Presentations

The Mobility Revolution – How EVs will Change the Energy Landscape

Wednesday, October 4, 2017 - 11:20 to 11:40
Summit sessions - Sustainable & Smart City - Sustainable Urban Mobility & Market Models

Stream location

G104-105

Introduction

“McKinsey Energy Insights’ latest analysis shows how electric trucks (eTrucks) could capture a significant share of sales as early as 2030 and assesses the impact this would have on energy markets. The new research is based on adoption curve scenario modelling of 27 truck segments in US, China, and Europe, incorporating the trends of three main drivers for electrification.”

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Description

McKinsey Energy Insights’ latest analysis shows how electric trucks (eTrucks) could capture a significant share of sales as early as 2030 and assesses the impact this would have on energy markets. The new research is based on adoption curve scenario modelling of 27 truck segments in US, China, and Europe, incorporating the trends of three main drivers for electrification.

While the short-term impact of eTrucks on diesel demand is modest, by 2030 the outlook is more significant and will require involved actors to rethink their strategies. Even though trucks represent only 5% of the global vehicle stock, they make up more than 20% of road transport fuel demand due to their high fuel consumption and mileage. By 2030 eTrucks could account for 15% of global truck sales, with favorable segments like urban, light-duty trucks reaching sales as high as 25-35% in China and Europe.

The adoption of eTrucks is progressing faster than most people expected. The three main drivers determining the attractiveness of eTrucks are cost parity with diesel trucks, electrification readiness (availability of eTrucks and charging infrastructure), and regulation.

For the majority of commercial vehicle segments, electric trucks are expected to reach cost parity with diesel-powered trucks within the next 10 years. Once eTrucks have a lower total cost of ownership, cost-conscious truck owners are expected to switch their fleets, although regional characteristics will determine the different timing of when cost parity will be reached in the three regions analyzed.

Investment has shown the viability of electrification for commercial purposes with heavy duty eTrucks entering the market within weeks and the Tesla Semi launch at the end of October. Once eTrucks become more mainstream, the roll-out of super-charging infrastructure along highways will follow, enabling fueling along popular routes. This will impact not only oil companies but also fuel retailers who will have to redesign their business models as well as their fuel stations. While the initial additional power demand from eTrucks will be relatively small, beyond 2030 electricity demand from eTrucks will grow rapidly putting pressure on utilities to e.g., upgrade grids.  

Regulation also plays a significant role, such as inner city diesel bans. Some major cities have already announced or are considering diesel bans, as well as several countries announcing ambitious electric vehicle penetration targets to meet their commitments to reducing CO2 emissions. These regulatory forces could lead to a rapid increase in the sale of electrified commercial vehicles even before they reach cost parity.

As far as the impact on national and international oil companies is concerned, the electrification of trucks in the EU, China, and the US reverses the global trend of growing diesel demand in the truck sector before 2030. Beyond 2030, the continued uptake of eTrucks could displace up to 3.5 million barrels per day by 2050 (the equivalent of removing 40% of today’s diesel demand from trucks).

 

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