The Sky is the Limit for Electric Trucks in China - ZEFI Summit China 2024: nine takeaways

Sophie Punte, Founder and Board Member, Smart Freight Centre

On a blue-sky day in Beijing, the Zero Emission Freight Initiative (ZEFI) summit and its 200 participants showed that when it comes to electric trucks in China, the sky is the limit!

Group photo ZEFI Summit 2024

The new China Zero Emission Freight Status Report 2023 (can be downloaded in Chinese from the ZEFI website) revealed the main trends. Experts from government and affiliated institutions, companies and think tanks brought a wealth of insights on what can truly be called a revolution in China’s road freight sector. It is impossible to capture nine hours of presentations and panel discussions. So I will leave you with my personal nine takeaways, hoping that nothing was lost in translation!

1. The tipping point has arrived.

Light and heavy-duty electric trucks represent respectively 6% and 5% of new trucks sold in China. With 74% of buses already being electric, and sales of electric cars now outpacing traditional cars, it is only a matter of time before trucks get there too. Performance and efficiency are rapidly improving while costs are coming down fast. The Commercial Vehicle Carbon-neutral Platform (CVCP) with 13 research institutes, OEMs and energy companies and 300 experts worked out the ‘Commercial Vehicles Carbon Neutrality Technology Roadmap 1.0’. Their prediction: China’s market share of new energy commercial vehicles will be 30% by 2030 and 72% by 2040. Dr. Lili Li from Tsinghua University predicted that by 2035 virtually all trucks sold will be electric if three conditions are met: a) the battery range is 4 hours or b) a 30-minute recharge can get the truck 300 km further, and c) the charging infrastructure covers the road freight network. Importantly: he believes that China can do this!

2. Battery-electric trucks are winning.

Light duty trucks are going fully electric, while medium- and heavy-duty trucks sold currently are a mix of battery, hybrid, and fuel cell electric / hydrogen. In-depth interviews with 30 carriers found that they base their decision to switch on four criteria: reliability of the technology, compatibility with the carrier’s application, flexibility of operation, and economic feasibility including the total cost of operation. Should the market decide for one solution, then battery electric trucks have the better cards. CVCP’s roadmap predicts 28% battery electric, and 1% hydrogen penetration of the commercial vehicle market in 2030 and 65% and 7% respectively in 2040. The main reason is higher costs for hydrogen-fueled trucks associated with trucks purchase, hydrogen fuel and distribution costs.

3. Sectors and corridors pave the way for roll-out.

The roll-out strategy for heavy-duty trucks is to first tackle sectors with bulk goods and fixed routes: steel, cement, mining, coal used for power plants. This is done along corridors, for example, connecting a steel plant to a port. Lessons learned and installed charging infrastructure can then be used to expand to other sectors, until the country has a fully developed network. An impressive range of demonstrations were shared. One hundred electric and hydrogen trucks are being piloted in three corridors in the Beijing-Tianjin-Hebei Region. In Tangshan, 3,000 zero emission heavy duty trucks were deployed for the steel industry, involving 26 carriers and 16 vehicle brands. More than 1,000 electric charging and battery swapping trucks transport coal along the 140 km road between Baotou and Ordos in Inner Mongolia. And the list is getting longer.

4. The infrastructure is starting to take shape.

There are 2.7 million public charging sites across the country, an increase of 51% from 2022, and 44% are DC chargers that trucks can use. Both fast or megawatt charging, and battery swapping are being tested widely, while infrastructure for hydrogen refueling is less developed. Interestingly, fast charging can reduce 40% of costs of charging heavy duty electric trucks through reduced service fees and time needed for recharging. Charging points are cheaper but battery swapping seems to be favored near ports and urban hubs where land is scarce. Still, CVCP estimates that battery-swapping will not exceed 5% penetration at any point in time, compared to an increase of 26% to 60% penetration rate of charging between 2030 and 2040.

5. Strong government policies have unleashed the transition.

Subsidies for new energy vehicles combined with tighter regulations like vehicles emission standards and access restrictions for polluting trucks have gotten us where we are. But more is needed: optimize and standardize the transport system, build charging infrastructure, and continue to promote new energy vehicles while discouraging ICE-trucks. This requires coordination between ministries covering environment, industry, energy and other areas. Enforcement remains a challenge though, for example, on-board diagnostics (OBD) systems have revolutionized the real-time monitoring of truck performance, including emissions, but some companies tamper with the software to get away with exceeding the emission standards.

6. Only a demand-driven market can complete the transition.

We now need to move from a policy-driven to a demand-driven market to complete the transition, and luckily demand from customers or ‘shippers’ is picking up. As Christoph Wolff, CEO of Smart Freight Centre put it: “When customers demand zero emission freight, then they give the confidence to OEMs, charging providers, financiers, and policy makers to step up, which in turn makes carriers decide that their next truck should be electric.” Companies in panel discussions – IKEA, JD Logistics, Maersk, Sinotrans and PepsiCo - confirmed their commitment and expressed what they need, for example, support for carriers to overcome the investment barrier for electric trucks, charging infrastructure, and a digital platform to optimize freight transport and reduce costs.

7. More focus on the value chain where everyone benefits.

Tighter regulations will ensure a fair level playing field for all companies. Attention must also be paid to the value chain. Mats Harborn, President Scania China Group, whose global electric truck factory in Rugao in China is under construction, was crystal clear about this: “The whole value chain and all its stakeholders must benefit. Value can be created by focusing on higher quality and efficiency, rather than on lowering costs which leads to poor quality and pollution. An OEM may sell less trucks but at a higher price because it can take more load and performs better. This is what sustainability is all about.”

8. Zero-emission road freight is possible.

Carbon emissions are being saved, but the number of electric trucks needs to ramp up while the power sector shifts to renewable energy, to make a dent in China’s road freight emissions. Standards like the ISO14083 and the more practical GLEC Framework will provide the basis for a China standard to calculate and report freight emissions. If the pace picks up, then zero emission road freight in line with Paris Agreement goals is possible.

9. ZEFI is here to stay!

ZEFI as a collaborative platform unites companies, industry associations, think tanks, research institutes and other players to work together towards zero emissions road freight transportation in China. Hosted by Smart Freight Centre and funded by Energy Foundation China, ZEFI will the coming year seek to exchange experiences with Europe, the US and other parts of the world, so that we can help each other to accelerate the transition. Boyong Wang, Director of Smart Freight Centre China and Secretary-General of ZEFI concluded that ZEFI is here to stay until all trucks in China are electric!