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CV: Consumer Perspective & Future Outlook

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Total Cost of Ownership

When considering the consumer perspective of commercial vehicles, one must always first consider total cost of ownership (TCO). CVs are primarily an investment good, especially for developed industries such as the US, China, and Europe [1]. Consumers, in this case fleet managers, freight companies, and so on, want the best cost-benefit balance for their heavy investment. At some point, technologies and alternative powertrains will become so cost efficient that they will outweigh the currently reigning Diesel combustion engines as well as human capital — drivers. Especially for the latter point, this will mean that autonomous driving technologies will have to become very advanced (Stage 4 and up) and more affordable than drivers’ wages and legally mandated downtime. Fuel consumption plays a major cost factor in TCO, as well; at this point in time, Diesel combustion engines remain more cost effective than other powertrains [1]. This is due to several factors depending on the respective powertrain technology, and could encompass resource availability, payoff, recharging costs and/or lacking/underdeveloped infrastructure. Aside from the TCO perspective, the adoption of new technologies depends on each use case, and will be discussed in the following. A tentative look into the future will round off this section.

Influencing Factors for Adoption

Factors such as types of energy and their supply, manufacturing capabilities, sufficient infrastructure, regulation and economic incentives will determine the popularity and feasibility of alternative powertrains in each market. In Europe, by 2030, it is expected that new-energy vehicles will account for 31% of total sales. Light CVs, mostly used for inner-city and and inter-city deliveries, will be the frontrunner, with an estimated 46% of total sales being alternatively powered CVs, and 40% of that quantity being battery-powered [2]. It is predicted that BEVs (battery-powered electric vehicles) will be the winner among the three new technologies discussed, at least for LCVs (light CVs) and MDTs (medium-duty trucks) in inner-city and inter-city transportation. Battery technology is only really interesting for these use cases because battery weight, range and fueling time all increase exponentially with increasing capacity [3]. Indeed, by 2025, BEVs are expected to achieve TCO parity, making them a more cost effective choice than internal combustion engines in these areas [1]. Further, BEVs will be most popular in these use cases, since the additional weight of the batteries will be easier to rectify due to the smaller sizes of the vehicles, and thus also the charging times can be more easily reduced. The restrictive mileage per charge will also not be as much of a problem to overcome with shorter distances and a greater concentration of charging stations available within cities than outside cities; indeed, convection charging stations can be integrated into city landscapes more effortlessly, easing the charging process and facilitating shorter downtimes for charging [1]. For inter-city MDT use as well as long-haul HDTs (heavy-duty trucks), LNG will come out ahead as the main alternative powertrain in the near future (in areas with sufficient supply and/or access, such as Italy) [2]. The advantages here are the low fuel cost given a favorable price for natural gas, quick refueling capabilities (thus reducing downtime significantly) and the high energy density (also reducing downtime and amount of charges per trip needed), making LNG a good alternative fuel for long-distance transport [1]. However, this technology is not fully “clean”, and is thus not a serious contender for the longer term when zero-emissions solutions are demanded. Further, infrastructure and supply challenges remain costly to overcome at this point in time. In the long run, for these two use cases, hydrogen fuel cells are predicted to become even more popular than LNG [2]. Until 2030, however, when the technology is expected to be fully ready, consumers will have to contend with high equipment costs as well as a high cost for hydrogen, making this technology not as advantageous for TCO as others [1] [2]. After this point, however, it can be expected that a steady supply of hydrogen and a sufficient fueling infrastructure can be secured in order to make hydrogen fuel cell technology viable for widespread use in the CV industry. For example; existing truck fueling stations can be converted to hydrogen charging stations with “manageable effort” due to their relatively lower numbers and already sufficient size [3].

Use Cases

As with new powertrains, the adoption of autonomous driving technology also heavily depends on the use case, since this will determine the complexity needed from the system to navigate the roads and surroundings effectively and safely. However, unlike the passenger vehicle market, the adoption of fully autonomous vehicles will be less directly tied to new powertrain development in the commercial vehicle market. This is also tied to TCO factors; commercial customers are more sensitive to TCO, and thus the internal combustion engine will likely prevail during early adoption stages of AD technology [2]. It is expected that the AD adoption rate will be lowest for LCVs, especially for inner-city usage — only around 10% are predicted to be fully autonomous by 2030 [1] [2]. The reasoning here is that the technology is not yet ready to accommodate the broad range of activities of typical LCVs within the complex surroundings of inner-city environments, and regulatory frameworks have not yet been arranged. Looking beyond the challenges of inner-city traffic to be navigated, it is here that the labor market challenges elucidated in the previous section are even more complicated; deliveries still require the driver to handle the goods being transported, and are not so easily replaced. More promising, however, is the adoption rate expected for both HDTs and MDTs; approximately 13% of CVs for both inter-city delivery and long-haul transportation are expected to be fully autonomous by 2030. Because in each case, the CVs are not navigating inner-city traffic and are rather driving along highways, which are more straightforward to navigate, AD technology is much more effortless to adapt to the situations and work effectively and reliably. Moreover, the TCO advantage here is much greater than for other, shorter-distance use cases. Even higher still is the adoption rate for HDTs when considering closed spaces such as harbors, construction sites, and mines; these environments present no risk to the public, and the specificity of each use case is favorable for the development of sensor technology [2]. Economically, for the closed spaces and long-haul transport cases, the TCO advantage is derived from the lack of labor needed; fully autonomous vehicles can work 24/7, can maximize fuel efficiency and minimize downtimes used for recharging/refueling [4]. Moreover, they will reduce the number of accidents caused by and involving CVs, further reducing costs and downtime.

Meantime & Future Outlook

To bridge the time, however, that is still needed until Autonomous Driving technology is at this point of operation, Platooning seems a viable option to create TCO advantage for customers. Also utilizing sensor systems, Platooning aims to electronically bind multiple trucks together into a convoy, with only the first CV in the convoy needing active driving while the others follow suit automatically. This technology would enable higher efficiency in transport, since drivers will be able to take breaks by falling into a rear position in the convoy and letting the system take over driving, while another takes the lead [1] [5]. Moreover, Platooning is expected to create fuel savings by taking advantage of aerodynamics of closer distances between CVs and more efficient driving due to the automatic systems taking over [4].

At this point, however, it begs the question: once all of these technological advances are in place, how does a convoy of automatically driven CVs differ from, say, a technologically advanced train? When, for instance, new pathways and roads are built for optimum transportation networks by autonomous vehicles that link up for maximized fuel efficiency, at what point do these innovations inevitable lead to essentially reinventing the train? Or even the hyperloop? The need for flexibility for ever faster transportation pathways and ever shorter delivery times will inevitably lead to a shift in how we need to transport our goods from one point to another. We then have to consider what place the commercial vehicle has in this view of the future, and what OEMs and politics have to say about it. Are these innovations that are on the way really for the long term, and feasible enough to replace everything we know now for a more sustainable future? Or are they for the medium term until other paradigm shifts take over these roles? There are truly many facets to consider in this industry, and foremost it is dictated by how capable it is of surviving the more pressing demands of society.

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Sources

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

[2] Jentzsch, A., Janda, J., Xu, G., Wiedenhoff, P., Girisch, A. (2019). The Future of Commercial Vehicles — How New Technologies Are Transforming The Industry. The Boston Consulting Group.

[3] Volkswagen AG. (2019). Hydrogen or battery? A clear case, until further notice. Retrieved from Volkswagen AG News Stories: https://www.volkswagenag.com/en/news/stories/2019/08/hydrogen-or-battery--that-is-the-question.html#

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

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