Massive disruptions are pushing the highway toward a $ 1.5 trillion global truck market, as old manufacturers and newcomers alike grapple for center stage in a race to dominate zero-emissions trucks.
Electric cars have attracted investor attention in the past year, as stocks such as Tesla TSLA,
Li Auto LI,
And the world 1211,
Roar higher. And this is for good reason: Electric cars will have penetrated 100% of the global auto market by 2040, according to UBS UBS.
Only by 2025, the Swiss bank is expecting two players – Tesla and Volkswagen Fu,
We have already emerged as the best sellers of electric cars in the world, with each offering about 1.2 million cars by next year.
But vehicle emissions matter more than just cars. There are bigger things moving.
Amid changing regulations and technological innovation, alternatives to photovoltaic and hydrogen fuel cells for internal combustion engines are appearing to disrupt the global truck market, which UBS estimates at $ 1.5 trillion.
The Swiss bank predicts that zero-emission vehicles, or ZEVs, will eventually replace trucks powered by internal-combustion engines, with the pace of change accelerating rapidly compared to three years ago as new entrants join the fray.
In a report published Wednesday with the contribution of 21 analysts, UBS said it expects most of the trucking market to be shared between battery-powered cars and fuel-cell electric vehicles, which run on hydrogen. Analysts said that renewable natural gas may also play a smaller role in the market.
The main driving force is global emissions regulations, but the economics of both batteries and ZEV fuel cells are also highly competitive. UBS expects heavy duty trucks powered by batteries or fuel cells to be more cost-effective than diesel by 2030, including the cost of infrastructure. However, providing input remains a challenge, with a global shortage of battery cells projected by 2025, according to UBS, and the green hydrogen industry is still very young.
UBS predicts that 30% of heavy-duty truck sales in North America, Europe, and China will come from ZEVs by 2030, with ZEV trucks accounting for 40% to 60% of average service sales across these regions.
UBS said that if Tesla’s targets were taken at face value, the heavy-duty semi-electric truck would be an “excellent alternative” to internal combustion engines by 2025.
Indeed, to the extent that Tesla can retain a pioneering role in battery innovation, analysts at the Swiss bank believe that the US company “may have an embedded advantage” over old heavy truck manufacturers who rely on third parties to supply the batteries.
Traditional truck and engine manufacturers are expected to fight hard to retain control, including through new offerings and partnerships, but UBS expects them to “lose at least some share” of the market. The bank said the incumbent manufacturers are facing “the biggest headwinds” in this changing space.
In medium duty trucks, new entrants such as Rivian, Lion and Chanje are establishing a presence and will be major competitors. These companies are currently privately owned, but could be offered for an initial public offering or merger with a special purpose acquisition company with a blank check.
For heavy trucks and engines, expect HYLN, Tesla, Nikola and Helion.
To take control if they are able to implement their own visions, UBS said, although established companies such as Toyota 7203,
It is expanding globally. Analysts noted that both the newcomers’ electric battery and fuel cell offerings are still under development and could fail to meet targets for both weight and range.
In the UBS model, all of the following conventional truck and engine manufacturers are expected to lose market share by 2030: Cummins CMI,
– which owns Mack Trucks and Traton 8TRA,
Most owned by Volkswagen, and is expected to complement its acquisition of Navistar NAV,
In the middle of 2021.
In this battle between truck makers, UBS expects infrastructure, battery, and fueling companies to outpace the battle and enjoy the most tailwind. These combinations of stocks are their favorite picks. The Swiss bank monitors the energy infrastructure company Quanta Services PWR,
Chemicals and battery sets such as Albemarle ALB,
LG Chem 051910,
And Amperex Technology Co., Ltd. Limited (CATL) 300 750,
More of the most preferred and least favored stock selections of UBS from the report are illustrated in the chart below: