Semi trucks are the workhorse of modern road freight. These large, two or three axel on-road trucks are used to haul freight trailers and, on average, each one travels over five times the distance of a typical US driver annually – at one-fifth the miles per gallon efficiency.
In 2018, US semi trucks demanded over 2 million b/d in petroleum products – primarily diesel. S&P Global Platts Analytics anticipates this energy need will grow through 2040 on the back of growing population and per capita GDP. Diesel semis have the potential for large efficiency improvements via integration of already mature technologies in aerodynamics, combustion control, and road load control.
However, in a recent Platts Analytics report, Semi Trucks and US Diesel Demand; Are Alternative Fuels in the Mirror Closer They Appear? we find a compelling economic case can be made for future fuel cell trucks in long haul applications, though economies of scale and cost declines in both hydrogen production and fuel cell manufacturing are necessary.
More miles to travelOver 60% of US semis are currently operating long haul, or greater than 200 miles per trip. According to Platts Analytics, long haul semi trucks travel an average of over 80,000 miles per year, accounting for nearly 50% of commercial truck energy demand and vehicle miles travelled (VMT). The balance of semis operate at regional haul (<200miles per trip), averaging closer to 30,000 miles per year, accounting for approximately 10% of both commercial truck VMT and energy demand.
Semi VMT is expected to increase from 2018 levels by 26% and 50% in 2030 and 2040 respectively, on the back of growing consumption and economic activity. An estimated 1.5 million semi trucks are likely to enter the US fleet across the next 20 years to fully meet domestic growth in road freight demand. A purchase decision will be made for these new vehicles that will ultimately reshape on-road semi demand and open the door for potential fuel switching.
To assess the vulnerability of semi truck oil demand to fuel switching, Platts Analytics evaluated the economics of both the purchase decision and operation of alternative semi truck technologies. This was based on cost and performance metrics, looking at both current technology and that expected in 2030. The drivetrain technologies assessed include compressed natural gas (CNG), hydrogen fuel cell trucks (FCEV), and plug-in battery electrification (BEV).
Across BEV, FCEV, and CNG drivetrains, none are economically competitive on average with the status quo diesel semi truck. A cumulative 30% efficiency improvement could be available to diesel semis from technologies that are already mature, further complicating any prospects of unseating diesel as the primary energy source for long haul semis in the near to medium term.
Stiff competition aheadThe bulk of the diesel efficiency technologies are likely to be integrated more widely under pressure from fuel switching and emissions policies. While this marks a small increase in semi purchase price, return on investment is achieved quickly due to lower fuel expenditure.
BEV semis are expected to still have a prohibitively expensive purchase price premium in the long haul segment. While reduced operational costs do improve the competitiveness of the drivetrain with increasing cumulative mileage, this is not enough to make the average BEV cost-competitive with an anticipated high-efficiency diesel semi. Similarly, CNG drive trains do not offer adequate per-mile savings to recover their higher purchase cost, even assuming continued capital cost declines from 2018-2030.
If economies of scale materialize in line with government hydrogen policy targets, FCEV semis could achieve purchase price parity with diesel semis while having lower operational costs, which could result in widespread fuel switching by fleet operators. Long haul semis – which are expected to represent 50% of 2030 US commercial vehicle demand - could become vulnerable to switching to fuel cell trucks under this technology paradigm. For widespread FCEV use in semis to become a reality, the current high costs of fuel cell systems and H2 production, transmission, and dispensing will need to be addressed.
To be sure, regional range semi applications are much more favorable for battery electrification. BEV semis that operate regionally require less than half the battery capacity on average versus their long haul counterparts. This reduces upfront purchase premiums to under $25,000. This purchase premium is recovered in less than two years of short haul operation due to lower fuel expenditure and reduced maintenance. For fuel switching to BEV regional haul semis to materialize, we would anticipate continued reductions in lithium ion battery prices and increased energy density, driven primarily by innovation and scale in the light duty sector.