A huge disruption is precipitating on the road towards a $ 1.5 trillion global truck market, as legacy manufacturers and new competitors scramble for pole position in a race to dominate zero-emission trucks.
Electric vehicles caught the attention of investors last year, like stocks like Tesla TSLA,
Nikola NKLA,
NIO NIO,
XPeng XPEV,
Li Auto LI,
and BYD 1211,
it roared louder. And for good reason: electric vehicles will have penetrated 100% of the global automotive market by 2040, according to UBS UBS,
In just 2025, the Swiss bank expects two players – Tesla and Volkswagen VOW,
– have already emerged as the biggest EV salespeople in the world, delivering around 1.2 million cars each next year.
But vehicle emissions are about more than just cars. There are bigger things that move.
Amid changes in regulations and technological innovation, electric battery and hydrogen fuel cell alternatives for internal combustion engines are emerging to disrupt the global truck market, estimated by UBS at $ 1.5 trillion.
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The Swiss bank expects zero-emission vehicles, or ZEVs, to eventually replace trucks powered by internal combustion engines, with the pace of change accelerating rapidly compared to three years ago as new competitors enter the fray.
In a report published on Wednesday with input from 21 analysts, UBS said it expects most of the truck market to be split between battery-powered electric vehicles and hydrogen-powered fuel cell vehicles. Renewable natural gas may also play a minor role in the market, analysts said.
The main driving force is global emissions regulations, but the economy of battery and fuel cell ZEVs is also highly competitive. UBS projects that heavy trucks powered by batteries or fuel cells will be more economical than diesel by 2030, including the cost of infrastructure. However, supply of inputs remains a challenge, with the global shortage of battery cells expected by 2025, according to UBS, and the green hydrogen industry still young.
UBS predicts that 30% of heavy truck sales in North America, Europe and China will come from ZEVs by 2030, with ZEV trucks representing 40% to 60% of average truck sales in these regions.
Read this: Forget Nio and XPeng. This company and Tesla will be the two largest electric vehicle representations in 2025, says UBS.
If Tesla’s goals are taken at face value, then its battery-powered semi-electric truck will be a “superior alternative” to internal combustion engines in 2025, UBS said.
In fact, insofar as Tesla can maintain its leadership in battery innovation, analysts at the Swiss bank believe the American company “may have a built-in advantage” over legacy heavy truck manufacturers that depend on third parties. to supply batteries.
Conventional truck and engine manufacturers are expected to struggle hard to maintain control, including through new offers and partnerships, but UBS expects them to “lose at least some share” of the market. Historic manufacturers face the “biggest headwind” in this changing space, the bank said.
In medium trucks, new participants such as Rivian, Lion and Chanje are establishing a presence and will be the main challengers. These companies are currently privately held, but could go public through an initial public offering or merger with a special purpose takeover corporation and blank check.
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As for trucks and heavy engines, expect Tesla, Nikola and Hyliion HYLN,
dominate if they are able to execute their respective visions, UBS said, although companies like Toyota 7203,
and Hyundai 005380,
they are also expanding globally. Analysts noted that new entrants’ electric battery and fuel cell offerings are still under development and may fall short of their weight and reach targets.
In the UBS model, all of the following conventional truck and engine manufacturers are expected to lose market share by 2030: Cummins CMI,
Daimler DAI,
Volvo VOLV.B,
– which owns Mack Trucks – and Traton 8TRA,
which is majority owned by Volkswagen and is expected to complete the acquisition of Navistar NAV,
in the middle of 2021.
In this battle between truck manufacturers, UBS expects infrastructure, battery and fuel companies to outdo themselves and make the most of the wind in favor. These stock groups are your favorite choices. The Swiss bank is watching the energy infrastructure company Quanta Services PWR,
and groups of chemicals and batteries like Albemarle ALB,
LG Chem 051910,
and Contemporary Amperex Technology Co. Limited (CATL) 300750,
More options for more and less preferred UBS shares in the report are described in the chart below:
