Clean trucks: Green freight transportation goes mainstream

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  Quantumrun Foresight
• April 7, 2022

Insight summary

The push towards clean vehicles, including trucks powered by alternative fuels, is reshaping the transportation landscape, with governments and major manufacturers committing to sustainability objectives. This shift is driving changes across the industry, from the development of new propulsion systems to the need for retooling and retraining in maintenance firms, and the creation of charging or refill stations. The long-term impacts include not only environmental benefits but also new business opportunities, potential job shifts, and changes in global trade dynamics.

Clean trucks context

Clean vehicles are those that are powered by alternative fuels and advanced vehicle technologies that lower a given vehicle’s carbon footprint. These include hybrid electric vehicles, plug-in hybrid electric vehicles, battery electric vehicles, compressed-air vehicles, hydrogen and fuel cell vehicles, neat ethanol vehicles, and flexible-fuel vehicles. Transportation accounts for most greenhouse gas emissions and corporations and governments are committing to new sustainability objectives to reign in emissions from the transport industry. Fuel-cell vehicles that produce no emissions have been hailed as the ideal replacement for fossil fuel-powered vehicles and a potential solution to address the industry's climate change concerns. 

The European Union (EU) has set a target for automotive manufacturers to reduce their carbon emissions by 37.5 percent by 2030 (compared to 2021 levels). These measures, combined with others instituted by governments worldwide, have led to automobile manufacturers reevaluating their production plants—as well as upstream and downstream supply chains—to identify opportunities to cut carbon emissions.

The momentum for a transition to clean trucks in the medium and heavy-duty industry is growing rapidly. The 2022 Biden administration in the US has set a goal of zero emissions for all new buses by 2030. Significant truck manufacturers such as Daimler, Volvo, Cummins, General Motors, and Ford are investing in clean technology and setting targets to eradicate tailpipe pollution by 2050. In October 2020, Hyundai delivered the company's first fuel cell-powered trucks to buyers in Europe and announced plans to sell them in the US and China by 2022. Toyota and its Hino affiliate announced the arrival of the first fuel cell truck in North America in the first half of 2021. 

In addition, Hyzon Motors intends to deploy over 5,000 fuel cell trucks and buses between 2022 and 2024, aided by an investment from French energy giant, Total. Meanwhile, General Motors is negotiating a partnership with Nikola, an Arizona-based hydrogen truck company. Other firms bringing big electric rigs to market include Freightliner, Tesla, and China's BYD. Ford's E-Transit cargo van went on sale in 2021, and General Motors is reportedly developing an electric delivery van in addition to its other clean vehicle projects. A host of startups, including Rivian, Arrival, and Nikola, are also vying for a share of the electric truck market.

Disruptive impact

To support the use of clean trucks and other types of clean vehicles, networks of charging or refill stations will be paramount. However, while the US had 42 public hydrogen stations in 2021, all but one is situated in California. The US Energy Information Administration (EIA) estimates that the country will require 200 hydrogen charging facilities for every million hydrogen vehicles. However, commercial vehicles do not require an extensive network of hydrogen fueling stations, particularly if they operate on established routes. A dedicated terminal can refuel an entire truck fleet, and long-haul operators could establish a network of 400 or 500-distanced hydrogen filling stations along high traffic routes. Nikola, for example, intends to create hydrogen on-site from renewable sources at its fueling stations. 

Like hydrogen stations, electric vehicle charging stations will prove crucial to the continuing uptake and use of electric vehicles in the US and elsewhere, with these networks requiring the necessary electrical infrastructure. Electrify America, an electric vehicle charging network, has announced intentions to quadruple its charging station network in the US and Canada. The expansion will entail the installation of 1,800 fast-charging stations and 10,000 individual chargers by 2025, as part of Electrify America's commitment to invest USD $2 billion over a decade in electric vehicle infrastructure, education, and access throughout the US. 

Automakers have boosted the production of longer-range, quicker-charging electric vehicles but are concerned that buyers interested in EVs might wait until charging infrastructure is made available and located closer to their homes and desired locations. The higher cost of fast-charging stations is a consideration for the Biden administration as it offers incentives to encourage companies to install additional charging stations. By 2030, the administration intends to have 500,000 charging stations countrywide.

Implications of clean trucks

Wider implications of clean trucks may include:

• The transition to environmentally friendly propulsion systems in transport trucks, leading to reductions in the carbon footprint of consumer goods transported domestically, aligning with global sustainability goals.
• Automotive companies focusing on the development of new types of environmentally friendly propulsion systems for transport trucks, leading to potential reductions in the logistical fuel or energy costs involved in transporting consumer goods domestically, benefiting both businesses and consumers.
• The need for parts manufacturers and truck maintenance firms or garages to retool or retrain to service clean truck models, leading to initial financial burdens and challenges in workforce adaptation.
• A potential increase in the initial cost of clean transport trucks, leading to higher expenses for transportation companies, which may be passed on to consumers in the form of increased prices for goods and services.
• The possibility of regulatory lag in creating and enforcing standards for clean transport trucks, leading to inconsistencies in implementation and potential conflicts between government agencies, industry stakeholders, and environmental groups.
• The emergence of new business models focusing on clean transportation solutions, leading to opportunities for startups and established companies but also creating competitive pressures that may force some traditional firms out of the market.
• A shift in labor demand towards specialized skills in clean transportation technology, leading to new employment opportunities in some areas but potential job losses in traditional automotive sectors.
• Governments and policymakers prioritizing clean transportation, leading to enhanced collaboration with industry leaders.
• A potential shift in global trade dynamics due to the increased emphasis on domestic transportation using clean trucks, leading to changes in import and export patterns and influencing international relations and agreements.

Questions to consider

• Which do you think is a better option: electric vehicles or those powered by hydrogen and other green fuels, and why?
• How do the economics of hydrogen and electric-powered trucks compare? And what are the long-term advantages of investing in hydrogen?