Navistar, Paccar, Other Truck Firms Risk Obsolescence

[kscarbel2]

Jerry Hirsch, August 9, 2017  /  Trucks.com

Traditional trucking industry manufacturers could become obsolete if they don’t start moving more quickly into electric drive trains.

That’s the assessment of analyst Alexander Potter from Piper Jaffray in a report released Tuesday for industry investors.

“Many stocks in our truck coverage are exposed to disruption. Other than Wabco and Tesla we don't recommend buying any of them,” Potter said.

Venerable industry suppliers such as Navistar International Corp., Paccar Inc., Cummins Inc. and Allison Transmission Holdings are among the most “susceptible,” Potter wrote.

Potter is looking at the increasing adoption of electric buses demonstrates as the pathway to electric trucking, primarily through the development of drivetrain and battery technology.

“Although California remains an early adopter of electric vehicles, the merits of electric drivetrains are now being acknowledged in regions far away from ‘friendly’ coastal enclaves,” Potter said. “Red states and blue states alike are embracing electric buses, and we see no reason why this trend should abate. Indeed, we expect it to accelerate,”

Burlingame, Calif., electric bus maker Proterra opened a new factory in the City of Industry, just east of Los Angeles last month that is capable of building 400 electric buses annually in its 100,000-square-foot space.

Elsewhere China-based BYD Co., has built a factory in Lancaster, Calif., to produce electric buses and trucks. The plant employs 600 workers and has already built 113 buses. Earlier this week, BYD said it inked a deal to supply 17 single-deck buses for service in Haifa, Israel’s third largest city. The buses will be operated by Egged, which with almost 3,000 buses is the country’s largest bus operator.

Potter readily acknowledges the higher cost of electric vehicle technology, but he said that’s a passing issue and can be offset by operating savings.

“It's important to note that electric bus volume is rising despite a sizable premium vs. internal combustion buses,” he said.

An electric bus can cost about $700,000 while is diesel counterpart is $500,000.

“But since regular maintenance costs for an EV bus are negligible – and since the energy savings are so substantial – the return on investment is still attractive,” Potter said.

This is where the trucking industry needs take note, Potter said.

“Naturally the economics are different in other vocations, but as volume rises and prices fall toward parity, other segments should steadily embrace EV drivetrains, including school buses, refuse trucks, and urban delivery fleets, more-or-less in that order,” he said.

To be sure, there are plenty of hurdles.

For example, there’s no national charging network to power long-haul trucks like there is for diesel vehicles, said Antti Lindstrӧm, an IHS Markit analyst.

Another issue is charging time. Truckers won’t want to sit around waiting hours for their batteries to charge when they can refuel a diesel truck in minutes. That’s why both analysts expect to see electric trucks deployed first on routes where they head back to a central depot for charging.

The key to driver of electric truck technology is the battery pack, where the “core” intellectual property resides, Potter said.

“The pieces of metal in the drivetrain (motors, inverters, transmissions, axles) are simple, cheap, and in some cases not needed at all,” he said. “Consider the Tesla drivetrain: we think the bill-of-materials for the drivetrain itself is $1,500 or less, whereas the battery pack is probably at least 10x more costly.”

The cost ratio becomes even more skewed in a heavy vehicle such as a truck or a bus because they require battery sizes of 400-600kWh, about five times larger than the battery Tesla uses in its biggest models.

Some manufacturers are moving into the electric truck market.

Tesla plans to reveal its design for a heavy-duty truck in September. Daimler Trucks just started production of an all-electric medium-duty truck this year called the eCanter under the Mitsubishi Fuso brand. It will be sold in the U.S., Europe and Japan. Both Daimler and Volkswagen, through its MAN Truck & Bus division, plan to introduce heavy-duty electric trucks around 2020.

Toyota and others are working on hydrogen fuel cell trucks. The fuel cells create power to run electric drive trains in the trucks.

[james j neiweem]

Get your classic diesel Macks while you can

[DailyDiesel]

As of 3 or 4 years ago most manufacturers were pursuing some sort of hybrid technology but with the return of low fuel prices those projects went onto the back burner.

[TeamsterGrrrl]

After a decades of subsidies and promotion electric cars haven't even managed a one percent market share... The only reason every manufacturer has fielded an electric is to goad the tech millionaires into buying their stock.

[Dirtymilkman]

There is no way any advantage to having electric trucks. You still have to produce the electricity, recharge batteries, replace batteries, etc. As with electric cars, the first 25 years of buyers are just buying basically prototypes. The same will be true for trucks. I think our truck builders have nothing to worry about for at least 50 years. 

[HeavyGunner]

Another thing to remember is we are drastically cutting down our ability to make electricity. The greenies killed coal (just here though, we can send our coal to china for them to pollute to high help), there's been a big push to get rid of hydroelectric dams that we do have and they absolutely killed any chance of making another, they have also put the kabosh on nuclear power. Let's not forget the US is growing and the big cities already have a weak grid and wind power is spotty at best and solar power seems to be too expensive and take up way too much space for what it puts out. So I agree with dirtymilkman, there's no chance of the truck market or even the vehicle market going electric. 

 

[TeamsterGrrrl]

Good points- I don't think the electric car proponents have worked through the consequences of mass scale adoption of electric cars. For most electric car homes the car would become the single biggest electricity user, requiring more energy than the water heater or air conditioning. Given that most of these electric cars would be charged at night when there's no solar production and wind turbine output drops, the electric cars could actually see cause an increase in pollution and greenhouse gasses as coal and gas fired plants are brought back online. 

[Jamaican Bulldog]

There will be a lot of hype towards electric trucks like there was for cars to drive up stock prices of those companies and tax payer funded subsidies with little regard to viability. All this before some politician starts mandating them so he can get more donations from recipients of the aforementioned subsidies.

I am in the car business and despite the hype most people buy electric cars  because of the enormous subsidies and most of these people could afford to  buy without subsidies. 

Like everything there is the element of scarcity. The batteries no matter how advanced are made from scarce materials that are often not acquired in the most environmentally  conscious way. Also the materials are often imported.

The reason that China pushes electric vehicles is not because China wants to go green but because it has abundant coal resources to generate electricty but not oil or natural gas.

Then there is the electric grid as some have already mentioned. If hypothetically everyone had an electric car the infrastructure would not sustain them and the cost of electricity would be astronomical or not sufficent if not sourced from non-carbon derivative. No, renewables can't supply all our needs as much as some think. Germany is the perfect case study of what happens when people try to live in the virtual world and not the real world regarding energy.

The demise of the internal combustion engine is greatly exaggerated. It is still the most efficient, practical and cost effective means of converting fuel into useful energy. The technology continues to keep pace above alternatives. Years ago  30 mpg was considered great for a small car, now large cars and SUVs can give you that.

Edited August 11, 2017 by Jamaican Bulldog

[kscarbel2]

As batteries become lighter, smaller, higher capacity and faster charging, changes already taking place at record speed, it will make electric power a viable reality.

As for how to keep the batteries charged, it will depend on the application. I still like the micro turbine concept over fuel cell, either of which can endlessly recharge the batteries as required. We'll see over the next ten years how it all turns out.