Competition in heavy-duty truck electrification: the tortoise and hare race between lithium batteries and fuel cells

According to the data from the China Automobile Association, the number of heavy-duty trucks in my country in 2019 was 7.617 million, accounting for 3.0% of the total number of vehicles. However, according to the data from the Ministry of Ecology and Environment, in 2019, heavy-duty trucks accounted for 74%, 29% and 29% of the emissions of nitrogen oxides, carbon monoxide and particulate matter from vehicles, respectively.

Sales volume of China's heavy-duty truck market over the years (10,000 units)

Source: China Association of Automobile Manufacturers (CAAM), Credit Suisse, China Industry Information Network, Orange Club Research Institute

The emission standards for fuel vehicles have been upgraded, but the fundamental solution is to transform to new energy power technology. In the field of heavy trucks, pure electric technology and fuel cell technology are expected to be promising.

1 In 2021, the number of new energy heavy-duty trucks exceeded 10,000 for the first time

my country's sales of new energy heavy-duty trucks reached 658 units in 2018; by 2021, sales exceeded 10,000 units for the first time.

Sales volume and penetration rate of new energy heavy-duty trucks from 2018 to 2021

Source: Compulsory Traffic Insurance, Orange Club Research Institute

The unusually rapid sales of new energy heavy-duty trucks in 2019 was due to the abnormal performance brought about by the centralized registration of pure electric dump trucks purchased in Shenzhen, but it is an indisputable fact that new energy heavy-duty trucks have been on an upward trend overall in recent years. Multiple factors have jointly contributed to the prosperity of the new energy heavy-duty truck market: technological progress, cost reduction, improved infrastructure, promotion of battery replacement, subsidy reduction stimulus, etc.

2019-2022.2 Monthly sales trend of domestic new energy heavy trucks (units)

Data source: First Commercial Vehicle Network, Orange Club Research Institute

From January to December 2021, a total of 10,448 new energy heavy-duty trucks were sold, with annual sales exceeding 10,000 for the first time, and the proportion of new energy heavy-duty trucks in total heavy-duty truck sales increased from 0.16% in 2020 to 0.75%. Stimulated by the decline in subsidies, new energy heavy-duty truck sales in 2021 saw a year-end sprint, with December sales even setting a record high in the history of new energy heavy-duty truck development, exceeding 3,000 units.

According to the Notice on Improving the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles (Caijian [2020] No. 86), the financial subsidy policy for the promotion and application of new energy vehicles will be extended to the end of 2022. In order to "smooth the intensity and rhythm of subsidy reduction, in principle, the subsidy standards for 2020-2022 will be reduced by 10%, 20%, and 30% respectively on the basis of the previous year" (non-public sector). That is, the maximum subsidy for pure electric heavy trucks (non-public sector models) registered before the end of 2021 is 40,000 yuan (a 20% reduction from 50,000 yuan in 2020). If it is registered in 2022, the maximum subsidy for a single vehicle will be 28,000 yuan, which will be another 30% lower than in 2021.

Note: According to GB/T15089-2001, N1 refers to trucks with a maximum design gross mass not exceeding 3500kg; N2 refers to trucks with a maximum design gross mass exceeding 3500kg but not exceeding 12000kg; N3 refers to trucks with a maximum design gross mass exceeding 12000kg.

Although the decline in financial subsidies for new energy vehicles has released some potential demand in 2022 in advance, driven by the general trend of heavy-duty truck electrification, sales of new energy heavy-duty trucks are expected to reach a new high in 2022.

2 Fuel-electric heavy-duty trucks are launched, and battery-swap heavy-duty trucks explode

在新能源重卡中，纯电重卡仍为主流，但燃料电池重卡进步显著。2020年与2021年，纯电重卡分别占比98．7％、92．4％，但燃料电池重卡占比在提升。2020年燃料电池重卡占整个新能源重卡市场的0．7％，2021提高到了7．5％。随着2021年8月份开始的燃料电池汽车城市群示范推广“3＋2”格局的正式形成，以及各示范城市群氢能及燃料电池汽车规划的出台，预计燃料电池重卡市场将迎来爆发。

2020-2021 New Energy Heavy Truck Fuel Market Share

Source: CAAM, Orange Club Research Institute

With policy support, battery-swap heavy-duty trucks are experiencing an explosion. Heavy-duty trucks have high energy consumption, electric heavy-duty trucks have insufficient mileage , and problems such as high refueling frequency, slow refueling, and short range are more prominent in heavy-duty truck operation scenarios. Battery-swap heavy-duty trucks can fully solve the pain points of electric heavy-duty trucks.

In 2021, the demand for battery-swap heavy-duty trucks in my country has exploded. In 2020, 612 battery-swap heavy-duty trucks were sold (accounting for 23.68% of the 2,584 pure electric heavy-duty trucks sold throughout the year), and in 2021, the sales of battery-swap heavy-duty trucks increased to 4,374 (accounting for 45.31% of the 9,654 pure electric heavy-duty trucks sold throughout the year).    

The proportion of battery-swap heavy-duty trucks in pure electric heavy-duty trucks in 2021

Source: Qidian Shared Battery Swap, Orange Club Research Institute    

The state has issued relevant policies to support the development of battery-swap heavy-duty trucks. In 2021, the Ministry of Industry and Information Technology issued the "Notice on Starting the Pilot Work on the Application of Battery Swap Mode for New Energy Vehicles", listing Tangshan, Baotou, Yibin and other cities as cities with heavy-duty truck characteristics. These cities have responded positively, formulated clear promotion goals, and issued a number of supporting policies to support the promotion and application of battery-swap heavy-duty trucks, which will effectively promote the rapid growth of battery-swap heavy-duty truck sales in 2022. At the beginning of 2022, the "Implementation Opinions of the National Development and Reform Commission and Other Departments on Further Improving the Service Guarantee Capability of Electric Vehicle Charging Infrastructure" was promulgated, clarifying the state's goal of improving the service guarantee capability of new energy vehicle charging infrastructure, and promoting more standardized and convenient charging of new energy vehicles.

3 New energy heavy-duty truck development trajectory over the past three years

From 2019 to 2021, the sales model structure of new energy heavy-duty trucks has undergone major changes.

All new energy heavy-duty trucks sold in 2019 were pure electric heavy-duty trucks, of which pure electric dump trucks sold 2,849 units, accounting for 56.57%. 98.77% of the dump trucks were contributed by BYD Commercial Vehicles alone, with the main model being BYD 31T 8×4 pure electric muck trucks, which are mainly sold in Shenzhen, Guangdong. In June 2019, Shenzhen purchased and licensed the vehicles in a centralized manner, which was a one-time behavior.

In 2019, the sales share second only to pure electric dump trucks was pure electric dump garbage trucks, with sales of 1,004 units, of which 99% were contributed by Nanjing Golden Dragon Kaiwo Automobile. The main sales area was also Shenzhen, which shows the importance Shenzhen attaches to the promotion and application of new energy special vehicles in the city.

In addition to pure electric dump trucks and pure electric dump garbage trucks, most of the new energy heavy trucks sold in 2019 were sanitation vehicles, such as sweepers, cleaning trucks, sprinklers, dust suppression trucks, etc. Even tractors are only used for short-distance material transportation, which shows that due to the lack of breakthroughs in battery technology, medium and long-distance transportation of new energy heavy trucks has not really started.

New energy heavy-duty truck model structure in 2019

Source: First Commercial Vehicle Network, Orange Club Research Institute

From 2020 to 2021, the new energy heavy truck market has been rising, with tractors and dump trucks performing the best. The sales share of new energy tractors increased from 26.42% in 2020 to 52.91% in 2021. The surge in sales of new energy tractors is mainly because tractors have found their own commercialization path in fixed-line scenarios such as mines, steel mills, power plants, and ports in a battery replacement mode.

Sales structure of new energy heavy-duty trucks from 2019 to 2021

Source: Tram Resources, Orange Club Research Institute

There is a certain relationship between the sales structure of new energy heavy-duty trucks in each city and the industrial structure of the city. The total sales of the top ten cities for new energy heavy-duty trucks in 2021 was 7,157 units, accounting for 68.08% of the total annual sales of new energy heavy-duty trucks. Among them, Tangshan and Zhengzhou had sales of more than 1,000 units. It is worth noting that 4 of the top 10 cities in sales are from Hebei Province, which is related to its industrial structure and environmental pressure. The model structure of new energy heavy-duty trucks sold in each city is different, and the specific analysis is as follows:

New energy heavy truck sales city rankings in 2021

Data source: Tram Resources, Orange Club Research Institute

New energy heavy-duty truck sales model distribution in cities from January to December 2021

Data source: Tram Resources, Orange Club Research Institute

4 Fuel-electric heavy trucks are just starting out: Top 5 cities by sales

Since 2016, fuel cell system suppliers have taken the lead and cooperated with various vehicle manufacturers to carry out demonstration and promotion of various types of fuel cell vehicles in various cities. By the end of 2021, a total of 813 fuel cell heavy trucks have been promoted. Among them, Qingdao, Shanghai, Baoding, and Guangzhou are at the forefront of the number of fuel cell heavy truck models promoted.

Demonstration and promotion case of hydrogen heavy truck

5Lithium   battery and fuel battery, the tortoise and hare race between two technical routes