Diesel Remains Dominant in Commercial Vehicle Market

(October 1, 2018) — Commercial vehicles will continue to run on diesel fuel for the foreseeable future, according to new research from the business information provider HIS Markit. Sixty-six percent of new medium- and heavy-duty commercial vehicles sold in the U.S. will be fueled by diesel—diesel and diesel hybrid—through 2040 compared to nearly 80% today, per findings released in September in the consultancy’s Reinventing the Truck study.

Diesel is expected to remain the dominant fuel type globally through 2040 due to increases in fuel economy, which will play a major role in keeping diesel competitive versus alternative powertrains, the study says.

Range and load capacity requirements from long-haul, on-highway trucking will keep diesel relevant in the shortand long-term while other propulsion types will grow in popularity as technology continues to advance.

“Understanding the future course of commercial trucking is so important because its impacts will reverberate far beyond just the trucking industry and through a whole host of industries,” said Daniel Evans, vice president of the IHS Markit downstream practice and co-author of the study. “Trucking accounts for half of diesel demand globally, or one-sixth of oil demand, making the future of trucking critically important for the oil industry. A holistic, system-wide view is needed to see the full picture of this new reality of transportation.”

While diesel does remain dominant, the forecast indicates a 15% compound annual growth rate for batteryelectric vehicles in the U.S. during the timeframe as adoption rates increase for medium-duty trucks. This growth is driven by an increase in per-mile urban trucking and advancements in battery technology, allowing for more mainstream adoption—particularly among Class 4 and 5 trucks with lighter payloads.

The study also highlights a view on total cost of ownership, with modeling suggesting battery-electric struggles in competitiveness compared to diesel and natural gas. In addition, the weight requirements of the battery pack cause limitations on the hauling capacity of the truck.

Currently, to achieve an equivalent range compared to a diesel Class 8 truck the battery pack weight required would result in a large cargo capacity penalty. “The regulatory environment will have a large impact on the pace of change in the industry between now and 2040,” said Matt Trentacosta, automotive advisory consultant at IHS Markit and study co-author. “A diesel ban within city centers has the potential to cause fleet owners to adjust their strategy alongside OEMs and suppliers. In addition, trucking impacts energy consumption and any dramatic change could elicit a major disruption in the energy markets.”

In the study, IHS Markit also considers a future with a more stringent regulatory environment in its “autonomy” scenario, which takes a more aggressive approach from regulators to shift away from fossil fuels. The impact from regulators banning diesel options inside city centers creates a scenario with a much more rapid adoption of battery-electric, hybrid, and fuel cell trucks. European markets will experience faster adoption of alternatives in this case.

Overall sales of medium- and heavy-duty trucks in China begin to taper off through 2040 in both scenarios as the industry becomes more organized and mature. And adoption rates of alternative powertrains start a bit slower than those in Japan, the U.S., and the European Union but grow quickly as the technology is proven.

(SOURCE: The Weekly Propane Newsletter, October 1, 2018)