Massive disruption tears down the highway toward a $ 1.5 trillion global truck market as older manufacturers and newcomers alike battle it out for pole position in a race for supremacy in zero-emission trucks.
Electric vehicles have caught the attention of investors like stocks like Tesla over the past year
roared higher. And for good reason: According to UBS, electric vehicles will have penetrated 100% of the global auto market by 2040
By 2025, the Swiss bank expects two players – Tesla and Volkswagen
– to have already become one of the world's leading sellers of electric vehicles and to deliver around 1.2 million cars each next year.
However, vehicle emissions affect more than just cars. There are bigger things that move.
In the face of changing regulations and technological innovations, both battery-electric and hydrogen fuel cell alternatives to internal combustion engines are emerging to disrupt the global trucking market, valued by UBS at $ 1.5 trillion.
Basic reading: Buy these 3 battery supplies to play the EV party but stay away from this company, says UBS
The Swiss bank assumes that zero-emission vehicles (ZEV) will eventually displace trucks powered by internal combustion engines, with the pace of change accelerating compared to three years ago as new market participants enter the market.
In a report released on Wednesday with the input of 21 analysts, UBS expects most of the trucking market to be split between battery electric vehicles and fuel cell electric vehicles that run on hydrogen. Renewable natural gas could also play a lesser role in the market, the analysts said.
The main driving force is global emissions regulations, but the economy of battery and fuel cell ZEVs is also highly competitive. UBS anticipates that heavy duty vehicles powered by batteries or fuel cells will be cheaper than diesel by 2030, including infrastructure costs. However, the supply of input remains a challenge, as according to UBS a global shortage of battery cells is expected by 2025 and the green hydrogen industry is still young.
UBS predicts that 30% of heavy truck sales in North America, Europe and China will come from ZEV by 2030, with ZEV trucks accounting for 40% to 60% of medium truck sales in these regions.
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If Tesla's goals are accepted at face value, its high-performance battery-electric tractor-trailer will be a "superior alternative" to internal combustion engines by 2025, UBS said.
To the extent that Tesla holds on to the forefront of battery innovation, analysts at the Swiss bank believe the American company may have "a built-in advantage" over older heavy-duty truck manufacturers who rely on third parties to supply batteries .
Conventional truck and engine manufacturers are expected to struggle hard to stay in control, including through new offerings and partnerships. However, UBS believes that they will "lose at least some of the market share". The established manufacturers are facing the “greatest headwind” in this changing environment, according to the bank.
Newcomers such as Rivian, Lion and Chanje are establishing themselves in medium-duty trucks and will be important challengers. These companies are currently privately owned but could go public through an IPO or a merger with a Blankoscheck acquisition company with Blankoscheck.
Plus: Tesla faces the race with Volkswagen as the German auto giant targets battery costs and new giant factories
For heavy trucks and engines, expect Tesla, Nikola, and Hyliion
dominate if they are able to implement their respective visions, said UBS, despite incumbents like Toyota
are also expanding globally. The analysts determined that both battery-electric and fuel cell offerings from newcomers are still in development and may miss the targets for weight and range.
In the UBS model, all of the following conventional truck and engine manufacturers are expected to lose market share by 2030: Cummins
– owned by Mack Trucks – and Traton
The company is majority-owned by Volkswagen and is expected to complete the acquisition of Navistar
In this battle among truck manufacturers, UBS expects infrastructure, battery and fuel companies to rise above the battle and enjoy the greatest tailwind. These groups of stocks make up their favorite picks. The Swiss bank is monitoring the energy infrastructure company Quanta Services
and chemicals and battery packs like Albemarle
and contemporary Amperex Technology Co. Limited (CATL)
More of UBS's most and least preferred stock picks from the report are shown in the table below: