On the one hand, companies with traditional vehicle fleets see many obstacles, more or less openly criticize the decision, reject it completely and point to insoluble challenges. On the other hand, both traditional and new entrants accept the development and even welcome the EU decision. Some fleets have already been converted or, as start-ups, have only purchased electric vehicles from scratch. Though from different perspectives, it’s equally clear to everyone involved that changing propulsion and energy is a Herculean task for the industry, with many unanswered questions and an open-ended score.
How many vehicles are affected and when?
In 2019, the Prognos study used approx. 130,000 CEP vehicles with a permissible total weight of up to 3.5 tons, determined. However, this number fluctuates greatly in the high-volume Christmas business. For the sake of simplicity, however, I am assuming 130,000 CEP vehicles. Assuming an average holding period of 4 years, 32,500 vehicles are purchased each year. In 2021, 4.8% of registered light commercial vehicles were powered by electricity, and 1.1% by e-fuels. The figures apply to all sectors, not only the CEP sector. This means that by 2035, registrations of vehicles powered by non-fossil fuels will have to increase almost twenty-fold. During this period, industry participants still have an average of 3 vehicle order cycles.
In fact, under current plans, none of the commercial vehicles sold can have a total weight of up to 3.5 tonnes from 2035. be powered more by an internal combustion engine or fossil fuels. This means that the production capacity of the new propulsion technologies has to be gradually expanded by then. On the other hand, this means that the production capacity of the corresponding diesel or gasoline vehicles for the European market will be gradually reduced to zero by 2035. The proportion of available diesel or gasoline vehicles will therefore decline by 2035 per order cycle. Accordingly, the cost of these vehicles will increase. The reverse is true for electric vehicles. A similar development can also be expected for the supporting sub-sectors, such as petrol stations and workshops, and the supply of spare parts. The residual value or resale value will also decrease.
Fleet conversion scenarios
While the pressure and opportunity to buy electric vehicles will be rather low in the context of the availability and cost increase of diesel vehicles by 2027, it will either increase sharply in the next procurement period and then slow again in the final third procurement period, ultimately 100% electric vehicle purchases ( Scenario 1). Or it is slowly increasing the share of electric vehicles in the second purchasing period, to increase significantly to 100% in the last purchasing period (scenario 2). The first scenario is supported by the fact that the social pressure to buy electric vehicles will already be very high in the second purchasing period. The latter scenario is supported by the fact that the industry is unable to deliver electric vehicles fast enough. However, it cannot be ruled out that the currently missing production capacity for the production of light commercial vehicles with traditional drive technology will no longer be fully expanded, but will be immediately transferred to the production of electric vehicles. The current registrations in April and May 2022 are 40% lower than in 2019. This again speaks for the first scenario.
Personally, I assume that the strong swing towards the purchase of electric vehicles will start already in the second purchasing period. (Scenario 1)
Just swap vehicles one by one and that’s it?
Unfortunately, the payback in propulsion systems cannot be achieved simply by swapping vehicles. Affects many sub-areas within the company. The amount of financing per vehicle is increasing, financing opportunities have to be prepared and used, work processes have to be designed to schedule the time of charging the battery. It may not be possible to use all vehicles for short and long distances as before, charging infrastructure needs to be planned and built, new suppliers and partners will be added. The use of cargo bikes or small vehicles in the first and last kilometers should also be re-assessed. After all, the shift in propulsion is accompanied by a shift in the corporate culture from diesel to new propulsion energies. This opens up new opportunities for recruiting employees. However, it should also be expected that female employees will avoid changing their motivation through termination.
How should this work for direct domestic and international travel?
If the technology for electric vehicles is already so advanced that regional routes of 100 km and more are possible, long distances with this ride without stopping for the charging process are still a dream of the future. Various scenarios and their combinations emerge as a solution. The range of vehicles and their economic efficiency can be improved, among others by increasing the storage capacity of batteries, further development of hydrogen drives, construction of replaceable battery systems and shorter charging processes. However, it is also possible that previous direct journeys will be made by combining journeys with pickup, consolidation of shipments in the main stretch with heavier commercial vehicles and regional light commercial vehicle journeys. A model of traffic in meetings can also be helpful. Here, the vehicle only moves in a geographic cell, which is predetermined by its range. At the cell borders, the goods to be transported are transferred to another vehicle. It cannot be ruled out that there may also be cost benefits from this. However, these transports will be slower than previous direct journeys. If the rail infrastructure had improved significantly by then, the main routes could also be moved to the tracks. In particular, the latter scenario seems rather unrealistic due to the capacity problems of the rail network and the related renovation costs.
Restructuring of fleets in an SME friendly manner
The transition to a climate neutral economy must be profitable and fair, socially sustainable and linked to medium-sized enterprises. CEP SMEs are ready to contribute. However, due to a concentration of 80% of CEP sales, and thus also value added of less than 1% of the estimated 18,000 CEP companies, they have relatively little financial resources.
Forcing SMEs to be prevented from being heavily invested in a climate neutral economy. Otherwise, there is a risk that the logistics networks will be served by several market participants in the future. As a result of the implementation of the Green Deal, these funds would end up in the hands of less global corporations. You, and not companies in the regions, will realize the added value. For this reason, medium-sized CEP companies must be able to make the necessary investments and implement the necessary measures on their own. They should come out strengthened in their independence from the reorganization of structures. It also ensures that added value and design freedom remain in place.