1、Emissions Mandates Will Remake Europes Trucking IndustryOCTOBER 2023The switch to zero-emission vehicles will benefit the sectors overall GDP and employment but will shift value among industry segmentsSource:BCG analysis.Note:OEM forecast assumes that automakers will not make strategic changes to th

2、eir current business model.MHDT-related utilities forecast assumes that,by 2035,the share of renewables from total electricity production will exceed 88%.MHDT=medium-and heavy-duty truck;T&E=Transport&Environment.SuppliersOEMs Infrastructure playersMHDT-related utilities GDP(BILLIONS)JOBS(MILLIONS)I

3、ncreased battery cell production from new entrants will drive GDP and job growthPhasing out internal combustion engine production will add to GDP but reduce employmentBuilding charging network infrastructure hardware will boost GDP and jobsShifting from foreign fossil fuels to domestic electricity w

4、ill increase GDP and employment221163320.60.33 1 3518 6 3 5525T&E caseBase caseBCG market perspectiveSuppliers will benefit in GDP and jobs,but they will need new capabilities to make battery cells and related componentsSource:BCG analysis.Note:Excludes buses,coaches,and light-duty vehicles.EDU=elec

5、trical drive unit;EV=electric vehicle;ICE=internal combustion engine;T&E=Transport&Environment.Because of rounding,not all sums of component numbers listed match the totals given.Overall impact+7BGDPAdditional GDP will come mainly from production of battery cells+3,000jobsNew jobs making EV componen

6、ts will compensate for loss of ICE-related positionsT&E case:Elevated CO2 standards(beyond those set by the EU Commission)GDP(BILLIONS)EMPLOYMENT(THOUSANDS)293572022211122035+6ICE transmissionICE engineperipheryBatterycellsEDU PowerelectronicsFuel cell stackand tankICE transmissionICE engineperipher

7、yBatterycellsPowerelectronicsFuel cell stackand tankEDU 23523820221113163442035+3For OEMs,the phaseout of ICE-powered trucks will lead to a net loss of 35,000 jobsSource:BCG analysis.Note:Assumes no strategic changes to current OEM business model.ICE internal combustion engine.GDP(BILLIONS)EMPLOYMEN

8、T(THOUSANDS)Overall impact+3BGDPThe higher value-add in the battery segment will compensate for losses from the decline in ICE engines35,000jobsDespite yielding higher GDP value,battery module and pack assembly will be less labor intensive,resulting in job losses2932620224203524420920224272035ICE en

9、gineBattery moduleand packICE engineBattery moduleand pack+335ZEV infrastructure players will benefit from a rapid buildup of charging stationsSource:BCG analysis.Note:2035 numbers based on ZEV adoption in T&E scenario.BEV=battery-electric vehicle;T&E=Transport&Environment;ZEV=zero-emission vehicle.

10、Because of rounding,not all sums of component numbers listed match the totals given.1Including connected and platform services,transport solutions,and resale,reuse,and recycling.Overall impact+600MGDPThe buildout of charging infrastructure will add significantly to GDP+6,000jobsThe contribution of c

11、harging infrastructure to employment will depend on BEV adoption ratesGDP1(BILLIONS)EMPLOYMENT(THOUSANDS)1.01.70.20.320220.12035DepotsLoading areasTruck stops+0.61117620222035Infrastructure employment+6Overall impact+22BGDPNew demand for electricity and hydrogen will compensate for losses from phasi

12、ng out dieseljobsThe need to provide 160 TWh of electricity per year will create jobs in the electricity sector MHDT-related utilities will reap the largest gains in jobs and GDP,mainly from domestically produced electricity Source:BCG analysis.Note:Assumes that renewables will produce 88%of total E

13、uropean electricity production by 2035.MHDT=medium-and heavy-duty truck;TWh=terawatt-hours.+55,000GDP(BILLIONS)EMPLOYMENT(THOUSANDS)1638215202242035DieselElectricityHydrogen+228814372142022312035DieselElectricityHydrogen+55The switch to ZEVs will have a net positive impact on European GDP and employ

14、ment,but it will shift benefits along the value chainSource:BCG analysis.Note:Calculation of European GDP:e.g.,Truck value VAT non-European value added.Calculation of European employment:e.g.,Employees per truck components Share of non-European production.MHDT=medium-and heavy-duty truck;VAT=value-a

15、dded tax;ZEV=zero-emission vehicle.GDP(BILLIONS)EMPLOYMENT(THOUSANDS)2022292911632 to 3531 to 321 to 227 to 382352441188236 to 238226 to 20914 to 17113 to 14391 to 107577589 to 60729203520222035SuppliersOEMsZEV infrastructureMHDT-related utilitiesTotal+11%to+22%+5%to+9%+32%to+63%+75%to+144%+22%to+43

16、%+1%to+2%7%to 14%+29%to+58%+29%to+63%+2%to+5%Implications for players along the value chain that are attempting to master the shift toward ZEVsSource:BCG analysis.Note:Based on T&E case.BEV=battery-electric vehicle;GWh=gigawatt-hours;ICE=internal combustion engine;MHDT=medium-and heavy-duty truck;T&

17、E=Transport&Environment;TWh=terawatt-hours;ZEV=zero-emission vehicle.SuppliersThe phaseout of ICE components shifts value from traditional ICE to new ZEV suppliers,with battery cells serving as the primary driver of future value;in the high-adoption scenario,battery cell capacity of up to 230 GWh wi

18、ll be required for 400,000 BEV trucks in 2035Prepare for radical change in business models Define a pathway toward the ZEV space,and start thinking about winding down ICE businessOEMsAlong with suppliers,OEMs will experience the biggest disruptions to their business model.They could lose up to 35,00

19、0 positions related to making ICE and require a substantial workforce transformation toward new capabilities,along with buildup of a new partnership ecosystem.Prepare for capability transformationConduct a capability shift to produce and market ZEVs,and seek business model extensions and strategic p

20、artnerships to establish a ZEV ecosystemZEV infrastructureInfrastructure providers will need to establish up to 185,000 charging points by 2035 and must overcome high implementation hurdles to ensure sufficient charging network coverageEnsure buildup of infrastructure componentsInclude such key elem

21、ents as a harmonized charging system and sufficient connection to the grid at core network corridors MHDT-related utilitiesEnergy providers need to ramp up renewable electricity generation from less than 1 TWh in 2022 to more than 160 TWh in 2035 to fuel 1.8 million BEV trucksa major driver of posit

22、ive economic impact due to high European value-add for renewable electricity(compared to fossil fuels)Accelerate buildup of renewable energy grid In addition to undertaking this buildup,ensure seamless access to charging locations(e.g.,truck stops,loading areas)Non-EU players could enter the market

23、via imports,gradually moving toward localizationSource:BCG analysis.TOTAL COSTS COMPARED TO LOCAL PRODUCTION IN EUROPE(%)90100110120130HighLow100%=COST FOR EUROPEAN PLAYERSDegree of localizationA localized supply chain will give outsiders a cost structure similar to that of incumbent OEMsImporting f

24、rom high-cost countries such as the US puts companies at a disadvantage compared with European incumbents due to import tariffs(10%)and logistics costs(35%)Importing from low-cost countries such as China puts companies close to European incumbents in terms of costsVehicles imported after assemblyLoc

25、al assembly with imported partsFully localized production with local assembly and supply chainIncreased localization yields significant cost benefitsThree scenarios assess the impact of non-European competitors entering the market Source:BCG analysis.1Including only suppliers and OEMs.2Through the y

26、ear 2035;the negative impact of the import-based competition scenario will continue to increase over time.AssumptionFully localized productionLocal assembly with partial local sourcingImport-based competitionGDP(billions)1Employment(thousands)Two players move into the European market and transition

27、to fully localized productionTwo players move into the European market and assemble vehicles locally,using components built elsewhere Competitors import fully assembled vehiclesNegative impact2Negative impact2Negative impact2Peak(2028)2035Peak(2029)2035Peak(2028)20351.60.41.81.41.21.2Negative impact

28、2Negative impact2Negative impact2Peak(2028)2035Peak(2029)2035Peak(2028)203511.31.612.37.47.67.6Fully localized production will cause a medium-term dip in GDP and employment,followed by a modest recoverySources:IHS Automotive;BCG analysis.Note:Analysis of the impact from non-European competitors is b

29、ased on the market perspective of zero-emission vehicle adoption.Fully localized productionSHARE OFTOTALMARKET(%)GDP(BILLIONS)JOBS(THOUSANDS)20281.6 billion20350.4 billionDuring the import peak,GDP will temporarily decrease by up to 1.6 billion202811,300 jobs20351,600 jobsAnnual employment losses du

30、ring import phaseup will peak at 11,300 in 2028Overall impact0.10.10.30.20.60.40.90.70.90.70.70.60.60.60.60.60.50.50.30.40.10.30.51.91.54.13.46.25.15.94.84.53.64.03.23.83.03.12.41.61.30.90.73335789910211131321320222023202420252026202720282029203020312032203320342035Domestic OEMsImported(non-EU OEMs)

31、Localized(non-EU OEMs)SuppliersOEMs344322666777012111Local assembly will lead to a substantial short-term dip in GDP and employment if the supply chain is not localizedSources:IHS Automotive;BCG analysis.Note:Analysis of the impact from non-European competitors is based on the market perspective of

32、zero-emission vehicle adoption.20291.8 billion20351.4 billionGDP will temporarily decrease until the import peak occurs in 2029202912,300 jobs20357,400 jobsAnnual employment losses during import phaseup will reach 12,300 in 2029Overall impactLocal assembly with partial local sourcingSHARE OFTOTALMAR

33、KET(%)GDP(BILLIONS)JOBS(THOUSANDS)20222023202420252026202720282029203020312032203320342035Domestic OEMsImported(non-EU OEMs)Localized(non-EU OEMs)SuppliersOEMs0.10.30.60.80.61.10.71.20.61.20.61.20.51.10.41.00.41.00.40.40.51.63.73.15.64.77.54.87.83.38.02.87.62.37.01.66.71.36.50.91233333333000Import-b

34、ased competition will lead to sustained losses of GDP and jobs for the European MHDT industrySources:IHS Automotive;BCG analysis.Note:Analysis of the impact from non-European competitors is based on the market perspective of zero-emission vehicle adoption.20351.2 billion20357,600 jobsImpact increase

35、s over time with higher zero-emission vehicle adoptionOverall impactLocal assembly with partial local sourcingSHARE OFTOTALMARKET(%)GDP(BILLIONS)JOBS(THOUSANDS)20222023202420252026202720282029203020312032203320342035Domestic OEMsImported(non-EU OEMs)Localized(non-EU OEMs)SuppliersOEMs0.10.20.40.50.40.50.40.60.40.60.40.60.40.60.40.60.40.70.50.10.20.31.42.63.63.03.73.13.93.14.03.24.03.24.13.24.13.34.33.32.20.51.2