The electrification of the transportation sector is not easy, and it is not something that industry needs governments to lead. But, a little help from state and local governments will go a long way toward moving electrification forward — wherever that leads.
"This isn't something we need Washington to make a call on. It is something individual companies can do," Ryan Laskey, vice president of commercial vehicles for Dana Inc. (NYSE: DAN), said during a panel on Thursday at ACT Research's Seminar 62 in Columbus, Indiana. "You can get change on Main Street. Any local mayor or government can make decisions that are important to their constituents."
Bill Zobel, general manager of Trillium, echoed those comments, but noted that push from government is critical to fleet adoption of electrification technologies.
"Governments like to offer incentives to get these new initiatives off the ground," he said. Zobel expressed hope that grants and tax credits needed to boost the electric vehicle market don't disappear the way those for natural gas have. "Either [governments] need to sustain the path until this technology is viable, or they need to look at other ways to distribute the funds other than just giving money to fleets to buy an electric truck."
Laskey and Zobel were joined on the panel by Jordan Wallpe, electric transportation manager for Duke Energy (NYSE: DUK). All three agreed that interest is high and deployment of commercial EVs will ramp up in future years. Laskey said Dana's compound annual growth rate (CAGR) estimate is 16% in the 2020 to 2023 timeframe and 21% over a five-year period from 2020 to 2025. Global deployment estimates call for 400,000 vehicles by 2024 and 500,000 by 2025.
"If you look at where [investors] are investing in the market, we believe this is real and we're at the beginning of the hockey stick," he said.
The power needs for electric vehicles — especially commercial vehicles — can be enormous if a fleet has many units in need of charging. That is part of what utility provides such as Duke are addressing.
"The initial deployment of one or two or three vehicles is not going to be terrible; the local grid can handle that," he said. "It's when you want to scale up and you need 6, 10 or 12 megawatts of power ... you're going to need a substation."
Laskey and Zobel both pointed to the change required to successfully deploy fleets. From the organizational mindset to training personnel, including technicians, championing change is something that is often forgotten in the EV equation.
"To bring in new technology that has 40% less parts and they are all different, that scares [people]," Laskey said.
Settling the debate over full electric or hydrogen-electric vehicles will take many years, according to the panelists.
"In my personal opinion, I think 30 or 40 years from now, hydrogen wins," Zobel said. "It's the most abundant element in the world."
Electric Vehicle Forecast
ACT's conference adopted electrification as its theme, with several panelists discussing the current state of the industry. In 2018, ACT produced a detailed report on electrification in the commercial vehicle space. Jim Meil, principal of industry analysis for ACT, said much of that work remains on target, but ACT is planning a 2020 update later this year.
"Green interests are a political imperative," Meil said. "More organizations are pushing sustainability initiatives."
That first report provided a U.S. market share timeline for electric vehicles out to 2035. Class 8 saw the least growth, moving from 3% market share in 2025 to just 10% by 2035, representing 28,100 units. Class 6-7 vehicles, with their heavy focus on urban and local delivery applications, have the potential for the most market share, growing from 13% in 2025 to 22% by 2035. Total vehicles sold would be 45,000 in 2035. Class 4-5 vehicle market share would sit at 8% in 2025 and grow to 19% by 2035, or 30,700 total units.
Meil did say that Class 8 presents "sizable unit potential" for electric vehicles in specialty applications such as yard spotters and where there are subsidized sales.
In all classes, battery costs and fuel prices will drive the speed of adoption. Currently, battery costs are about $225 per kilowatt hour. Meil said the 2018 report sees those costs falling to $120 by 2025 and perhaps as low as $80 in the 2030-2035 timeframe. But, if diesel prices fall to $2 per gallon, that could negate any price advantage; conversely if diesel prices skyrocket to $6 per gallon or more, that could speed electric adoption.
The 2020 update will analyze whether these projections remain accurate, and also add fuel cell technology, hydrogen and natural gas to the equation.
Electric Options
The electrification hype cycle appears to be in sync with fleet interest, and additional solutions are coming onto the market as a result.
"There's more and more fleets publicizing their sustainability efforts and increasingly [that's electrification]," said Jason Altwies, director of business development and strategic partnerships at Conmet. "Our perspective on electrification is that it is not a star that burns fast and dies."
Conmet, which has over $1 billion in annual sales with a focus on wheel ends, plastics and castings, has developed a vertical to take advantage of the electrification trend. One of its first products is the Conmet Preset Plus electric hub (eHub).
The electrified wheel hub, which is in testing, uses regenerative braking to generate electricity. Used on trailers at this point, it offers "power and torque packaged at the wheel end," said Caleb Lander, product manager of electrification for Conmet.
"Basically, anytime you are not accelerating, you are putting energy back into the battery," he said. The eHub also provides power to the trailer, giving it an extra power boost to get rolling quicker and easier.
"This is a building block technology," Altwies said. "This is an investment, but the payback this technology offers [is significant]."
Lander said commercial battery applications are a little behind automotive but that in the consumer space, there has been an 87% price decrease for lithium ion batteries.
"We're approaching the $100 per kilowatt hour that makes it price competitive with liquid fuels," he said, adding that energy density has been increasing at the same time. Weight has also declined by almost half in the past five years.
If the same battery trends follow in the commercial space, price competitiveness might be achievable and the weight drop will improve vehicle capacity.
Lander also noted solar energy, e-axles and electric auxiliary power units as other areas where electrification interest is growing.
"We're all trying to drive strategies that improve the bottom line," Altwies said.
Trailer Refrigeration Units
Customer sentiment is driving change in the trailer refrigeration market, but so too is regulation. In 2025, California is going to mandate that all transport refrigeration units (TRUs) operate in zero-emissions mode if they are parked or stationary for 15 minutes or more at an "applicable facility." In addition, all truck TRU fleets must turn over at least 15% of their units to zero-emission technology each year and be fully zero-emission by 2031.
The combination is driving more fleets to inquire about electric refrigeration units — or at least units that offer electric standby power.
Mark Domzalski, PLM Trailer Leasing senior vice president, said 90% of all TRUs are diesel only. But, 59% of PLM leases in 2020 have an electric option.
PLM specializes in refrigerated trailers and has about 12,000 units on the road today.
"It's out there," Domzalski said. "Customers are saying they need sustainability and we are seeing that."
Despite the growing interest in electric power, only 1.2% of PLM units are plugged in, Domzalski said. "This is an operational change and these are things that are going to be a challenge," he observed.
Domzalski pointed to a 2015 case study in which a customer switched from a diesel-powered refrigeration unit to an electric unit and cut diesel fuel usage from 25 gallons a day to just 13 gallons per week.
Electric units carry a 20-30% price premium, he said, but they are weight neutral compared to diesel units, and as evidenced by the case study, can provide real cost savings.
"We feel that the cost savings on fuel and maintenance will pay for the technology," Domzalski said.
Carrier offers electric standby on all its multi-temperature reefer units, and Thermo King makes electric an option.
Fully electric units are not really an over-the-road option at this point since fleets can't plug in the unit at truck stops, but PLM did run a test with an electric unit, running a trailer from Phoenix to Orlando, Florida. The trailer traveled 2,399 miles from a Tuesday at 3 p.m. to the following Saturday at 11 a.m., running a total of 93 hours successfully.
Domzalski also noted the work others are doing on electric units, including eNow, which offers solar panels for the roof of the trailer, and Solar Tech, which has produced an all-electric TRU that runs on lithium ion batteries and DC power. The eNow solution is being tested by several PLM customers in "fresh environments" where temperatures don't need to go below 40 degrees Fahrenheit.
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