LCVs poised to gain from electric push, but costs, range remain risks

November 4, 2018 06:01 CET

With a big push from European and local pollution reduction regulations, electrification is emerging as a viable option for light commercial vehicles. As with battery-electric passenger cars, sales of full-electric LCVs are currently tiny — well below 1 percent of the overall market — but automakers are expanding their lineups and displaying futuristic delivery concepts. New players from Europe, Asia and major suppliers plan to enter the market.

In some ways the sector is perfect for mass electrification, experts say. Delivery routes can be tailored to match battery range. Quiet, zero-emissions electric vans can improve the quality of life for urban dwellers — and allow drivers to enter city centers that may be closed or charge a fee to vehicles with internal combustion engines.

However, the relentless focus on cost by fleet owners and individual van buyers alike means that the price gap between internal combustion and electric powertrains is harder to overcome. Vans typically have short, high-mileage lifespans, making it harder to recoup investments. And electric motors and batteries are not yet suited for long-distance trips with heavier loads.

“The smaller the LCV, the more it’s possible that it will be electrified,” said Tatiana Hristova, an analyst at IHS Markit. “It’s still very unprofitable on bigger vehicles.” Hristova said that electric vans are a difficult sell to fleet operators right now. “An electric driveline will increase the price of commercial vehicles significantly, and total cost of ownership is key for professional buyers,” she said.

The LCV sector in general is benefiting from two trends, mass urbanization and the accompanying rise in online commerce deliveries.

“The last-mile delivery market is growing exponentially,” Thomas Steverding, responsible for the autonomous delivery program at DPD Global, said at the Hanover commercial vehicles show in September. “We expect volumes to double by 2025 in Europe.” DPD, which is a development partner on Renault’s EZ-PRO autonomous electric delivery concept, delivers 4.8 million packages a day in Europe.

VW’s vision for the future of delivery is the zero-emissions I.D. Buzz Cargo. Its styling is inspired by the original air-cooled, rear-engine VW van. It is positioned below the Crafter in Volkswagen’s LCV lineup. A passenger version will be produced by 2022.

Cost pressure

Scott Shepard, a senior analyst at Navigant based in London, said mass acceptance of electric vans probably will not come until the early 2030s, when Navigant predicts they will reach parity on total cost of ownership with diesel or gasoline versions. In comparison, he said, an electric compact passenger car such as a Volkswagen Golf should reach parity by around 2025.

“The market is weighted a little bit against electric vehicles,” Shepard said. “It’s very cost competitive. Vans typically need longer ranges, which requires a larger battery.” Diesel or gasoline van engines tend to be relatively simple, he added, thus “the distance your sophisticated battery has to come down in price to your non-sophisticated engine is pretty significant.”

Most sales so far have been to delivery companies or government agencies (the French postal service was an early buyer of Kangoo vans), and companies that want to decrease their environmental footprint.

“Governments are becoming more emphatic about transitioning away from internal combustion, and that has led companies such as DHL to move those vehicles that can be moved to electricity quickly,” Shepard said. “The difficulty will be in getting those companies that aren’t big and won’t see any environmental credits.”

Renault’s EZ-Pro is an autonomous, electric last-mile delivery concept. It consists of an autonomous leader pod with a human “concierge” orchestrating deliveries by a train of follower pods that can travel by platooning or independently. The pods can be configured in a variety of ways.

Small sector

The electric van market, which can be measured in tens of thousands of annual sales, is led by the Renault Kangoo, Nissan e-NV200 — and a new entrant, the StreetScooter Work, made by a subsidiary of logistics company DHL. Ford has started production of larger vans for StreetScooter. The Peugeot Partner and Citroen Berlingo round out the Top 5, according to the European Alternative Fuels Observatory.

“There are companies such as Street-Scooter that have the potential to make somewhat of an impression,” Shepard said, “but the larger impact is going to be felt when the major automakers are able to bring together a solution that can be produced at scale.”

Electrification will come to the LCV market in two waves, said Hristova of IHS. Electric vans now for sale are built on traditional platforms, “which isn’t profitable or cheap, even considering that new batteries will get less expensive,” she said. However, the next wave of vans — likely to arrive after 2022 — will be built on dedicated battery-electric architecture such as VW Group’s MEB, which will decrease overall costs.

PSA Group will begin selling electric versions of its next-generation midsize vans — the Opel/Vauxhall Vivaro, Peugeot Expert and Citroen Jumpy — which will be built on PSA’s e-EMP2 multi-power platform starting in 2019. The newest small vans, on a modified EMP2 platform, will follow, said Philippe Narbeburu, PSA’s LCV business unit head. He added that PSA expects 12 percent to 15 percent of buyers will opt for full-electric versions within three years. “The initial cost will be higher but the intent is to get the same total cost of ownership for diesel and battery-electric vehicles,” he said. “For fleets, it will be the same at the end of the day, because maintenance and running costs will be lower.”

There have been a few recent growth spurts. Renault has nearly doubled Kangoo sales this year compared with 2017, and Nissan said it had taken more than 7,000 orders this year for its upgraded e-NV200.

Paolo D’Ettore, Nissan Europe’s LCV director, said extending the e-NV200’s range was the key to increased orders. A 40-kilowatt battery gives the van a range of 200 km (124 miles) on the WLTP type approval cycle, and 300 km in urban driving, D’Ettore said. “Based on our data, we believe that with this kind of range we can cover up to 40 percent of the daily usage of a small van,” he said. Nissan has also seen its customer base diversify from municipalities and utilities to delivery businesses and shuttle services.

Bulk buying

Aman Atak, an analyst at IDTechEX in Cambridge, England, who studies electric mobility, said the electric van market was likely to grow at a faster rate than passenger cars because fleet owners and government agencies tend to order in large quantities.

“An essential part of it is getting the fleet operators to see the benefits of adopting electric vehicles,” she said. “Whether they feel pressure by regulations, they need to participate in some of these pilot programs. They will be able to understand some of the potential savings.”

The possibilities of Europe’s electric LCV market have lured China’s largest automaker, SAIC, which has begun limited sales of the Maxus EV80 large van, with up to 192 km of range (measured on the NEDC test cycle) and a two-hour charging time, ahead of a full launch of the brand next year. Prices start at 47,500 euros and SAIC says total cost of ownership is “within 5 percent” of diesel-powered competitors but could be less depending on use and government incentives.

By comparison, the similarly sized Renault Master Z.E. van starts at 46,700 euros in France and has the same NEDC range as the EV80. Pieter Gabriels, SAIC vice president for vehicle sales in Europe, said the Maxus brand was well positioned to capitalize on electric van growth because the EV80 has been on the market for five years in China, the world’s largest electric vehicle market.

“Bringing another 5,000 vehicles to Europe is not a big deal,” he said “If you order 1,000 with me today I will get you that within three months. We’re not better or worse than anybody else — the difference is we are ready to supply,” Gabriels added.

Ford, Europe’s best-selling van brand, is taking a different path. The company will launch a plug-in hybrid version of the Transit Custom in the second half of 2019. The front-wheel-drive midsize van, which has been undergoing real-world trials in London for more than a year, will offer 50 km of electric range and a total range of 500 km. A 1.0-liter three-cylinder gasoline engine is combined with an electric motor that is used to charge the batteries. Ford says the plug-in hybrid offers the same load capacity and payload as a diesel version.

Ford has not announced a price but officials at the Hanover show said it would be higher than diesel versions, adding that operators will save on fuel costs and avoid congestion charges in London, where they currently pay 11.50 pounds (12.85 euros) a day. “From an engineering perspective it [the plug-in hybrid] makes a lot of sense,” said Shepard of Navigant, but he said that Ford’s advantage could be negated as the cost of batteries falls.


Glimpse of the future

Renault, Mercedes-Benz and Volkswagen all displayed eye-catching concept vehicles in September at the commercial vehicle show in Hanover. Renaults EZ-PRO concept consisted of an autonomous leader pod with a human “concierge” orchestrating deliveries by a train of follower pods that can travel by platooning or independently.

“Two and a half years ago, we were talking about what will evolve in customer behavior and in the markets,” said Ashwani Gupta, the head of LCVs at the Renault-Nissan-Mitsubishi alliance. “We anticipated that there will be more and more regulations in different countries because of pollution and congestion, and customers will go more for e commerce and last-mile deliveries.”

Mercedes showed the Urbanetic concept, a modular electric and autonomous vehicle that could be used to transport cargo or people. VW’s vision for the future of delivery is the I.D. Buzz Cargo, an homage to the original air-cooled, rear-engine van.

German driveline and technology supplier ZF Friedrichshafen used the show to debut the Innovation Van, an electric delivery vehicle that moves semi-autonomously with the driver. Last month Robert Bosch said it would launch an electric van-sharing service in Germany this year. The vans will be provided by StreetScooter, Bosch said. Bosch supplies the powertrain components for the vehicles.

ZF CEO Wolf-Henning Scheider said that electromobility was already delivering the supplier 1 billion euros a year in revenue. “It’s realistic that within the next 10 years we will have about 30 percent electrification in the commercial vehicles sector, obviously for urban tasks,” Scheider said, “but everything that is logistics in the urban area can be electrified.” ZF is working with a “very large” logistics company to develop the van, highlighting the importance of partners to build a case for electrification.

Said Renault-Nissan Mitsubishi’s Gupta: “At the end, the delivery business is product and services. We have the expertise in products but services are not our core competency. We need to find the partners who can bring strength in terms of services, then we will prepare it together.”

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