ELECTRIC trucking is about to have its BYD Co moment.
Long considered an implausible alternative to conventional, diesel-powered road freight, electric vehicle (EV) trucks have been quietly growing into a formidable business.
Tesla Inc’s Semi, first promised in 2017, is getting most of the headlines after finally going into mass-market production last week.
But the real action is in China, where roughly 11% of the heavy long-distance trucks and 20% of the smaller ones sold over the past year were battery-only.
Backed by the world’s leading battery businesses including Contemporary Amperex Technology Co, or CATL, the revolution is on the brink of going global.
Machinery giants Sany Heavy Industry Co and XCMG Construction Machinery Co, seeking to escape the collapse of China’s construction market, are aggressively targeting overseas sales.
The crisis in the Strait of Hormuz, by forcing up the price of diesel and raising troubling questions about whether fuel will even be available in coming months, will accelerate the switch across Asia and beyond.
“The main driver is not emission control, it is that you’re going to save costs,” said Michael Yue, general manager of Sany’s truck unit.
The Iran war has made those concerns more pressing: “Customers are telling me very honestly, ‘We don’t want to rely on uncertain things. In the future, who knows? This could happen again.’”
The math is simple, according to Yue: Wherever it costs at least 10 times more to buy a liter of diesel than a kilowatt-hour of electricity, an electric truck will pay off its additional purchase cost in 12 to 14 months.
For truck owners, who treat their vehicles as long-term investments and keep an eagle eye on operating costs, switching in current circumstances is a no-brainer.
At present, countries accounting for about 40% of diesel demand meet that 10-times multiple, by my calculations.
Even if you look at average 2025 diesel prices, before fuel costs surged thanks to the crisis in the Middle East, more than a third of diesel is used in countries where it costs at least nine times more.
By 2030, EV trucks will outcompete diesel wherever the multiple is above four times, according to BloombergNEF.
On that metric, even petrostates like Saudi Arabia will find batteries cheaper.
Many of Sany’s potential customers are where you would expect: In Europe, where stringent fuel economy rules will effectively outlaw sales of non-electric trucks by 2040.
But a look at where electricity is most competitive with diesel underlines why Yue is seeing strong interest from South Africa, Vietnam, Indonesia, and Thailand, too.
As with the EV car boom underway, the developing world may be about to leapfrog richer countries in its push into clean energy.
The consequences could make the rise of electric cars look like a sideshow. Despite their smaller numbers, trucks and buses consume about as much fuel as all the cars and motorcycles on the road.
Add in off-road vehicles, like those in ports, on construction sites, and in mines, plus a host of non-mobile uses
such as generators and water pumps, and diesel accounts for about 28 million barrels of oil a day, compared to 25 million barrels for petrol.
Charging, a major headache for consumer EVs, may also prove less challenging. Trucks are already dependent on a limited number of depots and regular scheduling.
That means operators won’t need an oversized network of plug points.
CATL’s Qiji battery-swapping network for heavy trucks plans to have 900 locations built by the end of this year in China, and to cover 80% of major freight routes by 2030.
There are several advantages to battery-swapping, the emerging default for trucks in China.
The high-speed charging used by Tesla’s Semi and European EV truck-makers such as Scania AB, Daimler Truck Holding AG and Volvo AB requires gold-standard power grids to provide surges of electrons whenever a vehicle pulls in.
Swapped batteries, by contrast, can be topped up when power is cheapest, and even earn money from selling electricity back into the system during peak hours.
The conventional view is that fragile grids in emerging markets will be an insurmountable hurdle.
Battery-wapping depots can bypass those issues: By powering up with their own solar farms, or providing energy services to help stabilise the network itself, they turn a perceived liability into an asset.
European, US and Japanese companies that dominate the truck market should watch out.
As with electric cars, a brand-new drivetrain is about to upend their industry. Aggressive Chinese competitors are looking to seize the moment.
“For diesel, it’s very hard for Sany to surpass the competition; some of the other brands have been in the market for more than 100 years,” said Yue.
“For electrification, it’s new technology. We could be number one.” — Bloomberg
David Fickling is a Bloomberg Opinion columnist. The views expressed here are the writer’s own.
