E-trucks matter because growth in commercial transportation is a key factor expected to keep the oil market on a low but steady growth path out to 2040 and beyond, at least according to most long-term outlooks. If commercial transportation can adopt electrification, it would result oil demand peaking much earlier than most forecasts currently suggest and oil would become a sunset industry.

That oil demand from Light Duty Vehicles — everyday passenger cars — will contract is already assumed. This results only partially from the adoption of Electric Vehicles (EVs); another factor is the improving fuel efficiency of internal combustion engines, which is expected to increase on average for the global parc (population of cars) from about 25 mpg today to 40 mpg by 2040.

Thus the number of cars in the world can nearly double, but so long as even a fairly small proportion of them are New Energy Vehicles, overall oil demand from the sector will fall.

Not so with HDVs. These defy electrification essentially because they are load carriers, and would thus need much larger batteries, which are heavy and bulky, using up space and adding weight, neither of which would help the economics of e-truck freight. As a result, forecasters see commercial e-trucks as more than decade away.

Global GDP is forecast to nearly double between now and 2040 and that means much more commerce, people and trade, adding hugely to the movement of goods and people around the planet. So if commercial transportation cannot be electrified, then oil demand retains a huge market sufficiently robust to deliver long-term growth over and above the expected contraction in the LDV segment.

However, Tesla says e-trucking will be here in 2019. Even that is only CEO Elon Musk’s timetable; the reality is that Tesla leads the field only in style, but not in production capacity or commercialization when it comes to EVs.

Production of e-buses has been ramped up surprisingly quickly in China, in good part supported by subsidy, but they have found both a ready domestic and foreign market in megacities as far afield as Buenos Aires and London, where politicians are keen to cut urban air pollution. Although figures vary, Chinese e-HDV production, largely of buses, exceeded 100,000 in 2016, up from less than 10,000 a few years earlier.

China is also churning out increasing numbers of electric garbage and yard trucks and not just at home. Market leader BYD has been assembling them for about two years at a plant in California, which it is tripling in size, while it plans to open another in Ontario, Canada, next year.

There are estimated to be just over 400,000 e-HDVs in the world, based on cumulative sales, and very nearly 3 million e-LDVs. Because of their higher mileage and the low fuel efficiency of internal combustion engine HDVs, the e-HDV parc displaces roughly twice the amount of oil demand that the LDV segment does, despite the latter being seven times the size.

Moreover, the mix of technologies adopted is not turning out as expected.

It was assumed that Plug-in Hybrid Vehicles (PHEVs) would be the consumers’ preference as this would address range anxiety and concerns over recharging times. However, pure EVs are outselling PHEVs by a ratio of more than three to two, implying more oil displacement and greater electricity usage than anticipated.

In the HDV segment the ratio is even higher, with five pure EVs sold for every one PHEV.

That is why Tesla’s, and perhaps even more so, BYD’s e-HDVs matter.

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