Sustainable Transportation Energy Pathways (STEPS)

The US and Europe have ambitious plans and targets for light-duty electric vehicle (EV) market growth. This study estimates planned EV production capacity in both regions and investigates whether coordinating their combined production capacity would help them meet targets. We find that, while each region is developing a strong EV production capacity domestically, either may fall short of their targets given investments in EV production announced to-date. Transatlantic trade can serve as a critical “spare capacity” to add assurance. Yet, in scenarios where both regions seek higher EV sales targets, a combined shortfall in annual EV production capacity could reach over 6 million EVs compared to the 20 million needed by 2030. An additional investment of about $42 billion across both regions could address this concern, however, time is getting short to build new plants and bring them online. The capacity shortfall may persist even with planned EV production capacity from other major manufacturing centers such as Canada, Mexico, Japan and South Korea. Additional policies and incentives will be needed to ensure planned capacities are developed in a timely manner. Some options include providing incentives to invest and reducing barriers to trade. Exploring the potential supply of vehicles from other major EV manufacturing countries, such as China and India, is recommended.

This study evaluates the economics of various types and classes of medium-duty and heavy-duty battery-electric and hydrogen fuel cell vehicles relative to the corresponding diesel-engine powered vehicle for 2020-2040.  The study includes:  large passenger vans, class 3 city delivery vans, class 4 step city delivery trucks, class 6 box trucks, class 7 box trucks, class 8 box trucks, city transit buses, long haul tractor trailer trucks, city short haul tractor trailer delivery trucks, inter-city buses, and HD pickup trucks.  Typical designs were formulated for each vehicle type in terms of its road driving and load characteristics and powertrain and energy storage components. The performance and energy consumption of the electrified trucks were simulated for appropriate driving cycles using the ADVISOR simulation program.  The vehicle design characteristics were varied over 2020-2040 to reflect expected technology improvements. The study then focused on estimating the initial cost and total cost of ownership (TCO) for each vehicle type over the initial 5-year period and the 15-year lifetime and calculating payback periods. Calculations were done for 2020, 2025, 2030, 2035, and 2040.  The analysis particularly focuses on 2025 and 2030 since these are the most relevant years for initial market penetration.

For both battery and fuel cell vehicles, thanks to technology cost reductions, the initial cost generally decreases markedly in the period 2020-2030 and more modestly for 2030-2040.  Assuming fairly constant electric prices, declining hydrogen prices, and slowly rising diesel prices, TCOs for the various electrified truck types typically become less than that of the corresponding diesel truck before the initial cost of the electrified trucks gets close to that for the diesel truck.  For most battery-electric truck types, TCO competitiveness occurs by 2025.  For that year, the payback time for most truck types is 4-6 years and is less than 4 years by 2030. Fuel cell vehicles take longer to pay back due mainly to hydrogen fuel costs remaining above diesel prices on an energy basis. Fuel cell truck payback times of 3-5 years by 2030 can be achieved if the cost of hydrogen in that year is reduced below $7/kg. Fuel cell buses have payback times of less than one year in 2030.  By 2030, the purchase cost of most types of both battery-electric and hydrogen fuel cell trucks is close to that of the corresponding diesel vehicle and TCOs are competitive as long as battery costs and fuel cell costs drop per our expectations along with moderate electricity and hydrogen costs.  The cost sensitivity results indicated these conclusions were not significantly changed by reasonable variations in the major cost inputs (battery, fuel cell, hydrogen, electricity and diesel fuel) assumed in the economic analyses.