Vehicle Electrification

Trend Overview

Impact:

High

Adoption:

< 5 Years

Focus Areas:

Sustainability

Trend Clusters:

Sectors:

The trend of Vehicle Electrification refers to the replacement of traditional internal combustion engines (ICEs) in various vehicle types with electric powertrains. This involves the adoption of electric motors and batteries or fuel cells to power the vehicle, which reduces or eliminates reliance on fossil fuels. Vehicle electrification not only cuts carbon emissions and air pollution but also promotes sustainability in the transportation sector.

One of the biggest levers in achieving net-zero emissions is electrification – in other words, transitioning various applications and sectors to use electricity instead of fossil fuels as the primary source of power. This involves replacing traditional or non-electric systems with electric alternatives.

Vehicle electrification is an important area of focus for logistics. Road freight is responsible for around 70% of the 3.4 billion metric tons of emissions generated during overland transportation. Fortunately, developments in green technologies, such as battery electric vehicles (BEVs) and hydrogen fuel-cell electric vehicles (FCEVs) are advancing at an accelerated pace.

Based on today’s energy, climate and industrial policy settings, the number of EVs will grow from less than 45 million in 2023 to 250 million in 2030 and reach 525 million in 2035. As a result, more than one in four vehicles on the road will be electric by 2035.

The global outlook for vehicle electrification is promising for a variety of reasons. There is growing demand both from industry and private households wanting to become more sustainable. In support of this, many governments have implemented policies and incentives to encourage uptake of electric vehicles, such as subsidies, tax incentives, and stricter emission standards.

Another reason for this positive global outlook is significant progress with related technologies. There have been improvements in battery capacity and the charging infrastructure, as well as cost reductions that make EVs more accessible and attractive. Manufacturers are increasingly investing in EV development and many major automakers have announced plans to transition to fully electric vehicle lineups in the coming years.

Vehicle electrification is especially important in the transportation sector, with its potential to greatly reduce CO2 emissions. However, realization of this trend varies along the supply chain and between different vehicles and modes of transportation. For example, the trend is relatively mature in last-mile transportation but vehicle electrification has yet to be widely adopted in long-haul, air, and ocean transportation.

The borders of electric vehicles will be pushed over time

Source: DHL (2024)

Relevance to the Future of Logistics

Electrified Vans & Trucks

Much progress has been made in electrifying and decarbonizing last-mile transportation using electric vans. For example, at DHL 37.6% of our pick-up and delivery vehicles are electric with the aim to increase this share to 60% in 2030.

Today's market already offers a diverse array of electric vans, each designed to meet specific needs in the supply chain. From compact models adept at navigating narrow urban streets to larger variants equipped for more cargo capacity, this versatility allows logistics organizations to integrate different models into various stages of operations, from distribution center transits to final delivery.

While the last mile of logistics is close to adopting widespread electrification, with solutions expanding and the wait for existing non-electric vehicle contracts coming to an end, the situation is different for middle-mile and long-haul transportation. Although there are some electrification developments, these are still restricted by range limitations and insufficient charging infrastructure. In particular, grid connection is the main limiting factor for the further roll-out of e-trucks as, in main markets, the process of grid extension can take up to six years.

Truck electrification is being driven by established companies such as Volvo and Mercedes-Benz, the e-mobility frontrunner Tesla, and startups such as Nikola. Improvements are underway as, for example, in October 2023 the Mercedes-Benz eActros truck was launched with a range of up to 400 km (248 miles).

Also, solutions exist to bridge the transition from diesel trucking to fully electric. The US startup Revoy offers a SixWheel electric add-on that attaches between any diesel semi-truck trailer to provide an independent electric powertrain, turning it into a hybrid vehicle. Just like a pedal-assist bike, when the truck ‘pedals,’ the SixWheel ‘assists’.

Next use case

Fuel-Cell Electric Vehicles

In the realm of road transportation, it is predicted that there will be a mixture of different technologies, as no single alternative drive technology has emerged as the clear winner. Therefore, it remains crucial for logistics organizations to maintain a technology-neutral approach and continue testing various sustainable solutions.

This includes not only battery electric trucks but also hydrogen fuel-cell electric trucks, which excel at longer distances due to their larger range (up to 1,000 km or 620 miles), quick refueling capabilities (less than 15 minutes), and fit for heavy, energy-demanding assignments. These trucks generate electricity from fuel cells powered by hydrogen, stored in the tanks of the truck. An electrochemical reaction (combining hydrogen and oxygen) occurs inside the fuel cells which generates electricity, heat, and water. This means that, unlike a battery electric truck, a fuel-cell electric truck does not need to charge up from an external electricity source – ideal in countries with a limited electric grid and few opportunities for fast battery charging. Transportation over long distances generates no exhaust emissions except water and, if the hydrogen used is produced with energy from renewables, these are zero-emission journeys.

However, there are several restrictions on the widescale roll-out of these hydrogen fuel-cell electric trucks. Firstly, there is limited availability of hydrogen refueling stations (only 1,100 globally in 2023), and secondly it remains relatively expensive and energy-intense to produce general and green hydrogen. A third restriction is the cost of producing and implementing fuel-cell systems is currently higher than with internal combustion engine systems and for battery electric vehicles. Finally, to date there is only a limited range of truck models to choose from. One example of a production-ready hydrogen fuel-cell truck is the special-purpose commercial vehicle made by Paul Nutzfahrzeuge, currently being used by DHL Group in a distribution and line-haul pilot project in Germany.

Previous use case Next use case

Air & Ocean Transportation

To reduce the environmental impact of air transportation, companies can choose to use sustainable aviation fuel (SAF). An additional option is to create electric airplane engines. The Alice electric aircraft from the startup Eviation, scheduled for market launch in 2024, can be used for short-haul flights and is likely to become a viable sustainable solution for national and even regional air transportation. DHL Express has therefore ordered 12 airplanes with a range of 460 km (250 nm) to kick-off the electrification of its fleet.

Another area of sustainable aviation research is the use of hydrogen fuel. Startups like H2FLY and ZeroAvia are working on concepts but experts do not expect commercial application of sub-regional and regional hydrogen fuel-cell aircraft before 2030.

Also, the carbon-intensive shipping industry is looking into vessel electrification. Ferries, tugs, and inland waterway vessels can easily benefit from full electric propulsion.

DHL is piloting the use of an electrically powered solar ship in Berlin, Germany, which has already delivered more than 50,000 parcels in the capital since October 2022. Meanwhile, the world’s first fully autonomous cargo ship is all electric: the MV Yara Birkeland, commissioned by Norway-based chemical company Yara International, is powered by a 7 MWh battery. It is designed to replace 40,000 trips carried out by diesel trucks per year, has a top speed of 13 knots, and can carry 103 standard-sized containers.

Previous use case

Challenges

Infrastructure is holding back vehicle electrification – although the number of EV charging stations is growing, it is not yet comparable with conventional gas (filling) stations and there may be limits on power grid expansion; hydrogen refueling stations are almost non-existent globally.

Electrified drive systems on average still have a much shorter range than vehicles with combustion engines running on fossil fuels.

EVs often have reduced payload capacity due to the weight of their battery systems – a limitation of particular importance in trucks and airplanes as it can impact the ability to transport heavy cargo efficiently.

Compared to conventional counterparts, EVs generally have a higher upfront cost; this cost differential is challenging for logistics companies in terms of fleet acquisition and operational expenses.

Despite a clear sustainability advantage over fossil fuel solutions, EVs have some downsides in terms of natural resources – minerals must be extracted, manufacturing is energy intensive, and there are battery disposal challenges.

Electrified drive systems on average still have a much shorter range than vehicles with combustion engines running on fossil fuels.

Compared to conventional counterparts, EVs generally have a higher upfront cost; this cost differential is challenging for logistics companies in terms of fleet acquisition and operational expenses.

Challenge 1 Challenge 2 Challenge 3 Challenge 4 Challenge 5

Outlook

Many solutions for vehicle electrification are already available but some industry-revolutionary technologies are still in pilot phase and not yet scalable.

However, with sufficient market demand, rapid development is achievable. This is clearly evidenced by the progress and expansion of BEVs for ground transportation. Investment in research and development (R&D) and infrastructure, as well as corporate commitment to new solutions, will be crucial to achieving timely sustainability solutions.

This trend should be CAREFULLY monitored,with use cases in some applications that can already be addressed today.