European truck industry at risk of losing market share

In a comprehensive report commissioned by Transport & Environment (T&E), Boston Consulting Group (BCG) has issued a stark warning about the potential consequences of failing to strengthen carbon dioxide (CO2) standards for heavy-duty vehicles (HDVs) in the European Union (EU). According to the analysis, the EU's truck industry faces a significant risk of losing up to 11% of its market share to competitors from the United States and China by 2035 if a slow transition to zero-emission trucks (ZETs) is allowed to persist under current standards.
To put this in perspective, the 11% market share loss corresponds to the entire truck market share of companies like Scania or IVECO today, highlighting the magnitude of the challenge.

The report suggests that the current HDV CO2 standards are insufficient to stimulate supply and encourage the transition to ZETs, especially as the total cost of ownership (TCO) of battery-electric and fuel cell electric trucks is projected to drop below that of diesel trucks by the late 2020s. Strong policies and subsidies in the United States and China are driving these nations to develop economies of scale faster than Europe, potentially enabling them to gain a foothold in the European market.

The critical message from the BCG report is that stronger HDV CO2 standards are not just vital for climate goals but are also central to defending the competitiveness of the European truck industry. Strengthening CO2 reduction targets can not only protect domestic truck manufacturers but also bring significant economic benefits to European society.

The report’s key findings regarding the impact of stronger CO2 standards include:

  • Economic Benefits: The introduction of stronger standards could lead to the creation of 7,000 net new jobs (a 1% increase) and €10 billion in value added (a 12% increase) in the truck manufacturing, infrastructure, and energy sectors compared to current policies. Under T&E recommendations, these gains would be even more substantial, reaching a net increase of 23,000 jobs (a 4% increase) and €27 billion of value added (a 31% increase).
  • Localizing Battery Production: Encouraging battery production in Europe can further enhance the benefits of a faster ZET uptake. Ensuring that all battery cells are produced in Europe and onshoring production of cathodes and active materials can lead to the creation of an additional 9,000 jobs under the Commission proposal and 19,000 jobs under T&E recommendations.
  • Energy Sovereignty: Moving away from diesel trucks can significantly reduce Europe’s dependence on imported oil. Replacing truck diesel demand with domestically-produced electricity, primarily from renewable sources and hydrogen, can benefit the European economy and reduce vulnerability to volatile global fossil fuel markets.

The report acknowledges that while the transition to ZETs will have a net positive impact overall, there will be both gains and losses in different sectors. As a result, the need for strategies to support workers in internal combustion engine (ICE) manufacturing, diesel refineries, and related sectors is highlighted.

In conclusion, the BCG report underscores that strong CO2 standards for HDVs are essential for safeguarding the European truck industry’s global competitiveness, ensuring economic growth, and addressing climate change. T&E recommends policymakers to raise their ambition by strengthening the 2030 CO2 reduction target to -65%, setting a -100% CO2 reduction target in 2035 for freight trucks, and expanding the scope of the regulation to cover all new HDVs. These measures, the report argues, will play a pivotal role in shaping the future of the European truck industry.

Source: Impact assessment of the transition to zero-emission trucks in Europe | BCG

Source: How Europe can lead the global race to zero-emission trucks | Transport & Environment
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