This post is the third in a series of excerpts from the Advanced Energy Now 2021 Market Report, prepared for AEE by Guidehouse Insights.
Advanced Transportation was the third largest advanced energy segment worldwide in 2020, with an estimated $318.9 billion in revenue, with 15% growth from 2019 to 2020, highest of all segments. Globally, Advanced Transportation revenue has grown at an 18% CAGR since 2011. Driving much of this growth is the recent boom in plug-in electric vehicle (PEV) sales. Global PEV revenue has grown at a staggering CAGR of 59% since 2011, reaching $120 billion in 2020. Outside of a year in 2018, PEV revenues have grown by at least 25% every year, with most years registering over 60% annual growth. Since 2011, U.S. Advanced Transportation revenue has grown at a compound annual rate of 17%. As with global markets, surging PEV sales have driven overall Advanced Transportation revenue upward, reaching nearly $37.7 billion in 2020.
Hybrid electric vehicles (HEVs) continue to grow globally, with revenue from hybrid sales up 1% over 2020, to $66.8 billion. But the growth story over 2020 is in PEVs, with annual revenue growing 27% globally, to $120.4 billion, and 19%, to $19.7 billion, in the United States.
In this edition, for the first time, we do not include Clean Diesel in global or U.S. revenue for Advanced Transportation. While in past years Clean Diesel had been considered a legitimate contender for high-efficiency, low-emissions mobility, questions arising from the “diesel-gate” emissions scandal paired with rapid improvements in price and performance of EV technology have shifted industry focus toward electrification, in the form of hybrids, PEVs, and fuel cell vehicles.
Global sales of light-duty PEVs grew by nearly 1 million vehicles from 2018 to 2019, for sales growth of nearly 25%. The continued success of the Tesla Model 3, as it was introduced into new markets such as Europe and China, aided in advancing overall EV sales growth. This success, coupled with strong HEV sales, led to positive traction in the Advanced Transportation market in 2019, albeit with some areas of the market, such as PEV sales in the United States, having a slow year.
In 2020, the introduction of several new SUV and crossover PEV models in the United States, as well as additional 48-volt mild-hybrid vehicles coming to market in Europe, is expected to propel growth. The 48 V electrical system provides several functional benefits at a comparatively modest cost premium. Current 12 V systems are limited to approximately 2 kW-2.5 kW electrical output; by contrast, a 48 V system can generate a 10 kW-12 kW enabling functionality like regenerative braking, stop-start at speeds up to about 5 mph, and electric launch, electrification of ancillary components, and new functionality such as active suspensions and driving automation. The electric pickup truck market is expected to continue to support increasing PEV sales in the United States as these models come to market in 2021 and beyond.
Deployment of charging stations is the key element of the EV market other than vehicles, and there the United States is playing catch-up. (See Advanced Fuel Delivery, in a future excerpt.)
In the United States, PEV sales revenue fell 7% in 2019, but rebounded sharply in 2020 with 19% growth, reaching $19.7 billion in revenue. In 2017, PEV sales in the U.S. eclipsed that of hybrid electric vehicles, as hybrid sales flagged amid a surge in PEV adoption. This gap has grown wider since 2017, with 2020 PEV revenue nearly doubling that of hybrid EVs. However, hybrid EV sales have begun showing growth after a period of relative stagnation from 2015 and 2018; 2019 and 2020 revenues grew by 18% and 8%, respectively.
PEVs Surge Through COVID
In a year that spelled catastrophe for many industries around the world, the global PEV market reached record sales. Since 2011, global PEV sales revenues have grown at a 59% CAGR. Meanwhile, PEV sales in the US have grown by nearly 45% annually since 2011, while still only accounting for ~16% of the global market in 2020. This highlights the massive size and growth trajectory of international markets.
Europe saw over 500,000 battery EV (BEV) sales in 2020 and nearly 1 million sales of plug-in hybrid (PHEV) and standard hybrid EVs (HEVs), which is a 50% increase in total sales from 2019. While the total light-duty automotive market in the United States saw sales drop 15% in 2020, PEV sales remained relatively steady from 2019 levels. In China, the world’s leading PEV sales region, sales rose 18% despite significant economic impacts of COVID-19 in the early part of the year.
In China, fleets of taxis and buses (largely state-owned) are electrifying rapidly; two-thirds of new buses in 2017 were PEVs. According to Guidehouse Insights analysis, electric buses (including hybrid, battery electric, plug-in hybrid, and fuel cell) have already reached 16% of sales for public transit systems in the United States, as of late 2018. Fleet operators are more sensitive to vehicle economics than are individual consumers, but they are also more focused than consumers on total cost of ownership, which is more favorable for PEVs. Fleets can utilize company-owned charging depots, reducing reliance on publicly available charging stations. Over time, pairing vehicle grid integration (VGI) infrastructure technologies with fleet-owned PEVs will increase PEV payback. Companies such as UPS, FedEx, and Penske, are already actively exploring PEVs for fleet purposes.
Guidehouse Insights estimates that PEVs made up less than 1% of the fleet vehicle market in 2018 but will rise to 12% of fleet vehicles by 2030. The light duty segment will continue to make up the majority of PEV fleet sales, but medium- and heavy-duty PEV adoption rates are expected to increase throughout the forecast period.
Trucks Start to be Electrified
The market for electric trucks and buses is still young, but rapid developments in the industry and increasing market interest are setting a strong foundation for electrification to become the new norm.
Although the electric-drive medium- and heavy-duty vehicle market is gaining increased attention, the vehicles currently make up a small portion of global PEV sales outside of China. The rise of these vehicles is driven by several factors: regional fuel efficiency and emissions regulations, growing adoption of urban low- to zero-emission zone regulations, increasing demand from corporate customers for low- to zero-emissions logistics services, and lower fuel and maintenance costs for fleet owners.
Pathways to overcome challenges with range, infrastructure, and capital costs are becoming more clear, with encouraging developments in solid-state batteries, innovations in charging infrastructure technologies and deployment architectures, and new financing models. A development of note is the upcoming debut of megawatt charging systems, expected in 2021, which will eventually enable electrification of long-haul trucking. Also of note, the roll-out of leased vehicle-to-grid (V2G) capable electric school buses by U.S. utility Dominion Power, to school districts in its service territory, as well as the Montgomery County, MD, school district’s contract for EV school-buses-as-a-service from Highland Electric Transportation. These leasing arrangements set the stage for the transformation of North America’s 500,000-strong school bus fleet, a campaign goal enunciated by President Biden.
Beyond technical developments, major customers are showing increased willingness for electrification of truck fleets. This is evidenced by major investments from parcel distributors like UPS, FedEx, Amazon, and DHL in electric trucks from Arrival, Chanje, Rivian, and BYD respectively.
Guidehouse Insights estimates that the electric truck and bus market will grow to over 900,000 unit sales globally by 2030, roughly 15% of the market that year.
E-Bike Sales Surge During COVID-19
The rise of traditional bicycle and e-bike sales in 2020 is well-documented, as COVID-19 has driven an increase in demand for physically distanced transport options. What has been less discussed is the trend over the past six to eight years of e-bikes cannibalizing bicycle sales. Countries such as the Netherlands are far along in the transition from analog bikes to e-bikes, and many other European countries are showing similar patterns, including major e-bike markets such as Germany, Belgium, Austria, and France.
While 2020 has been a banner year for e-bike sales in the U.S., this market has generally lagged far behind Europe. This is largely due to the lack of priority given to bicycle promotion and infrastructure at a national level, resulting in bicycles being treated as more of a recreational apparatus than a viable transportation option. Consider, by comparison, the national-level efforts to promote bicycling, and so e-bikes, across Europe: 20 bicycle highways in the Netherlands, a 62-mile bicycle highway in Germany, e-bike subsidies as high as €500 ($580) in France, and Iceland’s dedicated 20% annually transport budget for cycling and walking.
Despite the lack of national action, e-bike sales in the U.S. grew at a 37% CAGR from 2013 to 2020, though accounting for just 2% of total bike sales in 2019. With the impact of COVID, however, U.S. electric bicycle sales grew by nearly 25% in 2020, reaching $734 million in revenue.
Consumer awareness of the benefits of e-bike technology has significantly increased, and unprecedented levels of interest are being shown at the city level regarding bicycle lane expansion (with potential national efforts to come). Meanwhile, new e-bike products are being released by an increasing variety of manufacturers, and continued cost and performance improvements in lithium-ion battery technology are expected to continue. Guidehouse Insights projects that e-bike sales in the U.S. will reach between 15% and 20% of the total bike market by 2030.
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