EV Transition Boosts Returns for Heavy-Duty Truck Makers

The global transition to battery-electric Heavy Duty Vehicles (HDVs) is accelerating, with the market for electric trucks projected to surpass internal combustion engine (ICE) equivalents within the next decade.

According to a new think tank Carbon Tracker study, revenues from electric truck and bus sales could exceed US$320bn by 2035.

The shift represents a significant opportunity for manufacturers and investors as fleet operators seek to replace diesel-powered fleets with battery-electric (BEV) alternatives.

Falling battery costs, driven by economies of scale and advancements in composite materials, are expected to reduce vehicle prices or enhance range, further accelerating adoption.

A lucrative market for HDV manufacturers

Industry leaders such as Volvo, Daimler Truck and Traton stand to benefit substantially from the transition to electric HDVs.

Carbon Tracker's report, Re-Fleeting Revolution: Delivering Financial Returns in the Electric Heavy Duty Vehicle Transition, suggests that fleet operators could rapidly electrify their vehicles to capitalise on cost savings related to fuel, maintenance and CO2-based road toll exemptions.

However, competition is intensifying. In 2024, Chinese automaker BYD sold more than 450% more electric HDVs than its European and American counterparts, selling fewer than 5,000 units collectively.

Moreover, new entrants like Tesla are expected to further disrupt the market with the launch of the Tesla Semi in 2026.

Ben Scott, Head of Automotive at Carbon Tracker and author of the report, warns: "Competitors are here now and the incumbents don't have time on their hands. They need to react quickly by developing a re-fleeting strategy and effectively transitioning their vehicle production asset base to produce EVs or face obsolescence."

The geopolitical and economic landscape

The transition to electric HDVs is not without challenges. A trade war or tariffs could increase production costs, necessitating localised supply chains and manufacturing.

Additionally, regulatory changes in the US under a new administration could weaken existing HDV emissions standards (EPA Phase 3).

While it may provide short-term relief for ICE truck manufacturers, it risks diminishing global competitiveness as international markets move aggressively toward zero-emission mobility.

Oil demand decline and energy implications

Widespread adoption of BEVs in the HDV sector is expected to have significant implications for global oil demand. Carbon Tracker forecasts that the transition will reduce oil consumption by 2.5 million barrels per day by 2036.

Simultaneously, HDVs' energy demand could surge to 600 TWh per year—equivalent to the combined annual electricity consumption of the UK and Italy.

Ben highlights the urgency of energy infrastructure upgrades, stating: "We recommend investors call on policymakers to help expand the high-voltage grid and speed up the planning and approval process for power connections and infrastructure.

"The right renewable energy policies need to be in place to ensure that clean energy is available to power an electric vehicle fleet."

Regulatory pressure and market risks

Despite making up only 3% of vehicles on the road, ICE HDVs contribute 30% of road transport emissions. Carbon Tracker warns that regulatory non-compliance could expose companies to significant commercial risks without swift action from leading manufacturers.

The UK and EU aim to impose increasingly strict emissions targets beginning in 2030, but current trends indicate that most HDV manufacturers will struggle to meet these mandates.

The transition to electric HDVs lags behind passenger vehicle electrification by approximately six to eight years.

Unlike the passenger vehicle market, which has seen rapid disruption from new entrants such as Tesla and BYD, the HDV market remains highly consolidated, with 10 manufacturers controlling more than 70% of the market share. The structure has led to a slower transition to electrification.

If legacy manufacturers fail to accelerate their shift to electric models, they risk losing market share to more agile competitors and facing penalties for regulatory non-compliance. Investors and policymakers alike must push for a rapid scale-up of electric HDVs to ensure financial sustainability and meet global climate targets.

As Ben highlights: "The market's failure to transition at pace means these companies are heavily exposed to commercial risks. Those who hesitate may find themselves left behind in an increasingly electrified world."

Stay informed and inspired with the EV Magazine community by signing up for our free weekly newsletter. Each week, receive in your inbox the latest industry news and in-depth insights into the world of electric vehicles, sustainability and cutting-edge innovations

Subscribe now, don’t miss the opportunity to stay ahead in the fast-evolving EV industry.

EV Magazine is a BizClik brand.