Half of all medium and heavy trucks and buses sold will be electric by 2035, a new report from UK market intelligence firm Interact Analysis has suggested.
The forecast predicts a massive increase in electric commercial vehicle sales, from less than 500,000 in 2025 to 2.5 million in 2035, a significant change from the current dominance of traditional internal combustion engines (ICE).
Despite this shift towards electric vehicles, fuel cell vehicles are still projected to occupy a smaller segment of the commercial vehicle market. Their suitability primarily lies in applications involving long-distance travel.
In addition, hybrid vehicles are also expected to constitute a limited share of the market. This can be attributed in part to a lack of emphasis on this technology from manufacturers and a deficiency in regulatory support, which fails to present compelling arguments for widespread adoption.
A noteworthy example of this transition comes from Västtrafik, the authority overseeing local traffic in Västra Götaland County. Västtrafik has announced a substantial initiative towards sustainable transportation by heavily investing in electric buses, thereby transforming the local traffic landscape in various urban areas. Nobina Sverige AB secured the tender to operate these services.
Cities including Uddevalla, Skövde, Lidköping, Falköping, Mariestad, and Alingsås are set to fully transition to electric buses by 2025.
“Uddevalla was early on with electric buses already in 2019 and is now reaching the finish line with fully electrified city traffic. It provides a cleaner and quieter city centre and helps us towards our goal that all city traffic in the region should be electrified before 2030,” said Anne Garcia Solving, bus business developer at Västtrafik.
This plan involves acquiring 87 new electric buses, reflecting a decade-long commitment to electrify various bus routes and promote sustainable public transportation.
“With the electrification of traffic in Skövde, Lidköping, Falköping, and Mariestad, our transportation network will see a substantial boost in sustainability,” said Solving.
“Concurrently, we are ushering in a new era by modernising the entire traffic system in the area, introducing nearly 150 new buses.”
In addition to the deployment of electric buses, Västtrafik revealed plans for a cutting-edge bus depot in Skövde, which is specifically designed for the electric fleet. The facility will incorporate solar cells and an energy storage system, enabling the capture and storage of solar electricity for charging the electric buses.
Dominance of Battery Electric Vehicles in Commercial Transport
Battery electric vehicles are taking the lead in commercial vehicles due to their cost-effectiveness, regulatory incentives, and subsidies that attract a growing customer base.
Currently, electric vehicle powertrains heavily rely on battery packs, constituting 55 percent of the overall powertrain revenue. This component has the most significant impact on the overall price of a commercial vehicle, overshadowing the contributions of engines, inverters, and transmissions in determining the vehicle’s overall cost.
For fuel cell vehicles, the fuel cell system bears a larger proportion of the total costs, while hybrid vehicles see transmissions playing a more substantial role in their overall expenses.
A rising trend in the industry is the use of e-axles, although currently considered a costly alternative to separate engine, transmission, and axle configurations due to their relatively new technology.
However, market analysts at Interact Analysis predict a cost decrease over time as production volumes increase. This anticipated price change is likely to contribute to increased sales and popularity of these vehicles.
“Currently the initial cost of a battery-powered vehicle is high and this is mainly due to the cost of a full electric powertrain,” said Jamie Fox, principal analyst at Interact Analysis.
“For a battery powered heavy truck, the complete battery powertrain can cost as much as $100,000, but this can be as low as $2,000-$3,000 for a mild hybrid light truck. Despite this, we expect to see price erosion over time due to production innovations and economies of scale.”
E-axles offer a notable advantage in saving space, allowing for increased battery capacity and range or enabling a smaller vehicle to have equivalent battery capacity, thus reducing production costs. Depending on the customer’s perspective, the benefits of e-axles may outweigh their higher initial cost, potentially proving to be a sound investment over time.
EU’s New Battery Regulation
Further advancing the green transition in Europe, the European Union (EU) successfully finalised the much-anticipated new battery regulation this summer after four years of negotiations. Battery regulations are important for establishing the groundwork for the new billion-dollar battery recycling industry.
The core concept revolves around creating a circular economy for batteries. Each year, Europe imports about 800,000 tons of car batteries, a large portion of which isn’t recycled. As a result, these batteries are harming the environment and wasting valuable resources.
The new battery regulation aims to bring about more stringent control by implementing collection targets for various battery types.
“Now we have ensured that all batteries released on the EU market must be more high-performing and can be reused and recycled. That batteries become durable and safe throughout their life cycle is an important step towards a circular economy in the EU,” said Jakop Dalunde, the Green Party’s EU parliamentarian and a member of the transport committee.
The Battery Ordinance involves setting higher standards for the safety and performance of batteries in the EU. Major battery manufacturers with turnovers exceeding 40 million euros must ensure their raw materials meet environmental and social criteria.
For electric vehicles and industrial batteries, a “battery passport” in the form of a QR code will provide consumers with information on carbon footprint, social standards adherence during raw material extraction, accurate capacity details, and recycling information.
The regulation also mandates a gradual increase in the percentage of materials to be recycled, reaching 90 percent for cobalt, copper, and nickel by 2026. Jakop Dalunde notes the vital role of batteries in the green transition, highlighting that battery manufacturing currently drives over half of the global demand for cobalt and lithium.
Looking ahead to 2027, a new marking system will disclose the proportion of recycled lithium, cobalt, and nickel in newly manufactured batteries. This move not only addresses environmental concerns but also leverages valuable minerals and metals within batteries for new production, reducing both the climate footprint and the EU’s dependence on imported metals.
Sweden stands as one of the frontrunners in this transformative industry, with Northvolt’s recycling facility, Revolt Ett, under construction in Skellefteå alongside the battery factory. Once completed, it is set to become the world’s largest recycling facility, capable of recycling 125,000 tonnes of battery material annually.
In addition, Stena Recycling has already opened Europe’s first lithium-ion battery recycling facility in Halmstad earlier this year, positioning the country at the forefront of the evolving battery recycling landscape.