Navigant forecasts MHD vehicle market to nearly double by 2035 with declining share of conventional engines; gases win out over electricity

07 July 2014

The number of medium- and heavy-duty vehicles (MHDVs) in use worldwide will nearly double between 2014 and 2035, according to a new forecast report by Navigant Research. Navigant projects that annual MHDV sales will grow throughout the forecast period at a compound annual growth rate (CAGR) of 2.4%.

Alternative fuel vehicles (AFVs)—including battery-electric (BEVs), plug-in hybrid (PHEVs), propane autogas (PAGVs) and natural gas vehicles (NGVs)—will grow from 5.0% of the market in 2014 to 11.2% by 2035. A majority of these AFVs will be NGVs and PAGVs. Vehicles running primarily on hydrogen and electricity will make up less than 1% of all MHDVs in 2035, according to Navigant.

 Source: Navigant. Click to enlarge.

Sales of conventional internal combustion engine (ICE) vehicles will grow more slowly than overall market at a CAGR of 1.9%, resulting in a decline in the share of MHDVs in use with conventional engines from 94.9% in 2014 to 87.1% in 2035. Of the alternative fuel vehicles (AFVs), Navigant forecasts thate natural gas vehicles (NGVs), powered by either CNG or LNG, will replace the largest portion of ICE vehicles, growing from representing 2.7% of vehicles in use in 2014 to around 6.9% in 2035.

Propane autogas fueled vehicles (PAGVs) will grow from 2.2% of vehicles in use in 2014 to 3.4% in 2035, according to Navigant, while hybrid electric vehicles (HEVs) will grow from 0.1% to 1.7% over the same period. Plug-in hybrids (PHEVs), battery-electric vehicles (BEVs), and fuel cell vehicles (FCVs) together will add up to less than 1% of the MHDVs in use in 2035, according to the Navigant forecast.

While diesel will remain the primary fuel choice of MHDVs throughout the forecast period, its share will fall from more than 79% in 2014 to 76% in 2035. Gasoline vehicles are mainly found in the medium-duty segments; Navigant Research estimates gasoline-dependent MHDVs will go from representing 15.7% of MHDVs in use to 12.5% by 2035.

Background. Changes in the MDHV market are being driven by rising fuel costs and environmental concerns. Navigant Research projects that today more than 1.2 billion light, medium, and heavy duty vehicles are on roads. The MHDV segment, which includes highway-capable trucks and buses weighing over 10,000 lbs, accounts for less than 5% of all vehicles in use.

Though numerically the MHDV segment is a small portion of the vehicle parc, it consumes a far greater portion of the total fuel and energy consumed in the road transportation sector because of the low average fuel economy and high annual mileage typical of MHDVs.

The MHDV markets’ enormous dependency on oil and the implications of this on domestic energy security and climate change have pushed national and regional governments to examine policies and programs that will speed adoption of various fuel efficiency and alternative fuel technologies through infrastructure development and economic incentives.

Many governments have categorically supported a comprehensive strategy to reduce oil dependency in the transportation sector; however, the depth of that support varies with each vehicle technology. Regional fuel costs and infrastructure availability play a major role in commercial vehicle owners’ acceptance of alternative fuels, regardless of government intentions of changing the fuel mix. As such, the adoption of MHDV alternative fuel vehicles (AFVs) and fuel efficient technologies varies significantly from region to region.

—“Transportation Forecast: Medium and Heavy Duty Vehicles”

The MHDV market includes all highway capable vehicles in excess of 10,000 lbs gross vehicle weight rating (GVWR). Navigant Research defines medium duty (MD) vehicles as between 10,000 lbs and 26,000 lbs and heavy duty (HD) vehicles as over 26,000 lbs. For the purposes of the report, Navigant Research defines each vehicle segment as:

• Hybrid electric vehicles (HEVs): Vehicles that generate all electric energy onboard the vehicle. HEVs include all varieties of hybrids (series, parallel, through-the-road, and mild) that use electric motors and combustion or spark-ignited engines for traction.

• Plug-in hybrid electric vehicles (PHEVs): Vehicles that use energy stored from the grid but also have an ICE to extend the range of the vehicle. This definition encompasses extended range electric vehicles (EREVs) that use a gas or diesel generator exclusively or primarily to charge the vehicle battery.

• Battery electric vehicles (BEVs): Vehicles that use energy from the grid or regenerative braking and do not have an ICE.

• Natural gas vehicles (NGVs): Vehicles that use compressed natural gas (CNG) or liquefied natural gas (LNG) exclusively or alongside gasoline or diesel in a dual-fuel system.

• Propane autogas vehicles (PAGVs): Vehicles that use liquefied petroleum gas (LPG) exclusively or alongside gasoline or diesel in dual-fuel system.

• Fuel cell vehicles (FCVs): Vehicles that use hydrogen exclusively as a fuel.

• ICE vehicles: Vehicles powered by either gasoline or diesel with no secondary drivetrain, such as an electric motor.

Recent increasing sales of electrified vehicles in China may change all those predictions within one or two years. BYD's e-vehicle sales have multiplied by 10X over the last 5 months and would have done even better if more EV batteries were available. China may be the major EV market place by end of 2014 as it is (already) the major market place for ICEVs.

Batteries availability will be addressed within 24 months and the world can expect sales of EVs to multiply in China in 2015-2016-2017.

Navigant's predictions may be OK for USA-Canada and EU but may not apply for China, Japan and S-Korea.

If Navigant said the sky was blue, I'd ask for more sources and then doubt my eyes as well as my sanity.

"Plug-in hybrids (PHEVs), battery-electric vehicles (BEVs), and fuel cell vehicles (FCVs) together will add up to less than 1% of the MHDVs in use in 2035"

Huh? Sales of these vehicles in important markets like the US & Europe is already approaching or in some cases (Norway, Netherlands) surpassing the 1% mark. World wide, the share of plugin vehicles is now ~0.3% and growing fast, probably reaching 0.5% this year already. We will sail past the 1% of sales before 2020. Add 15 years to replace the existing fleet and you can see that in effect, Navigant is predicting that sales of plugin vehicles will not grow between 2020 and 2035. Ridiculous. Who pays them for this?

Those false predictions were probably paid by the people currently manufacturing ICEVs and/or supplying the liquid fuels for ICEVs.

Every time I see a prediction like this I am reminded of Yogi Berra famous quote -- "It is really hard to make predictions, especially about the future." Navigant is just some hired gun consulting group. These types of predictions are usually wrong as they do not know what types of break-throughs will be made in the next 20 years.

The problem for Navigant: prior studies predicted something like what you are all saying here, and the market isn't showing that to be the case. From just last year...

"Combined worldwide sales of hybrid and plug-in electric vehicles will reach 6.6 million annual units by 2020 and become almost 7% of the total light-duty vehicle market, according to Navigant Research’s 2013-2020 Electric Vehicle Market Forecast."

Reality is that ICE vehicle efficiency has been improving more quickly than previously predicted, and oil prices have remained relatively stable. Hence ICE sales are far exceeding prior predictions and the uptake of EVs just isn't catching up despite improvements. Navigant has actually had to temper their enthusiasm. Remember '09-10 when all the major consultants (including Navigant, Pike, and others) and the DoT were confident in 1 Million American plug-ins by 2015? I'll bet if you go back and look at reader comments to these stories you'll see similar boundless optimism.

The markets in which EVs have done very well (Norway) look like victories to us but are infinitesimally small subsets of the global space. Even in the US as a whole, a larger market where EVs have done comparatively well, the rate of growth is slowing.

China is everyone's darling right now, but the real explosion in sales isn't in EVs. Audi, Ford, and GM, are reporting enormous increases in sales of conventional cars into a market 25-30% larger than the US (and growing), while we in our little world are focused on plug-ins. The vaunted Qin sales explosion amounted to 4500 cars through May --- a good fraction of these are still government sales. The total LD plug-in sales across China during this period were less than 11,000 (major headway in orders for all-electric busses notwithstanding), and this with extraordinary tax relief and subsidy that far exceed prior projections.

Break the battery range/cost barriers and Navigant's projections may indeed look silly by 2020 or so. In fact ANY market projection looking past 10 years and using more than one significant digit is fairly asinine.

Herman, the price/range barrier has been broken. However, the price point depends on volume and if people like Fiat, GM, and Ford won't sell their electrics to mass markets and price them as mass market vehicles it can appear to the ignorant that the price is too costly yet. That is however a standard strategy of US companies with vested interests in maintaining their own current market, in this case with ICEs and oil.

In 2009 the price of batteries ofr EVs was about $1000/kWhr. Today, 5 years later, they are at about$300/kWhr. That's a 70% reduction in cost. If the same thing happens in the next five years, batteries will be $120/kWhr. The Volt battery will cost$1,940. The Leaf battery $2,880. That is nearly a 90% cost reduction in what was known to be the most expensive component of the vehicles. When will the car companies start pricing the cars correctly? BYD's (China) electrified vehicles sales have increased by 1000% over the last 5 months and only 50% of orders could be filled due to battery shortages. Being one of the major battery manufacturer, BYD will soon correct the problem. China's electrified vehicles sales will take off by the end of 2014 and may increase at 3 digit rates in 2015, 2016, 2017 etc. Yearly sales will go from a few thousands to a few million by 2020 or so regardless of what Navigant is saying. The installation of new high efficiency solar panels will match the growth of EVs sales. bk, the barrier has been bent, but by no means broken. The barrier is also being constantly repaired --- a little less robustly every time, but nonetheless it is not giving way easily. I'm not going to get into a speculation contest about the current cost of batteries. While I think$300/kWh is too low, it's close enough to correct for discussion. That means Nissan's announcement of a $5500 replacement Leaf battery is still a loser, and is being offered probably as a measure to avoid a$100M+ writedown of leased Leaf asset values.

It also means the current factory Total Manufactured Cost (TMC) of a 1.2-1.5L ICE of around $1000 is the equivalent of about 3kWh of battery. You can build an adequate conventional car very inexpensively, and it keeps getting better (notwithstanding the ongoing addition of non-propulsive regulatory features like more passenger protection, cameras, etc.). Moreover I don't believe Fiat, GM, and Ford intentionally avoid mass-marketing their EVs in areas of the US that would make economic sense to sell them. Where I live there is virtually no interest in EVs owing to purchase cost and cold-weather impairment. I have one of the four Leafs, and there are two MiEVs, one Smart ED, and 3-4 Teslas in a population of about 225k people. (As for the Teslas: we also have about 3-4 Quattroportes here, proof that sufficient money will always draw in the exotic.) With that bleak picture the local Nissan dealer is nonetheless Leaf-certified, which requires a significant investment in training and test equipment. He's a dreamer like all of us. Much of America is like this. If you are a CA, Portland, Austin or other similar resident, you might find that shocking, but the internet EV news echo chamber is deceiving. In virtually all of a greener and expensively-fueled Europe the picture is similar. The EV industry hasn't built a good enough case. The cost of batteries may indeed hit$120/kWh. It may not. But at the same time we will move past 60kW/L output in naturally aspirated engines as a boring norm, and more than twice that in high-performance machines: powerplant and vehicle weights will go down, taking fuel consumption along. The very industrial improvements that we are all rooting for in BEVs will drive deeper, more effective ICEV electrification strategies, and further confound the definition of "hybrid" until nobody even notices or cares that the engine almost never idles any more.

So about the time of the sub-$200/kWh battery people will be buying EPA 60mpg rated family sedans and probably not plugging in (though more and more will). And SJC's hopes for a production base of synfuels will begin to take root, all while we continue to develop more global petroleum resources. Don't fret: more people will buy BEVs --- the experience is just too compelling. I live with 55-60mi winter range and I still love mine. But they will not be the dominant fleet population for decades. Lack of stones was not the reason why the Stone Age came to an end. Lack of liquid fuels or more efficient ICEs will not be the reason why ICEVs will be phased out. The main reason why we move to a new technology is often for added convenience and cleaner more appropriate usage, not necessarily because it is cheaper. On the contrary, early on, new technologies are normally more costly. Looked at what happened when we went from CRT to flat LCD TVs. From argentic film camera to digital units. From horse drawn buggies to trucks and cars. From heavy steel bicycles to recent ultra light unit costing 10X more. From low speed rails to new very high speed e-rails etc. Extra cost did not stop the introduction of 1001 new ore costly technologies. Why should it stop the introduction of BEVs and FCEVs? The higher cost argument does not hold progress! OK --- then I'm guessing you're saying pure battery electric propulsion will not have to be reasonably cost-competitive to absolutely sweep over a predominantly liquid-fueled counterpart. Cost has been the dominant driver of overall consumer choice for mechanized personal mobility for about a century amongst all but the upper quartile (or higher, depending on the location) and the adventurous. The broad difference between electric and ICE autos, while important to me, rates a "meh" from many, and surely isn't worth buying an EVSE or experiencing limited range. Therefore to them, like most, cost is a big deal, just like it always has been. History does not necessarily repeat itself, but it generally rhymes fairly well. Let's say person X, a very green, middle/upper-middle earner in a wealthy country generally does not choose pure electric propulsion even with numerous extant options (financially supported by his government, BTW, and well-regarded by peers). Since all the other elements of choice that would favor EV are present, he must be making this choice for reasons of cost. So how can person X envision a sea-change amongst the general population --- most of them with lesser financial resources and likely far less perceived ethical justification --- with that sea change occurring at unprecedented pace? I'll give you a wild guess who person X might be... Anyhow, we can't know the outcome of this until at least half a decade passes. It's going to be a very fun ride with many great new choices for the world's customers. bk GM knocked$5K off the price of the Volt this past year.

Well, on second reading and review of the Navigant site... I don't know what you all intended, but I know I basically missed the focus of Navigant's work was only MDHV: therefore NOT automobiles. My apologies.

On the one hand, this means that cost is a HUGE factor in the selection of propulsion technologies, far more so than in consumer choice. On the other, the inclusion of busses and municipal vehicles makes other issues --- environmental, local economics, politics --- very much a key criteria. So while I think in general I'll stick to my perspective, I can't say that the significant rush to electrified public transport is not meaningful.

Next time I'll RTFA.

By the way, total cost of future 200+ mpge BEVs and 120+ mpge PHEVs will probably be less than total cost of future 60 mpg ICEVs, specially where liquid fuel price is $7+/gal. In USA, a progressive extra Fed fuel tax (2 to 5 cents/gallon per month) could make most electrified vehicles cheaper to own and operate by 2020 or so. @Herman...LOL Yeah, I didn't really stop to think about the LDV vs MDHV angle either so I'll join you and RTFA next time! Oh, And even though I made the snarky comment about Navigant, they're MUCH better than other organizations like those clowns over at Pike!!! Herman, As far as light duty vehicles go: new sales don't seem to have that much to do with price. The minimum cost US vehicle is about$11k, while the average vehicle is more than \$30k.

Hybrids, EREVs and EVs are already the low cost choice for Total Cost of Ownership, so if cost were the driver....we would have reached the tipping point.

There are two big problems:

First, the vast majority of people are very slow to move to new things. They have to see people around them using this new thing for quite a while to become comfortable with them. For example, online food ordering has overwhelmingly benefits for parents, but Webvan went bankrupt: they counted on people moving to a new thing too quickly.

Second, the primary reason for EVs is Climate Change, and as a society we haven't prioritized dealing with CC. We just haven't. Until we do, with things like carbon taxes and acceptance by Republicans, it's unrealistic to expect fast movement by consumers.

As for heavy duty vehicles: the problems of economy of scale and long-lived investments are very large. Large fleet customers have been experimenting with pilot programs, but have been afraid of making first movers. That suggests that the early rate of adoption may be deceptive, as we reach a tipping point of cost and acceptance.

Good point, nickg.
Other factors at play affecting the growth of LDV PEV are the compromise of internal space due to the size of the battery pack, and the excessive weight. Tesla solved that problem but the price of a Tesla is out of reach for the majority of car buyers. The rapid consumer switches to smart phones and flat screen TV and monitors are encouraging signs.

Long-haul HDV's will continue to use diesel due to the high energy density, the high efficiency and durability of Diesel engines. NG is a potential replacement, but NG tanks are bulky and heavy.
Short-haul buses and trucks are increasingly adopting CNG and battery, though H2-FC buses are seeing increasing numbers, for improvement in local air quality as well as energy costs.

Roger,

Internal space is inherently better in an EV. The Volt lost a seat simply because GM chose to use an EV-1 battery rather than lose time developing a new one.

Battery weight is a feature, not a bug. A well designed EV places the weight low, where it greatly improves handling. Regenerative braking greatly reduces the impact of weight on efficiency.

Rail is the best place for freight, though LNG and swappable batteries will work just fine for fleets with fixed routes.

Are fuel cells and H2 storage really cheap enough now for portable applications?

nickg

If the best stimulus you can think of to get people to change to a new and better technologyis CC, then you're going to be waiting a long time. People just aren't buying into that fraud, and it's not because they are stupid.

Larzen,

Not stupid, just misinformed.

But, Climate Change isn't the only reason to move away from oil - I should have mentioned other things which add up to an even greater cost: pollution, the cost of military protection of oil supplies, etc.

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