Since the diesel engine has been around our whole lives, it can be hard to imagine anything taking its place. But the switch to battery-driven electric vehicles is set to go much faster than most have anticipated. And when it happens, it will revolutionise the vehicle industry. Let me explain why.
What will it take to break diesel’s dominance? Well, let’s look at electric trucks purely as any other technology. It’s been shown that for any big technology shift to happen, three things need to take place. There has to be a strong business case for the switch. The technology needs to demonstrate a degree of readiness and it has to gain customer acceptance.
So first, let’s take the business case. One of the major obstacles to electromobility right now are the high initial costs. But a number of factors are driving down the price of an electric truck so that total cost of ownership could become equivalent to owning a conventional diesel truck – and it’s happening much faster than anticipated. In fact, the price of batteries has been decreasing at such a fast rate that it has soundly beaten most analysts’ expectations every year.
Meanwhile the world is heading towards a renewable future, where the price of generating renewable energy, such as wind and solar, has gone down so drastically that it is cheaper than coal in many cases. For an operator running an electric fleet, the costs of electricity could likely go down to a tenth of today’s fuel costs. And other aspects of electric vehicles could make them an even better deal for fleet owners. The number of moving parts in an electric engine, for example, will only be fraction of those in a conventional diesel engine, which means there is less wear and tear. These trucks are therefore expected to have a longer lifecycle and need less maintenance.
This all means that in the not-to-distant future the owner of an electric truck has a vehicle with much lower fuel costs, low maintenance costs and a lifecycle that is fair bit longer than that of today’s diesel vehicles, resulting in a higher earning potential for the truck. Now that’s a pretty strong business case for going electric!
Electric vehicles could create lots of business opportunities in other ways, too. For example, by driving on premises where a conventional diesel vehicle can’t. In the future, an electric truck could drive into large retail stores, which would be redesigned so that deliveries are made straight on to the shop floor, cutting both warehousing and stocking costs. Or quiet, electric vehicles could make more night-time deliveries in the city center possible, allowing owners to operate their vehicles 24/7. These are scenarios that are all being explored right now by cities, transport companies and retailers.
And how about customer acceptance – the second major factor for a technology switch? Initial customer acceptance has been helped by a broad regulatory push, as many countries and cities have committed to emission-control agreements, including gradual banning of diesel vehicles in city centres. But it’s also pretty easy to see why truck drivers might like electric trucks. They are both quieter and generate fewer vibrations than a traditional diesel vehicle, which means a more peaceful, less stress-filled workday. Electric vehicles are also helped by their sustainable image.
Looking at the car industry as an example, we’ve already seen a clear trend that electric vehicles are becoming mainstream. Globally 1,2 million electric cars were sold in 2017, and that almost doubled in 2018 to 2,1 million. Meanwhile, the growth in investments within high-power charging and development is expected to further aid to customer confidence, while the falling total cost of ownership of electric vehicles is removing cost-barriers.
And what about tech readiness? One major obstacle to the growth of electromobility is that today’s batteries are still heavy. This reduces payload and vehicle range, while restricting the type of applications of electric trucks are best-suited to. But technologies that will make the batteries lighter and increase the driving range per charge are developing fast, including solid state batteries. Battery innovation is being driven by the huge uptick in demand for electric vehicles. And it’s being helped by fast-emerging energy storage technologies for business, domestic and industrial applications. The upsurge in electrified household appliances such as lawn mowers and even electric toothbrushes are making batteries not only better and cheaper, but also much denser.
Just how quick all this will happen is the billion-dollar question. But it’s progressing faster than many have anticipated. That is also the reason why everyone in the transport industry is building an electrification strategy now. Have you?
Santosh Harakamani works as Services Strategy Manager. He has about 20 years of truly diverse experiences, having worked for different industries and businesses in different countries. He has been within the Volvo group for over nine years in several different roles. Santosh works in Strategic Insights, tracking industry developments in disruptive technologies, helps formulate future strategy and runs key strategic projects.
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