CO2 targets and commercial vehicles
The climate summits which have taken place over the last decades, including COP26 held in October and November 2021, have repeatedly underlined the need for a change in direction in the approach regarding CO2 emissions and greenhouse gases, proposing a series of actions to be undertaken.
The automotive sector is one of the main industries affected, but it is important to differentiate between cars and commercial vehicles.
According to data from the European Commission, cars and light commercial vehicles are responsible respectively for 12% and 2.5% of total EU emissions of carbon dioxide (CO2), which is the principal greenhouse gas.
However, as underlined by ACEA (European Automobile Manufacturers’ Association), some technological solutions to reduce CO2 emission for cars are not applicable to commercial vehicles, and lower production volumes of Light Commercial Vehicles (LCVs) don’t permit the same economies of scale.
Therefore, given the necessity to reduce climate changing emissions in the near future, what are the challenges for the LCV sector?
Emissions, development and production cycles
From 2025 to 2030, EU regulation 2019/631 sets tougher goals for CO2 emissions regarding the entire UE fleet, defined in terms of percentage decreases with 2021 referenced as starting point for the comparison.
- Passenger vehicles: a reduction of 15% from 2025, and a reduction of 37.5% from 2030 onwards.
- Commercial vehicles: a reduction of 15% from 2025 and a reduction of 31% from 2030 onwards.
These very challenging goals are especially problematic for commercial vehicles, as development and production cycles of LCVs are far longer than those for cars. On average, we are talking about 15 years, compared to 11 years for a passenger vehicle.
LCVs that will be sold in 2025 are already being developed, therefore the goal of reaching a CO2 reduction of 15% by 2025, when applied to vehicles in this category, is simply put not realistic.
According to ACEA, the 2030 benchmark for low emission vehicles proposed by the European Union should decrease by 10% for LCVs, as their potential for electrification is much lower than that of cars.
Electrification of LCVs
With regard to cars and respect for the environment, the solution on which we are currently heavily investing, is vehicle electrification, provided that the production of the required energy is via renewable sources.
Otherwise, it would be at least partially a nonsensical position. Unfortunately, even as of today, purchasing an electrical vehicle assumes a willingness to pay a higher price if we consider a comparable fossil-fueled vehicle and this is an important point when taking LCVs into account.
The reason for this is that this type of vehicle is for business use, not private. Renewing a business commercial fleet implies a sizable financial investment for a company, and just a small degree of increased costs could cause problems.
And that is not everything! An electrical vehicle brings with it built-in limits, associated with autonomy and battery life. If a business owner, over and above the costs associated with the purchase of the LCV, also has to factor in lower capacity loads and delays in logistics due to recharging, then it will be even harder to switch over.
An electric battery for an LCV vehicle could occupy a considerable space, which would otherwise be used for people and/or goods, and is heavy, possibly pushing the van into another vehicle category.
Adherence to goals for the reduction of climate changing gases regarding LCVs cannot follow the same rules and procedures as for cars, due to a number of limiting factors which cannot be overcome in the short term.
This is why diesel-fueled vehicles continue to represent over 96% of vans, according to ACEA data.
So having stated this, according to the “Global Electric Light Commercial Vehicle Growth Opportunities” report, we can forecast an e-LCV market in North America, Europe, China and the Asian-Pacific which will reach 5.6 million units by 2030.
Within the LCV segment, North America and Europe are declaring potential electrification preference for heavy vehicles (over 3.5 tons) whilst China and the Asian-Pacifice region are aiming for lighter vehicles (below 3.5 tons).
It is forecast that Europe will show the highest market penetration for e-LCVs with 40%, followed by China at 35%, by 2030.