Massive disruption is hurtling down the highway toward a $1.5 trillion global trucking market, as legacy manufacturers and new entrants alike grapple for pole position in a race for dominance in zero-emissions trucks.
Electric vehicles have sped into the attention of investors in the last year, as stocks like Tesla TSLA, -6.93%, Nikola NKLA, -9.82%, NIO NIO, -6.99%, XPeng XPEV, -3.10%, Li Auto LI, -1.45%, and BYD 1211, -3.75% roared higher. And that is for good reason: electric vehicles will have penetrated 100% of the global car market by 2040, according to UBS UBS, +1.71%. By just 2025, the Swiss bank expects two players — Tesla and Volkswagen VOW, -9.90% — to have already emerged as the world’s top EV sellers, delivering around 1.2 million cars each as soon as next year.
But vehicle emissions concern more than just cars. There are bigger things that move.
Amid changing regulations and technological innovation, both battery-electric and hydrogen-fuel-cell alternatives to internal combustion engines are emerging to disrupt the global trucking market, estimated by UBS to be worth $1.5 trillion.
The Swiss bank expects zero-emissions vehicles, or ZEVs, to eventually displace trucks powered by internal combustion engines, with the pace of change accelerating rapidly compared with three years ago as new entrants join the fray.
In a report published on Wednesday with the contribution of 21 analysts, UBS said it expects most of the trucking market to be shared among battery-electric vehicles and fuel-cell electric vehicles, which are powered by hydrogen. Renewable natural gas could also play a smaller role in the market, the analysts said.
The main driving force is global emissions regulations, but the economics of both battery and fuel-cell ZEVs are also highly-competitive. UBS projects that heavy-duty trucks powered by batteries or fuel cells will be more cost effective than diesel by 2030, including the cost of infrastructure. However, input supply remains a challenge, with global shortages in battery cells expected by 2025, according to UBS, and the green hydrogen industry still young.
UBS predicts that 30% of heavy-duty truck sales in North America, Europe, and China will come from ZEVs by 2030, with ZEV trucks making up 40% to 60% of medium-duty sales across these regions.