China’s Dominance in the EV Truck Market

China’s Dominance in the EV Truck Market

Chinese companies have established their presence in the electric vehicle (EV) car sector and are now expanding their influence in the less-noticed trucking industry. Utilizing their domestic supply chain and cost-effective strategies, these firms, including established automakers and start-ups, aim to revolutionize trucking similar to their success in the EV car market.

Global Reach and Expansion

Electric trucks currently account for less than 1% of truck sales worldwide, with China leading the market, capturing 70% of sales in 2023. The International Energy Agency (IEA) anticipates that favorable policy and technological advancements will accelerate widespread adoption of electric trucks in the coming decade. Chinese companies such as BYD and Beiqi Foton have already expanded their trucking operations globally, exporting trucks to countries like Italy, Poland, Spain, and Mexico. They have established assembly plants worldwide to meet growing demand. Stephen Dyer of consulting firm AlixPartners highlights the cost-competitiveness of Chinese trucks in emerging markets.

Environmental Challenges and Battery Limitations

Reducing emissions in the trucking sector poses significant challenges. Heavy-duty trucks are among the most difficult transport segments to decarbonize, after aviation and shipping. A key hurdle lies in balancing battery size and range. Elizabeth Connelly of the IEA explains that increasing battery size extends range but simultaneously increases truck weight, diminishing fuel efficiency.

Quality Concerns and Competitive Gap

Chinese manufacturers have faced criticism for producing lower quality products compared to their foreign counterparts. While this perception is shifting, Chinese companies still lag behind competitors in factors such as range and battery capacity. The Zero-Emission Technology Inventory reveals that median Chinese heavy-duty trucks have a range of 250 kilometers, while US trucks boast a range of 322 kilometers. However, Chinese manufacturers are actively addressing these gaps. Windrose, a start-up company, claims its semi-trucks can travel up to 670 kilometers on a single charge. Additionally, battery giant CATL has introduced battery-swapping facilities for trucks, eliminating charging time by replacing drained units instantly.

Geopolitical Risks and Protectionism

Despite their momentum, Chinese EV truck companies face potential roadblocks in the form of geopolitical tensions. Western countries like the European Union and the United States have imposed tariffs on Chinese EV cars, citing concerns over unfair state aid to automakers. As the Chinese EV truck footprint expands globally, it increases the likelihood of similar measures being applied. Governments in potential export markets prioritize protecting their local industries. AlixPartners’ Dyer notes that “these are not ‘normal times’ anymore” and that anything Chinese attracts significant attention in the US government.

Mitigating Risks and Global Expansion

Anticipating such challenges, some Chinese companies have taken proactive steps to mitigate risks. BYD emphasizes that its trucks are “assembled by union workers in Lancaster, California” and has plans for a factory in Mexico. The company also has plants in Hungary and Romania. Windrose has dispersed its operations across multiple countries, including Belgium, where it has relocated its headquarters. Han, the founder of Windrose, acknowledges the desire of major markets to establish their own domestic EV supply chains but stresses the importance of starting in China. He believes that “there’s no alternative” to starting in China and then gradually moving the supply chain globally.