Race to zero: How manufacturers are positioned for zero-emission commercial trucks and buses in North America
Made in North America: Manufacturers invest in zero-emission buses and trucks
The zero-emission bus and truck market has grown steadily over the last few years and continues to be a dynamic space, with new orders streaming in as the momentum behind zero-emission technology grows. A parade of new products, pilots, and partnerships is seemingly announced every week, and they show no sign of slowing down.
While China undoubtedly leads the zero-emission market in absolute sales, business has been ramping up in the United States and Canada, as detailed in a previous paper and our recent update. In 2020, zero-emission bus and truck sales in the United States and Canada topped 900 despite the industry downturn caused by the pandemic, of which approximately 120 were sold in Canada. These vehicles are overwhelmingly manufactured in North America: in the last two years, three of every four zero-emission buses and trucks sold in the United States and Canada were made in these same two countries, led by California-based Proterra. This number grows to six of every seven for zero-emission buses alone.
The strength of the North American market is largely driven by demand in California, which currently hosts around 42% of the total zero-emission heavy-duty vehicle stock in the United States and Canada. With strong market signals coming from California’s Advanced Clean Trucks regulation and a multi-state commitment to coordinate on medium- and heavy-duty vehicle electrification, we estimate that zero-emission bus and truck sales volumes in the United States could grow by more than 10-fold by 2025, based on zero-emission sales requirements and projected sales volumes. To meet this demand, North American manufacturers are doubling down on investments in zero-emission transport and looking to expand the nascent zero-emission truck market. Just this month, Québec-based Lion Electric announced plans for a new facility in Illinois dedicated entirely to the production of zero-emission buses and trucks. With an annual production capacity of up to 20,000 battery-electric vehicles, this would be the largest dedicated production site for zero-emission medium- and heavy-duty vehicles in the United States.
And Lion Electric isn’t the only one making investments. Swedish-owned Volvo Group has also been investing in its zero-emission heavy-duty portfolio, spending $400 million to upgrade its massive truck manufacturing facility in Virginia to produce the VNR Electric, a battery-electric Class 8 day cab. Volvo recently received its first major order for this truck model and has plans to deliver more than 100 to fleets in California in the next few years. Daimler Trucks North America is also preparing to start series production of its first two battery-electric truck models, the eCascadia and eM2, in Portland, Oregon, in late 2022.
Despite the recent phase-out of North American truck sales by Daimler subsidiary Mitsubishi Fuso, a number of other zero-emission bus and truck models are expected to break into the market in the next two years and are well-positioned to recoup and expand this market share. Moreover, if investments in manufacturing capacity in the United States and Canada continue on the current trend, a majority of new zero-emission heavy-duty vehicles may come with a tag that says: “Made in the USA and Canada.”