Race to zero: Zero-emission bus and truck market in China in 2023
Market Spotlight
Zero-emission medium- and heavy-duty vehicle market in China (January–June 2024)
Overview
This overview of China’s zero-emission heavy-duty vehicle (ZE-HDV) market covers city buses and coaches, medium and heavy straight trucks, and tractor-trailers above 3.5 tonnes. Sales of ZE-HDVs in China saw two spikes in the last 13 years: first in 2015–2016, underpinned by government subsidies, and more recently in 2021, amid a rebound in domestic and foreign demand after COVID-19.
Through the first half of 2024, total ZE-HDV sales in China reached approximately 77,700, including roughly 64,500 ZE trucks and tractor-trailers and 13,200 ZE buses and coaches. Sales of ZE trucks and tractor-trailers were particularly noteworthy, as they almost matched the total number of these vehicles sold in the whole year in 2022 (65,200). Meanwhile, ZE bus and coach sales continued to shrink.
Heavy trucks
The heavy truck market saw changes in the mix of fuel types from previous years. In the first half of 2024, diesel trucks accounted for 55% of sales, down from 80% in the first half of 2023, and natural gas-powered trucks made up 35% of sales, up 8% year-on-year. Battery electric trucks reached a 9% sales share and were the third most popular powertrain technology in the market.
Sales of both battery electric and fuel-cell heavy trucks have mostly grown steadily in 2024, except for a dip in February during the Spring Festival, when most business activity is paused. In June, the market share of battery electric heavy trucks hit a new high of 14%, a 35% increase from January 2024. The market for fuel-cell heavy trucks remains nascent, with 332 vehicles sold in June 2024, a 1% market share.
Lithium iron phosphate (LFP) batteries dominate the heavy truck market in China due to their economy, durability, and safety. In terms of capacity, the most popular battery sizes for these vehicles were 282 kWh, 350 kWh, and 423 kWh, indicating a balance between cost and efficiency.
The collective market share of the top 5 original equipment manufacturers (OEMs), known as the 5-firm concentration ratio or CR5, is an indicator of market maturity. In the first half of 2024, the CR5 among internal combustion engine (ICE) heavy truck manufacturers was 79%, while the ratio among ZE manufacturers was 69%. This implies that the ZE heavy truck industry is approaching a level of market maturity similar to that of ICE manufacturers, with top OEMs capturing a growing share of the market.
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Medium trucks
Diesel remained the dominant powertrain in the medium truck market in the first half of 2024, accounting for 86% of total sales, a 4% year-on-year decrease. Battery electric reached a 10% market share, making it the second most popular powertrain in the segment.
By month, battery electric trucks showed steady growth in market share, reaching 14.4% in June 2024, more than double the level in January 2024. Just two fuel-cell trucks were sold in June, representing a 0.4% market share; this powertrain remains in early stages of development in this segment.
As in the heavy truck market, LFP is the dominant battery chemistry among medium trucks in China. Most electric medium truck models were equipped with 100 kWh batteries to balance cost and available range. Equipping trucks with heavier batteries may not necessarily improve the available range, as reduced energy efficiency due to the increased weight of the battery may offset the range benefits of added battery capacity.
Here there is a small difference in the market share of the top 5 OEMs between the ICE and ZE medium truck industries: In the first half of 2024, the CR5 of ICE OEMs was 79%, while the CR5 of zero-emission truck OEMs was 69%.
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City buses and coaches
City buses have the highest electrification rate of all vehicle categories in China, with a cumulative battery electric, hybrid electric, and fuel-cell electric market share of almost 100% as of mid-2024. Electrification among coaches, which are used for intercity transport, has been far more limited: The market share of battery electric coaches was 6% in the first half of 2024, and most coaches were still powered by diesel. This implies that the uptake of electric commercial vehicles is driven by demonstrated applicability in certain uses, with widespread adoption for (generally shorter-distance) intra-city bus travel but not yet for (typically longer-distance) trips between cities.
In terms of market share, there were no major changes in the adoption of zero-emission technologies during the first half of 2024. City bus sales saw a peak in January with 2,670 units sold, predominantly battery electric buses, followed by a sharp decline in February and March before a bounce in April. As of June 2024, the market share of battery electric coaches was 6.0%.
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Battery swapping
Battery swapping, whereby a depleted electric vehicle battery can be switched out for a fully charged replacement within minutes, is an innovative technology that can make battery electric vehicles operate more efficiently and affordably. Fleet operators save on the upfront investment by purchasing vehicles without batteries installed and renting batteries from third-party lessors; operators can also be free from range anxiety, assuming there is battery swapping infrastructure deployed close to their yard. Swap-capable technology has gained in popularity in China in recent years, particularly for trucks and tractors.
In the first half of 2024, sales of swap-capable vehicles increased and reached a total of 2,497 in June 2024. That is up 87% from the first half of 2023. The popularity of swap-capable vehicles has been jointly driven by policy and market developments: Several policies were introduced in 2024 to support this emerging technology (see Table 4.1), and pilot projects have been launched to assess use cases in several industries, including mining, steel, and port logistics.
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Terminology, data sources, methodology, and assumptions
A zero-emission vehicle is any vehicle whose propulsion system produces zero combustion emissions, such as a dedicated battery electric, fuel-cell electric, or other motor that is not driven by combustion.
A heavy-duty vehicle is a commercial vehicle intended for the transport of passengers or freight with a gross vehicle weight above 3.5 tonnes.
A heavy truck is a truck with a gross vehicle weight above 12 tonnes.
A medium truck is a truck with a gross vehicle weight between 3.5 and 12 tonnes.
Utility vehicles (专用车辆), due to their popular application in freight trucking, are categorized as trucks.
A city bus is a passenger vehicle with a gross vehicle weight above 3.5 tonnes that is used exclusively in urban environments.
A coach is a passenger vehicle with a gross vehicle weight above 3.5 tonnes that is used exclusively in inter-city environments.
All data are provided by Gasgoo Auto.
