Frost & Sullivan, in collaboration with Nishi Inax Technology, released the 'White Paper on the New Energy and Intelligent Development of Commercial Vehicles 2023'

At present, the sales volume of various commercial vehicle models is closely related to the development of downstream industries. With the development of China's logistics industry, the sales volume of trucks in China has been significantly higher than that of buses. The sales volume of trucks in China increased from 3.64 million units in 2019 to 4.47 million units in 2021, with 4.45 million units reached in 2020. The main reason is the wave of vehicle replacement caused by the implementation of the National VI standard. In 2021, due to reasons such as the epidemic, the global economy was affected, and enterprises faced significant financial pressure. Therefore, their willingness to replace vehicles was relatively low. However, the related demand is expected to gradually be released in the coming years.

In recent years, the demand for passenger cars has been relatively stable. The main reason is that with the gradual improvement of China's infrastructure, travel modes such as airplanes and railways have a wider coverage area and travel costs are continuously decreasing, leading to a reduction in the demand for long-distance passenger car travel in China. At the same time, the pandemic has also reduced people's willingness to travel and corporate expenditure budgets, resulting in a slower growth of the passenger car market. However, the new energyization of urban transportation is gradually unfolding, and the demand for passenger cars will grow slowly, expected to reach 650,000 units by 2026.

Source: Analysis by Frost & Sullivan

1) Commercial vehicle exhaust emissions pose a serious pollution problem

Currently, global warming has become a core issue that concerns all countries around the world. As nations put forward higher carbon reduction and decarbonization requirements for industries and regions with heavy pollution and emissions, new energy has become an inevitable path for the logistics industry. With the gradual tightening of relevant standards, how to control carbon emissions from commercial vehicles has become a major pain point within the industry.

Currently, heavy-duty trucks are the key to emission reduction in commercial vehicles. In the calculation of carbon emissions from commercial vehicles, all commercial vehicles account for nearly 65% of total vehicle carbon emissions, with heavy-duty trucks accounting for 83.5%. They are the key vehicle type in all vehicle carbon emission reduction efforts.

Commercial vehicles are vehicles used for transporting people or goods, and their essence is a means of transportation. As a tool, profitability has become the top priority for customers, with the core being to create greater value for them.

Therefore, compared to adopting more advanced high-end technologies, customers are more concerned about reducing the vehicle's TCO. Truck TCO mainly consists of fixed costs (insurance, driver wages, road and bridge fees), variable costs (fuel consumption, maintenance, tires), and depreciation. With the annual increase in variable and fixed costs, the variability of commercial vehicle TCO seriously affects downstream customer choices. How to reduce commercial vehicle TCO has become one of the significant pain points in the industry.

In recent years, with issues such as population aging, China's labor force has been declining year by year, making it a common phenomenon that traditional industries are difficult to recruit workers into. Due to the harsh working environment and long hours in the logistics transportation industry, a large number of young people are unwilling to engage in this sector, resulting in a lack of fresh blood in the industry. From 2016 to 2020, the number of freight drivers in China decreased from 18.98 million to 15.10 million, a reduction of 20.4%. Currently, there is a shortage of about 12 million truck drivers in China.

A traffic accident refers to a special situation that occurs during driving due to an uncoordinated and unstable relationship between vehicles, drivers, and the road traffic environment. In 2016, there were a total of 145,820 automobile traffic accidents in China, which peaked at 166,906 incidents in 2018, and in 2020, there were 156,901 automobile traffic accidents in China.

Currently, the accident rate per million kilometers for commercial vehicles is around 3.5. In terms of accident severity, compared to passenger cars, due to the greater weight and higher handling difficulty of commercial vehicles, the losses caused by accidents are more severe, having a serious impact on logistics transportation. How to reduce the accident rate of commercial vehicles has become one of the core demands of logistics enterprises.

• New energy technology

Source: Analysis by Frost & Sullivan

Comparing from six major aspects: environmental protection, technical difficulty, implementation capability, energy replenishment efficiency, safety, and market attention, pure electric technology currently has an obvious advantage in the new energy direction of commercial vehicles. Compared to hybrid technology, pure electric technology is a completely clean energy source and more in line with the requirements of the times. Compared to hydrogen energy technology, pure electric technology has higher feasibility and can be commercialized more quickly. The main issue with pure electric technology at present is its low energy replenishment efficiency, but with the help of technologies such as battery swapping stations, it can achieve the same energy replenishment efficiency as hydrogen energy.

*Note: Environmental protection attributes only consider the environmental performance during the vehicle's operational cycle, excluding the source of energy; if battery swapping technology is adopted, the energy replenishment efficiency of pure electric technology is comparable to that of hydrogen energy; in addition to technical difficulty, higher scores indicate better performance; among technical difficulties, higher scores represent lower technical difficulty and easier implementation.

Source: Analysis by Frost & Sullivan

• Intelligent technology

In the field of commercial vehicles, intelligent driving can reduce drivers' operational pressure and alleviate the problem of driver shortage. With technological upgrades and the improvement of relevant laws and regulations, in the future, drivers will be completely replaced by intelligent systems, and logistics transportation will enter an unmanned stage. During operation, intelligent driving can improve transport safety, reduce the probability of accidents, and enhance overall operational efficiency.

New energyization can mainly solve the dilemmas of high pollution and high TCO sensitivity in commercial vehicles.

Compared to traditional petroleum fuels, new energy technologies are more environmentally friendly. Moreover, they are usually renewable sources. Compared to non-renewable petroleum fuels, they are cheaper and more stable in price, effectively reducing the energy costs in commercial vehicle transportation's Total Cost of Ownership (TCO).

In addition to energy conservation and emission reduction, as well as reducing transportation TCO, new energy vehicles are more conducive to intelligent deployment compared to fuel-powered models. Compared to the complex mechanical structures of traditional commercial vehicles, new energy commercial vehicles have a simpler structure and more flexible layout, making them more suitable for intelligent deployment. At the same time, the vehicle is entirely powered by electricity, which aligns with the driving energy for intelligent development, resulting in a higher degree of compatibility. New energy commercial vehicles are more conducive to the development of intelligent processes.

Source: Analysis by Frost & Sullivan

Source: Analysis by Frost & Sullivan

Intelligence in the commercial vehicle industry can mainly solve two major dilemmas: difficulty in recruiting workers and frequent safety accidents. Commercial vehicles, with the help of advanced technologies such as sensors and big data, can effectively reduce the logistics industry's demand for the number of drivers while ensuring the smooth progress of overall logistics transportation.

Intelligentization can not only solve the two major dilemmas of commercial vehicles but also increase their operating hours.Currently, commercial vehicle drivers work an average of about 12 hours per day, including breaks and meal times. Autonomous trucks can theoretically operate continuously for nearly 24 hours without interruption while ensuring transportation safety. This means that logistics companies can complete more shipments within a shorter delivery cycle, thereby improving the overall efficiency of the enterprise.

Source: Analysis by Frost & Sullivan

Source: Analysis by Frost & Sullivan

At present, the intelligentization of commercial vehicles has progressed relatively rapidly, with the penetration rate of truck intelligence reaching 28.7% in 2021. Due to the incomplete construction of supporting facilities and continuous iteration of battery swapping technology, the progress of new energy utilization in commercial vehicles is currently slow, especially in the field of heavy trucks, where it was only 0.7% in 2021.

With the improvement of supporting facilities and the maturity of battery swapping technology, the penetration rate of new energy in commercial vehicles will increase rapidly. At the same time, it will also drive the upgrade of commercial vehicle intelligence and the improvement of penetration rates. Intelligence and new energy will be important development directions for commercial vehicles in the future, jointly promoting the vigorous development of the commercial vehicle industry.

Source: Analysis by Frost & Sullivan

Currently, due to the incomplete infrastructure for new energy charging piles, the use of new energy commercial vehicles is limited by their charging capabilities. The penetration rate of new energy trucks is relatively low, remaining stable at around 50,000 to 60,000 units in 2019 and 2020. In 2021, with the gradual maturation of technology, leading commercial vehicle manufacturers such as FAW, Scania, and Daimler have successively launched their new energy models. With further technological upgrades and the introduction of new products from various manufacturers, it is expected that the new energy market will continue to grow.

However, due to the cancellation of subsidies in 2023, it is expected that the penetration rate of new energy truck sales will decline slightly in 2023, but market demand still exists.It is expected that by 2026, the sales volume of new energy trucks in China will reach 755,000 units, with a compound annual growth rate of 34.7% compared to 2022.

Source: Analysis by Frost & Sullivan

At present, autonomous driving technology has not been widely applied on a large scale due to issues such as laws and regulations, and technology. It is mainly used in some closed scenarios. In 2020 and 2021, due to the implementation of National VI standards, there was a wave of vehicle replacement, leading to a rapid growth in the penetration rate of autonomous driving, increasing from 9.6% in 2019 to 28.7%.

As autonomous driving can effectively address the current market pain points of trucks in the transportation sector, it is expected that its penetration rate will grow rapidly with further technological development and improved laws and regulations. It is estimated that the penetration rate of truck autonomous driving will increase from 39.9% to 72.0% between 2022 and 2026.

Source: Analysis by Frost & Sullivan

Recently, the country has been actively promoting the "dual carbon" strategy, encouraging the vigorous development of new energy heavy trucks, especially pure electric ones. At the same time, due to the obvious advantages of electric heavy trucks themselves, they are suitable for multiple scenarios such as port, mining, urban construction waste transportation, and large steel mills. With the support of policies and demand, the new energy heavy truck industry has developed rapidly.

The main factors currently restricting the growth of new energy heavy truck sales are range and refueling time. Battery swapping technology can effectively solve the refueling problem for new energy heavy trucks. The 12th batch of recommended new energy special vehicle catalogs by the Ministry of Industry and Information Technology in 2021 showed that there are already 26 battery swapping models. As battery swapping technology matures, more battery swapping heavy truck models will emerge, and the sales volume of new energy heavy trucks in China will rise rapidly.

Source: Analysis by Frost & Sullivan

Currently, XCMG Technology has launched a variety of new energy intelligent commercial vehicles that can adapt to different scenario needs. For closed roads, semi-open roads, and open roads, XCMG Technology has taken its flagship product, the autonomous truck Q-Truck, as the foundation to develop scalable intelligent connected electric heavy trucks, penetrating into the entire container logistics chain and promoting the digital green transformation, upgrading, and intelligent iterative innovation of global logistics.

Source: Analysis by Frost & Sullivan

In terms of green ecology, Xijing Technology has built a PowerOnAir unmanned battery swapping ecosystem through the 'vehicle - battery swapping station - cloud platform' architecture, dedicated to providing energy services for new energy intelligent commercial vehicles. PowerOnAir boasts five core advantages: fast battery swapping speed, high pure unmanned safety, strong environmental adaptability, high standard modularization, and cloud platform-enhanced carbon value. It helps Q-Truck achieve full-process autonomous battery swapping, reducing the single battery swap time to 5 minutes and breaking through the dual challenges of manpower and efficiency.

Source: Analysis by Frost & Sullivan

In terms of ground-breaking benchmark cases, Xingang Technology adheres to the concept of 'efficiency first, value implementation', contributing to global intelligent solutions for autonomous new energy vehicles. It has helped increase efficiency and reduce carbon emissions at the Port of Linchabang in Thailand: Since April 2020, the autonomous Q-Truck fleet at the Port of Linchabang has become one of the first Chinese smart projects to go overseas during the pandemic, helping users become the world's first port where autonomous and manual operations are mixed.

In October 2022, the second batch of full-time all-electric Q-Trucks and intelligent connected electric heavy trucks successfully entered and were put into use at the Port of Linchabang. As of December 2022, the Q-Truck driverless fleet has been operating at this port for a cumulative 26 months, completing more than 190,000 TEUs of actual ship operations. The working efficiency of driverless container trucks can be increased by 27.5% compared to manned ones. The Q-Truck fleet uses new energy pure electric drive, reducing CO2 emissions by 10.7 tons per vehicle per year, which is equivalent to planting more than 700 more trees each year.

Source: Analysis by Frost & Sullivan