Electric Commercial Vehicle Market

[334 Pages Report] The global electric commercial vehicle market is projected to grow from USD 70.9 billion in 2024 to USD 255.6 billion by 2030, registering a CAGR of 23.8%. The stringent regulations to reduce emissions and promote sustainable transportation practices have incentivized businesses to transition to electric vehicles, aligning with global efforts to combat climate change. Additionally, advancements in battery technology have led to increased energy density, longer driving ranges, and faster charging times, addressing some of the primary concerns associated with the feasibility of electric vehicles in commercial applications. Moreover, the decreasing costs of electric vehicle components, including batteries and electric drivetrains, coupled with government subsidies and incentives, have made electric commercial vehicles more financially viable for businesses, resulting in a lower total cost of ownership over the vehicle's lifecycle compared to traditional internal combustion engine vehicles. Furthermore, growing consumer awareness and demand for environmentally friendly products and services have prompted businesses to embrace electric vehicles as part of their corporate sustainability initiatives, further propelling market growth. Electric heavy-duty truck eActros 600 by Mercedes-Benz Group AG (Germany) was launched in October 2023. Whereas Renault (France) launched Renault Trucks D, D Wide electric truck in October 2023. In May 2023, Mercedes-Benz Group AG (Germany) launched EQT Van (Electric Van) equipped with a 90-kW electric motor, two sliding doors, the MBUX infotainment system, and numerous safety and assistance systems. Electric Vans is emerged as the largest market in electric commercial vehicle. And last mile delivery has the largest market share in end use application of EVCs. Along with this the emergence of innovative business models such as electric vehicle leasing and fleet management solutions for electric vehicles have facilitated easier adoption and integration of electric commercial vehicles into existing transportation infrastructures, fostering market expansion and driving towards a more sustainable future.

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Market Dynamics:

Driver: Rising Fossil Fuel Prices

As the cost of traditional fuels such as gasoline and diesel continues to escalate, businesses are faced with mounting operational expenses, particularly those reliant on large fleets of vehicles for transportation and logistics. This upward trend in fuel prices underscores the financial benefits of transitioning to electric vehicles, which offer substantially lower operating costs over their lifespan. ECVs rely on electricity as their primary source of power, which tends to be more stable in terms of pricing compared to fossil fuels. Therefore, businesses seeking to mitigate the impact of volatile fuel prices on their bottom line are increasingly turning to ECVs as a cost-effective alternative.

Moreover, the uncertainty surrounding future fossil fuel prices, exacerbated by geopolitical tensions and supply chain disruptions, further incentivizes businesses to invest in ECVs as a long-term strategy for cost savings and financial stability. Unlike traditional vehicles whose fuel costs are subject to market fluctuations and geopolitical risks, ECVs offer a more predictable and sustainable solution for managing transportation expenses. By reducing dependence on fossil fuels, businesses can insulate themselves from the adverse effects of fuel price volatility and achieve greater control over their operating expenses, thus driving the accelerated adoption of ECVs in commercial fleets.

Restraint: High Development Cost

Developing electric vehicle technology requires substantial research, development, and manufacturing infrastructure investment. This includes investments in battery technology, electric drivetrains, charging infrastructure, and other components unique to electric vehicles. These upfront costs pose a barrier to entry for many manufacturers, particularly smaller companies without the financial resources to fund extensive research and development efforts. As a result, the initial cost of ECVs tends to be higher compared to their conventional counterparts, making them less accessible to businesses operating on tighter budgets.

Additionally, the high development costs of ECVs can deter investment in scaling up production capacity, further limiting the availability of electric vehicles in the market. Manufacturers must recoup their development expenses through sales, which can prolong the time it takes for ECVs to reach price parity with traditional vehicles. This cost disparity may dissuade businesses from transitioning to electric fleets, especially if the return on investment is too long-term or uncertain. Consequently, despite the long-term cost savings associated with operating ECVs, the high initial investment required for development and production remains a significant restraining factor in the broader adoption of electric commercial vehicles.

Opportunity: Development of wireless EV charging technology for on-the-go charging

Wireless charging eliminates the need for physical connections between the vehicle and the charging infrastructure, offering greater convenience and flexibility for fleet operators. This technology enables ECVs to charge automatically while parked or idling, minimizing downtime and maximizing operational efficiency. For businesses with large fleets, such as delivery services or public transportation agencies, wireless charging offers a seamless and hassle-free solution for keeping vehicles powered throughout the day, thereby enhancing productivity and reducing operational costs.

Moreover, wireless charging technology addresses some of the key challenges associated with the adoption of ECVs, such as range anxiety and limited charging infrastructure. By enabling continuous charging without the need for frequent stops at charging stations, wireless charging systems can extend the driving range of ECVs and alleviate concerns about battery range limitations. This increased range and flexibility make ECVs more practical and appealing for a wider range of applications, including long-haul transportation and urban delivery services. As wireless charging technology continues to advance and become more widespread, it has the potential to accelerate the adoption of ECVs and drive their growth in the commercial vehicle market.

Challenge: Low availability of lithium for EV batteries

The limited availability of lithium-ion batteries poses a significant challenge to the growth of Electric Commercial Vehicles (ECVs). As the demand for electric vehicles continues to rise globally, there is increasing pressure on the supply chain for key components, particularly lithium-ion batteries. These batteries are essential for powering ECVs and are also used in various other applications, such as consumer electronics and renewable energy storage. However, the production capacity for lithium-ion batteries has not kept pace with the rapid growth in demand, leading to supply shortages and price volatility. This scarcity of batteries has resulted in longer lead times for manufacturers and increased costs for vehicle producers, hindering their ability to scale up production and meet market demand for ECVs.

Furthermore, the low availability of lithium-ion batteries has implications for the affordability and accessibility of ECVs, particularly for small and medium-sized businesses. The limited supply drives up the cost of batteries, which in turn increases the overall cost of electric vehicles. As a result, businesses may face higher upfront expenses when purchasing ECVs or encounter delays in acquiring vehicles due to production constraints. Additionally, the reliance on a single type of battery technology raises concerns about supply chain resilience and dependency on specific raw materials, such as lithium and cobalt, which are subject to geopolitical and environmental risks. Addressing the challenge of battery availability will be crucial for unlocking the full potential of ECVs and accelerating their adoption in the commercial vehicle market.

Market Ecosystem

NMC batteries hold the largest market share during the forecasted period.

NMC (nickel-manganese-cobalt) batteries contain several materials with distinct properties, high density, and efficiency. These batteries are ideal for use in electric commercial vehicles as they have a low self-heating rate during operation. They are known for their high energy density, allowing them to store a considerable amount of energy in a relatively compact and lightweight package. This characteristic is crucial for electric commercial vehicles as it directly influences the vehicle’s range on a single charge. Many leading battery manufacturers, such as CATL (China), LG Energy Solutions (South Korea), Panasonic Corporation (Japan), and BYD (China), produce NMC batteries. NMC (Nickel Manganese Cobalt) batteries are widely adopted in the electric vehicle market, including electric commercial vehicles. These batteries have achieved a balance between cost and performance, making them a cost-effective choice for electric commercial vehicles. This cost-effectiveness is crucial for the commercial sector, where the total cost of ownership is a significant consideration. Many leading OEMs also incorporate NMC batteries in their electric trucks, including Mercedes-Benz e-Actros, Volvo FL Electric, BYD T series, and Rivian R1T. These batteries have a higher energy density than LFP batteries, and the declining cost of NMC batteries further drives the segment.

The 60–120 kWh segment is estimated to be the largest battery capacity segment of the electric commercial vehicles market over the forecast period.

The 60–120 battery capacity range strikes a balance between power and range, making it suitable for a broader range of commercial applications, including medium to long-haul transportation. With larger batteries, vehicles in this segment can cover longer distances on a single charge, addressing the needs of industries such as regional freight transport and inter-city logistics. The 2023 E-Transit Cargo Van from Ford is equipped with a 68 kWh lithium-ion battery pack with a more than 200 km range. Government incentives and regulations encouraging the electrification of transportation, coupled with a growing awareness of the environmental benefits, are boosting the demand for electric commercial vehicles with 60–120 kWh battery capacities. In January 2024, the government of Canada announced its plan to offer a maximum incentive of USD 5,000 per vehicle for businesses purchasing new light-duty zero-emission vehicles. As businesses seek sustainable alternatives and aim to meet emissions targets, the 60–120 kWh battery segment presents a compelling option for those requiring a balance between extended range and operational flexibility.

Asia Pacific is the largest market for Electric Commercial Vehicle during the forecast period.

The Asia Pacific region is projected to be the largest ECV market by 2030. The Asia Pacific market is dominated by China, which has large sales volumes for electric commercial vehicles, especially electric buses. With favorable government regulations and the increasing adoption of electric buses in public transport fleets, India is expected to be a high-potential market for electric commercial vehicles in the future. Asia Pacific is home to many OEMs, especially Chinese companies, dominating the global electric commercial vehicle market. Japanese companies also play a vital role in automotive technological developments in Asia Pacific. For instance, in May 2023, Toyota Motor Corporation (Japan) collaborated with PACCAR Inc. (US) to expand their joint efforts to develop and produce hydrogen fuel cell (FCEV) Kenworth and Peterbilt trucks, which are powered by Toyota hydrogen fuel cell modules. All such developments in the region will drive the market for electric commercial vehicles during the forecast period.

In North America, federal and state governments are offering incentives to promote the adoption of electric vehicles, including commercial vehicles. These incentives include tax credits, rebates, grants, and infrastructure investments. For instance, the US federal government's investments in charging infrastructure and tax incentives for EV purchases have stimulated growth in the electric commercial vehicle market.

Key Market Players

The Electric Commercial Vehicle market is dominated by established players such as BYD (China), Mercedes-Benz Group AG (Germany), Yutong (China), AB Volvo (Sweden), and Ford Motor Company (US) and others. These companies manufacture and develop new ECVs as per the market requirement. These companies adopted strategies such as product developments, deals, and others to gain traction in the market.

Scope of the Report

This research report categorizes the Electric Commercial Vehicle market based on Vehicle type, Propulsion Type, Range, Battery Type, Power Output, Battery Capacity, Component, End User, Body Construction and Region.

Based on Vehicle Type:

• Pickup Trucks
• Trucks (Medium-duty Trucks and Heavy-duty Trucks)
• Vans (Light Vans and Full-size Vans)
• Buses & Coaches

Based on Propulsion:

• BEV
• FCEV

Based on Battery Type:

• LFP Batteries
• NMC Batteries
• Solid-state Batteries
• Others

Based on Battery Capacity:

• Less than 60 kWh
• 60−120 kWh
• 121−200 kWh
• 201−300 kWh
• 301−500 kWh
•  501−1,000 kWh

Based on Power Output:

• Less than 100 kW
• 100−250 kW
• Above 250 kW

Based on Range:

• Less than 150 Miles
• 151−300 Miles
• Above 300 Miles 100−250 kW

Based on End Use:

• Last-mile Delivery
• Field Services
• Distribution Services
• Long-haul Transportation
• Refuse Trucks

Based on Body Construction:

• Integrated
• Semi-integrated
• Full-sized

Based on Component:

• Battery Packs
• Onboard Chargers
• Electric Motors
• Inverters
• DC-DC Converters
• E-Axels (Including Gearboxes)
• Fuel-cell Stacks

Based on the region:

• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
• North America
  • Canada
  • US
• Europe
  • Austria
  • France
  • Germany
  • Netherlands
  • Norway
  • Spain
  • Sweden
  • Italy
  • UK
  • Others

Recent Developments

• In January 2024, Dongfeng Motor Corporation (Dongfeng) and Huawei Technologies Co., Ltd. (Huawei) entered into a partnership to collaborate on Dongfeng’s Voyah brand of “new energy” vehicles. Through this partnership, Dongfeng will include various Huawei technologies in its vehicles, such as autonomous driving and infotainment software.
• In January 2024, Tesla, Inc. announced its plan to set up a factory in India and may invest USD 30 billion over the next 5 years.
• In October 2023, The Infrastructure & Transport Ministry of Greece signed a contract with Yutong for 250 e-buses. This contract will facilitate green and sustainable development and improve public transport conditions in Greece.
• In June 2023, Ford Motor Company opened the Electric Vehicle Center, an electric vehicle production facility in Germany, to serve the European markets.
• In May 2023, Mercedes-Benz Group AG released the EQT van (Electric Van), which is equipped with a 90-kW electric motor, two sliding doors, the MBUX infotainment system, and numerous safety and assistance systems.
• In May 2023, AB Volvo launched an Augmented Reality (AR) safety app for electric trucks designed to support responders in an emergency. The app provides valuable real-time information from the electric truck to guide emergency services for safe rescue operations.
• In April 2023, Scania AB launched an all-electric car transporter with a GVWR of 42 tons and a battery capacity of 230 kWh.

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