Fuel for Thought: Can Electrification Deliver for Commercial Vehicles?
Automotive Monthly Newsletter and Podcast
This month's theme: Can Electrification Deliver for Commercial Vehicles?
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Even in the face of the global pandemic and semiconductor shortages, commercial vehicle product segments continue to move forward. Light commercial vehicles (LCVs) and medium- and heavy-duty vehicles are experiencing periods of growth and transition.
IHS Markit recently completed a Light Commercial Vehicle study and forecast which highlights trends in the light commercial sector, including the trajectory of growth of electrification in light commercial vehicles, and details how newcomers to the industry are affecting that growth. Growth and transition in this sector are influenced by an increase in e-commerce combined with other factors favoring the introduction of electric commercial vehicles.
Much of the growth in electrification in the light commercial
segment comes from companies new to the industry. These newcomers
are arriving without the dilemma of balancing the timing and volume
of electric vehicle (EV) introductions with the drawdown of volume
of legacy internal combustion engine (ICE)-based products. They do
not have the need to protect the profitability of their legacy
products. In contrast, traditional OEMs do have to balance, and in
some cases, temper the growth of EV products because of the need to
draw profits from ICE products.
Electrification of light commercial vehicles will occur across all included body types, but at different degrees. Pickups and vans lead the charge, but buses, particularly school buses, show impressive growth of electrification. These are the body types that clearly favored by new entrants to the market.
Medium and heavy-duty commercial vehicles, broadly defined to include Class 3 as well as Class 4-8, are also experiencing growth and transition. Vehicles in Operation (VIO) for GVW classes 3 - 8 combined has increased 9% since 2018. New registrations for those same weight classes have increased 10% over the same period. This level of growth in the vehicle parc will spur an increase in the need for replacement parts to provide service and maintenance to keep these vehicles on the road. In some cases, the rate of growth of serviceable parts exceeds the growth of vehicles in operation. Since 2018, the need for aftermarket parts for critical vehicle systems has increased as follows:
- Braking systems - 16%
- Electrical systems - 15%
- Steering, Suspension and Wheel End - 12%
This is an indicator that vehicle usage is increasing, driving
the need for additional maintenance.
IHS Markit has developed an Aftermarket Parts Demand Forecast, based on the Truck Industry Profile Network (TIPNet), that can provide expert analysis covering 12 aftermarket part categories for vehicles in the GVW Classes 3 - 8.
Alongside the increase in medium and heavy-duty commercial vehicle VIO and the resulting shifts in the aftermarket opportunities, IHS Markit is also tracking increased prospects in the heavier weight segments for zero-emission vehicles (ZEV), including battery-electric (BEV) and fuel-cell (FCEV) trucks. The soon-to-be-published 2021 update of IHS Markit's Reinventing the Truck study features forecasts by fuel type to 2050 and all-new scenarios, building on the latest announcements by manufacturers and by policymakers around the world. Spurred by a spate of new product introductions and the prospect of ZEV mandates in many U.S. states, BEV trucks are likely to outpace FCEV trucks early on. Among Class 4-7 medium-duty vehicles, the BEV take rate in the baseline forecast is projected to climb as high as nearly 13% by 2028. Among class 8 heavy-duty trucks, the percentage is seen somewhat lower, at just shy of 6%, but still markedly above current levels. As time passes, and more fleets become familiar with the technology, particularly in long-haul applications, FCEV trucks are expected to narrow the gap. IHS Markit tracks OE-offered ZEV commercial vehicle model introductions and finds that available models globally will more than double from 2020 to mid-decade. In parallel to rise in ZEV trucks, hybrid models will also see a boost, the new Medium and Heavy-Duty Commercial Vehicle Alternative Propulsion database shows.
From Light Commercial Vehicles to Heavy-Duty Vehicles, from aftermarket service parts to brand new propulsion systems, IHS Markit is focused on understanding the rate of change and the underlying factors driving change.