CV Business Models: New & Digital Models

From the newcomers and their emerging capabilities, it can be seen that diversified products for various consumer needs are being developed and that innovation is underway. Some of the many challenges to innovation on such large products as heavy-duty CVs, however, can be seen by the example of Tesla-Semi. The battery capacity required for the promised fast acceleration (0-60 mph in 5 seconds) and 800 km range with a full loading is staggeringly high — ten times higher than the capacity of the Model S battery currently in use [1]. This would result in an enormous load for the large battery, which would undermine the efficiency of the electric solution CV and is thus not viable as of yet. Further, these batteries are being developed with the concept of worldwide solar-powered “mega chargers” in mind; a concept which is does not yet have the necessary infrastructure or network with high enough power output available [1][2]. While there are undoubtedly great efforts involved in seeing these innovations in development, a number of challenges are revealed in the process which must be overcome through collective efforts of economy and policy combined because of their sheer enormity.

Meanwhile, new business models purely for after sales services are being developed, as well. As for passenger transport, pay per use models are being tested to enhance TCO benefits of alternative power trains and new technologies. However, in the CV industry, there is a bit of a twist to the common model: battery leasing business models have gained in attention, as with the use case of South Korea’s Ministry of Trade and Hyundai Motors [3], to introduce the so-called battery-as-a-service. The goal of this model is to tackle the hesitation in battery acquisition posed by customers, generated by the high cost of acquisition, lack of available supporting infrastructure, and concerns as to battery life [4]. This hesitation in turn is holding back the large-scale uptake of electric CVs, and can hopefully be reduced by the offer of battery-leasing business models to take out TCO concerns and investment anxiety: “An EV (electric vehicle) sans battery reduces vehicle upfront cost by 30-40% and battery can separately be rented out or leased, dividing the cost of owning and maintaining over a vehicle’s lifetime” [4]. This model is an especially inviting option for customers who do not operate long-distance, but rather short- or medium-distance trips. Further benefits of battery-leasing include the “timely inspection of battery residual values by service provider, free/warranted replacements and assistance by service provider in events of breakdown” [4]. Especially large fleets will experience a cost benefit from shared mobility such as this model, and could thus encourage the rise of the electric commercial vehicle.

An especially flourishing example of cooperation is the project “Platooning Ensemble” under the supervision of the Netherlands Organization of Applied Scientific Research (TNO); all big European OEMs are working together with suppliers like NXP, ZF, WABCO, Bosch, Continental and Brembo for research and development [5]. Platooning is the concept of electronically coupling multiple CVs together at close range to glean aerodynamic advantages, create fuel savings, and collectively reduce downtime by allowing drivers to take breaks while still in motion further behind in the chain [2] [5]. The aim of this project is to collectively bring a cross-brand Platooning solution on the roads within 3 years [6]. The possible benefits of Platooning will enhance the timing bridging now until the full development of Autonomous Driving technology.

Digital services are at the forefront when it comes to the expansion of after sales services to boost profit but also enhance the customer experience and TCO. Further, there is a number of categories of digital services which are experiencing increasing demand from customers and focus from OEMs. Vehicle analytics, for example, include the transmission of vehicle data and freight analytics to the service provider and customers, in order to increase efficiency, decrease downtime, predict fuel usage and thus reduce costs. Using vehicle analytics, maintenance can be conducted much sooner than before, based on automatic remote diagnosis. Driver analytics, on the other hand, analyze driver behavior and performance in order to maximize driving times and enhance fuel usage and driving behavior. At the forefront are also next generation navigation services, which not only take into account road conditions and parking availabilities for breaks, but also freight and weight, remaining drive time and other individual vehicle information to optimize routes [7]. Here, as well, the rising demand for increasingly complex and holistic capabilities and services will have to be absorbed by a changing market landscape of interconnected players; there simply cannot be a single player that is able to satisfy all needs and capabilities demanded by the consumer.

Sources

[1] Electrek. (2021). Tesla Semi News Overview. Retrieved from Electrek.co: https://electrek.co/guides/tesla-semi/

[2] Renschler, A. (2020). The commercial vehicle industry at a glance. Munich.

[3] Hyundai Motors. (2021, February 21). Hyundai signs MOU for EV battery lease to foster EV ecosystem. Retrieved from Hyundai Press Release: https://www.hyundai.news/eu/articles/press-releases/hyundai-signs-mou-for-ev-battery-lease-to-foster-ev-ecosystem.html

[4] Just Auto. (2021, February 23). Battery leasing key to EV adoption - analyst. Retrieved from Just Auto: https://www.just-auto.com/news/battery-leasing-key-to-ev-adoption-analyst/

[5] ENSEMBLE. (2021). The Project. Retrieved from Platooning Together: https://www.platooningensemble.eu/

[6] Fliesser, L. (2019). Wie sieht der LKW der Zukunft aus? Retrieved from Traktuell: https://traktuell.at/a/wie-sieht-der-lkw-der-zukunft-aus

[7] Renschler, A. (2016). Speech by the CEO at the Volkswagen Truck & Bus Start-Up Night IAA NFZ 2016 [Speech transcript]. Traton Group. Retrieved from: https://traton.com/en/newsroom/press_releases/press_release_20092018.html