Massive disruption is rushing down the highway to a $ 1.5 trillion global trucking market, as traditional manufacturers and newcomers attempt to claim pole position in a race for zero-emission truck dominance.
Electric vehicles grabbed the attention of investors last year, as stocks like Tesla TSLA,
Li Auto LI,
and WORLD 1211,
roared higher. And that’s for good reason: electric vehicles will have entered 100% of the global automotive market by 2040, according to UBS UBS,
By just 2025, the Swiss bank expects two players – Tesla and Volkswagen VOW,
– have already emerged as the best sellers of electric vehicles in the world, delivering around 1.2 million cars each as of next year.
But vehicle emissions are not just about cars. There are bigger things moving.
Amid changing regulations and technological innovation, alternatives to battery-electric and hydrogen-powered internal combustion engines are emerging to disrupt the global trucking market, estimated by UBS at $ 1.5 trillion.
Essential reading: Buy these 3 stocks of batteries to play electric vehicle party, but stay away from this company, says UBS
The Swiss bank expects zero-emission vehicles, or ZEVs, to eventually replace trucks powered by internal combustion engines, as the pace of change accelerates rapidly from three years ago, when newcomers join the fray.
In a report released Wednesday with contributions from 21 analysts, UBS said it expects most of the trucking market to be split between 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, analysts say.
The main driving force is global emissions regulations, but the economics of battery and fuel cell ZEVs are also very competitive. UBS predicts that heavy trucks powered by batteries or fuel cells will be more cost effective than diesel by 2030, including the cost of infrastructure. However, the supply of inputs remains a challenge, with global battery cell shortages expected by 2025, according to UBS, and the green hydrogen industry still young.
UBS predicts that 30% of heavy truck sales in North America, Europe and China will come from ZEVs by 2030, with ZEV trucks accounting for 40% to 60% of medium truck sales in those regions.
Read it: Forget about Nio and XPeng. This company and Tesla will be the first two electric vehicle games by 2025, according to UBS.
If Tesla’s goals are taken literally, then its heavy-duty battery-powered semi-electric truck will be a “superior alternative” to internal combustion engines by 2025, UBS said.
In fact, to the extent that Tesla can maintain a lead in battery innovation, analysts at the Swiss bank believe that the US company “may have an inherent advantage” over older heavy-truck makers who are rely on third parties to supply batteries. .
Manufacturers of conventional trucks and engines are expected to fight hard to maintain control, including through new offerings and partnerships, but UBS expects them to “lose at least one. Part of the market. Incumbent manufacturers face the “biggest headwind” in this changing space, the bank said.
In mid-duty trucks, new entrants like Rivian, Lion and Chanje are establishing a presence and will be the main challengers. These companies are currently private, but could go public through an initial public offering or a merger with a special purpose blank check acquisition company.
Plus: Tesla faces race with Volkswagen as German auto giant targets battery costs and new gigafactories
When it comes to heavy trucks and engines, expect Tesla, Nikola and Hyliion HYLN,
dominate if they are able to execute their respective visions, UBS said, although incumbents like Toyota 7203,
and Hyundai 005380,
are also expanding globally. Analysts noted that new entrants’ electric battery and fuel cell offerings are still under development and may fall short of targets in terms of weight and range.
In the UBS model, all of the following conventional truck and engine manufacturers are expected to lose market share by 2030: Cummins CMI,
– which owns Mack Trucks – and Traton 8TRA,
which is majority-owned by Volkswagen and should finalize its acquisition of Navistar NAV,
In this battle between truckmakers, UBS expects infrastructure, battery and refueling companies to overtake the fray and make the most of the tailwind. These action groups are their preferred choices. Swiss bank observes power infrastructure company Quanta Services PWR,
and chemical and battery groups like Albemarle ALB,
LG Chem 051910,
et Contemporary Amperex Technology Co. Limited (CATL) 300750,
The chart below shows other selections of UBS most and least preferred stocks in the report: