulting
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