Q2 2018 Executive Summary - Interact Analysis · Q2 2018 Executive Summary ... 4 Excavator Loader NASTA/SINTEF 2017 30 Electric Fuel Cell Unspecified and hydrogen Unspecified Excavator

Confidential. © 2018 Interact Analysis. All Rights Reserved.

Q2 2018 Executive Summary

• Major developments in the second quarter of 2018 have seen the largest on-highway truck manufacturers accelerate their electrification plans. Daimler and

Volvo have both launched electric trucks for regional and short haul applications. Daimler has also created a dedicated division to develop electrification across

all its truck brands.

• Volvo Penta, a major supplier of engines to marine and industrial applications, also announced that it would deliver hybrid and full electric solutions by 2021.

Again, this represents a major strategic shift for Volvo Penta as it begins to transition away from diesel.

• Volkswagen Truck & Bus will rebrand as TRATON. Whilst there is no immediate outlook for electrification, the rebranding exercise is ahead of an IPO to raise

additional funds. A focus for ‘TRATON’ will be sustainable transportation and it seems reasonable to assume further announcements on electrification and

autonomy investments can be expected.

• Kubota has released a micro-hybrid product for the off-highway sector. Featuring a down-sized diesel engine, it has the same form factor as an existing engine

and servicing requirements. It is aimed at differentiating Kubota from its competitors and providing machine builders with an ‘easy’ path into emission

compliance and electrification.

• Major new electric truck and bus projects have been confirmed over the last quarter. Major fleet operators and vehicle rental agencies are amongst the new

customers, as well as public transport operators. A significant ramp in volumes is now anticipated before 2020.

• Chinese electric vehicle manufacturers are positioning themselves to be able dominate global markets. Nearly 100,000 battery electric buses were sold in

China in 2017. Companies like BYD, Dongfeng, Shandong and FDG are investing in electrification technologies across their organisations and are increasingly

winning business in global markets.

1


Specifications of recent electrified off-road vehicles (1)

Vehicle/Brand Year Introduced Weight (ton) Powertrain Architecture Battery Type Battery Chemistry Applications

Artisan Z40 2018 40 Electric Lithium LiFePO4 Underground haul

Artisan A4 2017 9.5 Electric Lithium LiFePO4 Underground

load/haul/dump (LHD)

DEUTZ 2018 Various Hybrid Electric Lithium LiNiMnCoO2 (NMC) Various

Cummins 2018 Various Hybrid Electric Lithium LiNiMnCoO2 (NMC) or

LixNiO2 (eLNO)

Various

Mecalac e12 2018 9.7 Electric Lithium LiFePO4 Excavator Loader

NASTA/SINTEF 2017 30 Electric Fuel Cell Unspecified and hydrogen Unspecified Excavator

Pon Equipment/CAT 323F 2018 25 Electric Lithium Unspecified Excavator

JCB 19C-1 E-TEC 2018 1.9 Electric Lithium LiNiMnCoO2 (NMC) Mini-excavator

Kobelco SK210HLC-10 2016 20 Hybrid Electric Lithium Unspecified Excavator

MacLean BT3 2016 13.6 Electric Lithium LiNiMnCoO2 (NMC) Underground LHD

Sandvik – LH307B 2016 22 Electric Lithium Li2TiO3 (LTO) Underground LHD

Atlas Scooptram ST7 2016 21.5 Electric Lithium LiFePO4 Underground LHD

Saminco/Highland 2016 (trial) Not specified Electric Molten sodium SoNICK Underground LHD

2


Specifications of recent electrified off-road vehicles (2)

Artisan Z40Artisan A4 Mecalac e12

NASTA/SINTEF

Pon Equipment/CAT 323F

JCB 19C-1 E-TEC

Kobelco SK210HLC-10

MacLean BT3

Sandvik – LH307B

Atlas Scooptram ST7

Saminco/Highland

0 5 10 15 20 25 30 35 40 45

VEHICLE WEIGHT (T)

3

NMC Electric

NMC Hybrid

LiFePO4

LTO

Unspec Li

Unspec Li Hybrid

Unspec Li + H

SoNICK

Cummins

DEUTZ


Intermat 2018 – Review of electrification news (1)

Kubota showed a micro-hybrid engine. It’s a slightly down-sized engine with a very small electric motor attached. It’s their plan for targeting Stage V emission standard – it’s a relatively low cost solution and the low voltage level meaning that technicians can work on the engine without additional training.

Kubota also announced a new, defined unit for developing engines for the European market.

Kohler had no electrification products on show. In fact, it’s tagline was “diesel is not dead” (or similar).

Volvo Penta did not showcase any hybrid or electric products (this has obviously been superseded by the recent Penta announcement; however, could indicate that the products were not ready for external viewing).

Scania engines was not showing any electrification products.

Cummins was showcasing its range extended solution.

DEUTZ was showcasing its hybrid solution.

Yanmar did not showcase any hybrid or electric solutions, instead focusing on its most power diesel engine to date

No Chinese hybrid or electric solutions

FPT did not showcase any hybrid or electric solutions

4

Engines


Intermat 2018 – Review of electrification news (2)

5

Machines

Kobelco might be struggling with sales of its hybrid machine in Europe. It is heavily subsidised in Japan but receives no such rebate in Europe – it has a very high list price (by comparison to standard machine) and fuel savings are not making an impact.

Komatsu introduced two new hybrid machines.

Volvo EX2 concept machine actually has 2 batteries, one of which can be replaced with a hydrogen fuel cell or small diesel engine, making a hybrid machine possible.

Volvo EX2 machine has zero hydraulics. OK for digger operation, but cannot use any standard hydraulic tool attachments. Some industry participants think actuators will never take off, some think within 5 years. Dealing with hydraulics will be an important engineering consideration for CE electrification.

Mecalac e12 machine has two electric motors – one for drive, one for hydraulics. It can only get energy recuperation through drive motor. Target start of sale for end of 2019.

CIFA (Zoomlion) were showcasing Energya, the plug-in mixer truck (only mixer drum is electric, drivetrain is ICE).

CNH/Iveco not showcasing any electrification productions

Doosan not showcasing any electrification products

Volvo not showcasing any electrification products, although this has been superseded by recent announcement.

No Chinese vendors showing electrification products.

Multiple electric AWPs and micro-excavators on display


Electric Vehicles by Horsepower (1)

6

Fuse eCanter, 1

Peterbilt 520, 1Cummins Aeos, 1

Toyota (Project Portal), 2

Kenworth T680, 1

BYD T9, 2

BYD T7, 1

Nikola 1 and 2, 6Tesla 300, 4

Tesla 500, 4

VW e-crafter, 1MB eVito, 1

Volvo FE Electric, 2

Volvo FL Electric, 1

0

200

400

600

800

1000

1200

0 100 200 300 400 500 600

Pe

ak

Ho

rse

po

we

r

Maximum Battery Capacity (kW)

Freight

Port Drayage

Urban

Refuse

Size of bubble is number of motors



7

Fuse eCanter

Peterbilt 520

Cummins Aeos

Kenworth T680

BYD T7

VW e-crafter

MB eVito

Volvo FL Electric

Toyota (Project Portal)

BYD T9

Volvo FE Electric

Tesla 300

Tesla 500

Nikola 1 and 2

Scaled Comparison of hp, battery capacity and no. of electric motors

Scaled Motor Number

Scaled Peak Horsepower

Scaled Battery Capacity



• Long haul and port drayage vehicles typically use in excess of 500 peak horsepower. From a design perspective, most are using 2 or more electric motors for

the drivetrain with the Nikola One and Two using 6. It is interesting to note that the Kenworth T680 fuel cell truck is only using one electric motor. It is using a

dual rotor electric motor, presumably to reduce component/integration cost from the use of one motor versus 2, 4 or 6. However, this does represent a single

point of failure and the technology is ‘newer’ in this application and there could be design challenges in the future.

• The rationale from Tesla for using 4 electric motors was partly redundancy and partly cost. The truck can still be driven if 2 motors fails and the motors

themselves are the same as used in the Model 3, meaning that some degree of purchasing scale will bring costs down.

• Urban electric trucks are typically 200 hp or less and only require 1 electric motor for the drivetrain. The Volvo FL truck has a higher maximum battery capacity

than other urban vehicles. It can be used as a refuse truck – requiring more power – or a longer range vehicle too.

• The Toyota, Kenworth and Nikola trucks are hydrogen powered. The Toyota and Kenworth trucks have relatively small batteries, offering limited range before the

hydrogen fuel cells need to be used. The Nikola trucks have a far larger battery meaning that longer battery range can be achieved before the fuel cells need to

be used. This means the trucks can operate when hydrogen fuel is not available.

8


Will Chinese brands dominate commercial vehicle electrification?


Will Chinese brands dominate commercial vehicle electrification? (1)

Recent news from both Daimler and Volvo revealed that they are to put considerable focus on commercial vehicle electrification. As two of the largest

manufacturers of commercial vehicles, this is a strong signal that the market will shift towards electrification to meet more stringent emission regulations and the

requirements of low and zero emission zones. However, will Daimler, Volvo and others be able to compete with bullish Chinese vendors in the long term?

The growth of China’s new energy vehicle (NEV) market has been well documented. With strong support from the Chinese government, many local manufacturers

have grown into multi-billion-dollar enterprises from sales of electric vehicles to the domestic market. In 2017, close to 100,000 electric buses were sold in China.

Many of these Chinese brands are actively looking to export their expertise in electric commercial vehicles overseas. Undoubtedly, they will face challenges –

perceptions about quality, brand equity, underdeveloped service networks, autonomy, etc. – but with a growing appetite for electric trucks, bus and off-highway

vehicles there is an irresistible opportunity.

Before assessing how Chinese brands can address these challenges, it useful to review what some of the brands are already doing in the electrification market:

Chinese Brands Expand

BYD

BYD is perhaps, the most well-known Chinese electric vehicle manufacturer. To date, it has primarily been active in the electric passenger car and bus markets.

However, in recent years it has expanded its product line to include electric vans and refuse trucks, and it has also opened production facilities in the US with

further facilities planned in Canada, France, Morocco and Ecuador.

With total shipments of its electric buses exceeding 35,000 units, it has the know-how and growing global manufacturing footprint to be able to dominate markets

quickly in pursuit of growth. BYD is also pursuing what it calls its “4+7” strategy which involves seven conventional vehicle types (private vehicles, battery electric

taxis, battery electric buses, battery electric coaches, logistics vehicles and waste management vehicles) and four specialised vehicle types (warehouses, ports,

airports and mining operations). BYD has the potential to be major on- and off-highway electric vehicle supplier if it can continue to expand both its product

offering and global footprint.

EVHA Newsletter Q2 2018 / June 2018

10




11

?

BYD has executed upon its 7+4+1 strategy fairly effectively. For

‘on-road’, BYD has created products for all 7 applications. It has

also developed tractor trucks for freight. For off-road, it has

developed a yard tractor and also has a forklift truck business.

For mining vehicles, it launched a dump truck in 2015 called the

BYD V60, but very little information is available about this

product and may have been a trial. It would be a surprise if, given

the increasing pressure on emissions, particularly in China, this

product didn’t reappear.

BYD V60



FDG Electric Vehicles

Relatively unknown to a global audience, FDG is the parent company of US-based Chanje. The ‘Chanje’ brand draws more attention, particularly with the recent

announcement that it will supply 500 electric vans to truck leasing firm, Ryder. However, FDG has recently announced three substantial orders in China totalling

over 10,000 units:

• January 2018 – 228 units of electric buses and vans for operation in Sichuan.

• April 2018 – agreement with ZXL to purchase 6000 e-GLORY commercial vehicles before 2021, including 1200 to be delivered in 2018.

• April 2018 – agreement with Shanghai Yidong to purchase 4500 e-GLORY commercial vehicles before 2021, including 1000 to be delivered in 2018

Shandong Heavy Industry Group

A large Chinese conglomerate, Shandong is the parent company or joint-venture partner for a number of Chinese and global on- and off-highway brands, including

Weichai, Shaanxi, Kion and Asiastar. Although there is no dedicated, cross-group focus on electrification, many of its brands already offer electrified products,

including buses, trucks concrete mixers and forklift trucks. Weichai has recently signed agreements with both Bosch and Ceres Power to develop hydrogen fuel

cell technology for use within its vehicles. Because of its size and multiple standalone segments, Shandong would benefit, if one does not exist, from a central

division/team that can bring a single, coherent electrification strategy to market. If it can do this, it potentially represents a serious threat to the global on- and off-

highway market given its size and breadth of offering.


12

https://www.reuters.com/article/us-ryder-chanje-vans/u-s-rental-truck-firm-ryder-makes-first-big-electric-van-order-idUSKBN1D222D



Dongfeng

Dongfeng is one of the largest Chinese manufacturers of cars and commercial vehicles. Its corporate structure is somewhat convoluted – with many joint ventures

and subsidiaries – but it is active in electric commercial vehicles through its truck brands and now, notably, its joint venture with Volvo (Dongfeng Commercial

Vehicles) may become a focus for electrification. It is also exposed to off-highway equipment in China through its engine joint-venture with Cummins. Its special

vehicle subsidiary supplied 500 vehicles for a hydrogen fuel cell project in Shanghai, although the actual integration was done by Shanghai Re-Fire Technology

and the fuel cells were supplied by Ballard.

Dongfeng Cummins

This joint-venture has developed hybrid technologies in the past for buses (2009/10). Its engines have also been used by other bus builders as a part of hybrid

platforms. It is interesting to note that Cummins China NOT Cummins Dongfeng recently introduced the Cummins REEV solution to the Chinese market in May

2018.

Electrifying the world

Success in the domestic Chinese market does not always equate to success in the global market. Chinese manufacturers face a number of challenges in pursuing

global electric on- and off-highway markets.

Trade war?

The current tit-for-tat trade war with the US could be a headwind for Chinese manufacturers looking to build sales in the US. BYD, Shandong and Sany already

have US production and/or R&D facilities and Chanje is planning local US production. It’s too early to make a pronouncement on an unpredictable situation;

however, the US represents a key strategic market for truck and bus OEMs, so it would be more likely than not that Chinese OEMs would adopt a long-term

strategy for the US and pursue opportunities regardless of the current trade situation.


13



Quality

A criticism that is often levelled at Chinese OEMs focuses on product quality. How can brands that have been in existence for a relatively short period of time offer

reliable vehicles, particularly for demanding applications like trucks and buses? In reality, there is little reliability data to hand that paints an accurate picture of

medium and heavy commercial vehicles and the difference in reliability between US, European and Japanese brands and their Chinese counterparts. Chinese

truck and bus OEMs have invested billions in modern production facilities and techniques and are often sourcing the same Tier 1 components as their

international competitors. If there is a difference, it is likely closing quickly, particularly as Chinese truck and bus OEMs get more vehicles on international roads

and feedback design issues into new platforms.

Brand equity

Chinese truck and bus brands are not, on the whole, well known to international audiences. This may hinder growth in the short term as fleet operators,

particularly smaller ones, may not recognise a brand and feel uncomfortable working with an unknown party. However, attempts to increase global brand

awareness – such as BYD sponsoring London’s Arsenal football club are likely to continue. Other Chinese brands may look to this tactic in other markets to start

to gain visibility with fleet operators.

Underdeveloped service networks

The provision of service is likely the greatest challenge for Chinese truck and bus OEMs when operating internationally – even greater than winning business in

first place. Providing local service and parts and helping fleets to maintain maximum operational time (and profit) will be key to winning long-term, repeatable

business. Sany, for example, already has a well-developed global service network for its construction equipment. For other Chinese vendors, they will need to give

careful consideration to who they want to partner with and where best to invest in building up service capability.


14


Shandong Heavy

Industry Group

WeichaiHolding Group

WeichaiPower

WeichaiHeavy

MachineryBaudouin Ferretti Spa

KION Group (25%)

Linde Hydraulics

Shaanxi Automobile

Group

Shaanxi Fast Auto Drive

Group Company

Shaanxi HANDE Axle

Co.

Xiamen Fengtai

YangzhouxAsiastar Bus

Co.

Weichai(Chongqing) Automotive

Co.

Zhuzhou Torch Spark Plugs Co.,

Ltd

Zhuzhou Gear Co.,

Ltd.

Shandong Auto

Industry Group

ShantuiConstruction Machinery

Strong Construction Machinery

Strong Financial Leasing

Shandong Heavy Industry Group Finance



15

Shandong Heavy Industry Group Co., Ltd.

• Ceres Power work with Weichai to jointly develop and launch a Solid Oxide Fuel Cell (SOFC) range extender system for electric buses

• Kion Group develops electric and fuel cell forklift trucks.

• Shaanxi Automobile group develops electric buses, trucks and a PHEV cement mixer truck.

• Weichai Power has partnered with Bosch to develop fuel cell technology.



Dongfeng Motor

Corporation

Dongfeng Dana Axle (50%)

Dongfeng Motor Group

Dongfeng Commercial

Vehicles (55%)

Dongfeng Nengdi(50%)

Dongfeng Electric Vehicle

Co. Ltd.

Dongfeng Off-road Vehicle

Dongfeng Special Purpose

Commercial Vehicle

Dongfeng Honda

Dongfeng Nissan

Dongfeng Motor Co. Ltd

(50%)

Dongfeng Automobile Co.

Dongfeng Cummins

(50%)

Dongfeng Peugeot-Citroen

Dongfeng Renault

Dongfeng Yueda Kia

Dongfeng Yulon

16

Dongfeng Motor Corporation


• Active in electric commercial vehicles through its truck brands and now, notably, the JV with Volvo (Dongfeng Commercial Vehicles) may

become a focus for electrification.

• Its special vehicle subsidiary supplied 500 vehicles for a hydrogen fuel cell project in Shanghai, although the actual integration was done

by Shanghai Re-Fire Technology and the fuel cells were supplied by Ballard.

• Dongfeng Cummins developed hybrid technology in 2009/10 for buses

Documents

Q2 2018 Executive Summary - Interact Analysis · Q2 2018 Executive Summary ... 4 Excavator Loader NASTA/SINTEF 2017 30 Electric Fuel Cell Unspecified and hydrogen Unspecified Excavator