Opinion - 01/June/2022

We could run 30% of the entire truck fleet on electricity—what’s gone wrong?

We could electrify 30% of all trucks today. The technology is ready as is the industry, but a lack of clear economic incentives is standing in the way. We need policies, investments and tax systems to favour electricity if we are to realise the potential, says Joakim Bansholm Nilsson of Volvo Trucks Denmark

The views expressed are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy


 

Diesel-powered trucks still dominate sales despite the available low-emission alternatives

We know that we need to electrify our trucks. We know that we need this to happen now. But what many people don’t know is that we could in fact electrify around 30% of the entire truck fleet operating shorter distances, especially in inner-city and rural environments today.

Here, we actually already have the battery technology able to deliver the necessary 300-kilometre range and up to 540 kilowatt-hours (kWh) which is needed to cover a daily operation.

There is also positive momentum for this right now within the sector. Big truckmakers have scaled up ambitions and pledged to go zero-emission by 2040. They are investing massively in the improvement of battery technologies and several are planning to put electric heavy-duty vehicles (HDVs) into series production within the next couple of years.

On the consumer side, demand for electric trucks is growing. Logistics companies DHL and DFDS, but also companies with high sustainability ambitions such as IKEA, Carlsberg, Stark, Maersk, Unicon and COOP are beginning to invest in battery-powered trucks.

Despite this momentum, the prevalence of electric trucks remains limited. Data from the European Automobile Manufacturers Association (ACEA) shows that only 0.5% of the new trucks sold in the EU in 2021 were electric—only up by 0.1% compared to the year before. Diesel is still dominating sales of new medium and heavy trucks accounting for 95.8% of the market.

  

NOT ATTRACTIVE YET

So why are things still moving so slow despite the fact that both the technology and many companies are ready? Why are we not seeing a significant increase in the sales of electric trucks?

The short answer is that we have yet to make it an attractive business case. Looking at the total costs of ownership, battery-powered heavy trucks cannot yet compete with their conventional, fossil fuel-based counterparts.

An electric truck demands a three-times higher upfront investment than a diesel truck and the operational cost is still not low enough to compensate for that during the lifetime of the electric truck. Even if companies should be willing to pay some degree of extra price, the difference in costs between a diesel and an electric truck is simply too high.

On top of this, there is also the task of converting to an electricity-based process, which calls for new ways of working, new route planning and integration on the electricity grid. This is all before we get to a lack of clear plans and investments in charging infrastructure that can ensure the level of security needed by companies considering investing in battery-powered trucks.

The current energy crisis caused by the Russian invasion of Ukraine has not made this choice any easier. Spontaneously, one might think that there should be a greater pressure on companies to pursue decarbonisation and green technologies and the REPowerEU initiative—the European Union’s plan to end its dependency on Russian gas—is enormously positive for the prospect of cheaper green energy.

Unfortunately, the crisis is putting severe pressure on energy prices and many companies are experiencing cost pressures that are making them hold back on acquisitions. These investments in the energy transition are now falling under the “we can wait” category. Although diesel prices have risen, electricity prices have risen even more, which also affects the total cost of operation (TCO) of an electric truck.

 

 

POLITICAL ACTION NEEDED

To change this situation, and make electric trucks a more attractive choice, there needs to be further political action, decisions and plans to demonstrate that getting battery-powered trucks on the road is a high priority.

The first and obvious step is to introduce zero-emission city zones where only low emission vehicles are permitted—which a growing number of cities around the EU have already implemented or planned. This will make battery-powered trucks and goods vehicles a necessary way forward for all distribution and logistics companies operating in cities.

Furthermore, it is important to ensure clear and credible eco-labelling and branding so that companies can better promote their green fleet and price differentiate. Then it is essential to increase the production of renewable energy and improve the grid infrastructure in cities to meet the demand of a growing battery-powered truck fleet.

Another vital step is to revise the tax system to make it much more financially viable to go electric. This is something some countries have already implemented with great success. In Germany, up to 80% of the additional cost of purchasing an electric truck can be covered by the state.

Part of these plans should also include the revision of road tolls. The EU is already examining this issue with a new toll system that would catapult the decarbonisation of heavy transport. When doing this, though, it is important to ensure that the cost does not reflect the truck is driven, but the energy consumption and the type of energy used.

 

START WITH THE 30%

When designing new policies, tax systems, support packages and incentives, it is also important that we start with the 30% where electrification is possible already today. Focusing on the 30% would enable us to obtain substantial (and very much needed) reductions in the carbon emissions from heavy transport within a few years. In this segment, each electric truck would save 50 tons of CO2 per year in its operational life.

This would also provide a much better chance of succeeding with electrifying the remaining 70%: the long haul trucks, where limitation of battery size, weight and range poses challenges and where the widespread prevalence of 800 km battery-powered HDVs still seems unrealistic before 2030.

By paving the way for the electrification of the first 30%, we get the opportunity to learn, see and test how electric trucks work. This will help ensure further investments, innovation and exchange of experience in the field—all of which is necessary when we are to tackle the remaining 70%. •

 


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