Positive growth for MCVs: but will it last?
Positive growth for MCVs: but will it last?
The medium commercial vehicle (MCV) industry looks set to grow. While the situation may change, JACO DE KLERK discovers that the segment is gearing up for market domination, with MCVs predicted to make up over 93% of the global electric truck fleet by 2026.
Reflecting on the new South African vehicle sales statistics for the month of February 2022, Mikel Mabasa, CEO of the automotive business council Naamsa, says that the new vehicle market continued to gain traction. Aggregate domestic new vehicle sales of 44 229 units for the month represented an increase of 6 860 units: up 18,4% from the 37 369 vehicles sold in February 2021.
Sales for the MCV segment of 572 units also reflected a positive performance for the month, with the increase of 40 units representing 7,5% annual growth.
This healthy performance in the new vehicle market reflected an improvement in domestic demand conditions, although year-on-year comparisons remain difficult to interpret because of differing pandemic circumstances during the corresponding period last year.
GEOPOLITICAL TENSIONS POSING A PROBLEM
The automotive industry in South Africa is, however, concerned about the escalating geopolitical tensions due to the Russian invasion of Ukraine. Naamsa says that the current hostilities pose another potential global supply chain challenge for the auto industry because of Europe’s strategic significance to the global automotive ecosystem.
The timing of the confrontation between Russia and Ukraine – alongside the European Union, the United States, and other Western allies – could not be much worse. It comes at a time when the global auto industry is still trying to recover from the devastating impact of Covid-19, disruptions and global shortages of semi-conductors, and many other supply chain-related industry challenges experienced since the beginning of 2020.
“We don’t need another global economic disruption. We urgently urge all global leaders to work through the United Nations structures to find sustainable political solutions to the conflict in the region, so that the people of Ukraine can avert human suffering, destruction to property, and the demolition of some of their important economic infrastructure needed to sustain progress and development,” says Mabasa.
Amid an escalation of the Ukrainian conflict, this renewed disruption to global supply chain operation will have cost implications for the domestic economy. Despite this, though, the ABSA Purchasing Managers’ Index for February 2022 reflected that purchasing managers remained upbeat about expected business conditions in six months’ time.
ELECTRIC COMMERCIAL VEHICLES ON THE RISE
The medium- and heavy-duty electric vehicle market segment is expected to grow from US$ 274,31 billion in 2020 to US$ 432,75 billion by 2025 at a compound annual growth rate of 7,89%. So says online market research provider Mordor Intelligence in Medium and Heavy-Duty Commercial Vehicles Market – Growth, Trends, Covid-19 Impact, and Forecasts (2022 – 2027): “With the world manufacturing units being shut down due to Covid-19 pandemic, production was stopped. Due to this, the need for transporting was completely reduced. Due to disruption in the supply chain, leading truck manufacturers stopped production. But the increased need for transport in the aftermath of the Covid-19 pandemic is the ray of hope for medium and heavy-duty commercial vehicles,” notes the report. “With the gradual relaxation of lockdown and restrictions, the medium and heavy-duty commercial vehicles market has a great chance to bounce back from the economic crisis.”
Statista researcher, Mathilde Carlier*, adds that medium-duty trucks are projected to make up over 93% of the global electric truck fleet by 2026, at over 302 000 units in use worldwide. “This share of the market remains constant compared to 2019, when medium electric commercial vehicles amounted to 94% of the total fleet.”
US-BASED PARTNERSHIP TO BOOST ELECTRIC MCVs
Lightning eMotors, a leading provider of zero emissions medium-duty commercial vehicles and electric vehicle technology for fleets, has reached an agreement with General Motors (GM) to be the first GM Specialty Vehicle Manufacturer (SVM) to provide fully electric MCVs and heavy commercial vehicles.
Under the agreement, Lightning eMotors will electrify popular medium-duty truck platforms provided by GM, which can be used for several vehicle applications like school buses, shuttle buses, delivery trucks, and work trucks.
“We are thrilled that GM is working with Lightning eMotors to make GM’s medium-duty truck platform the basis for new electric vehicles,” says Lightning eMotors’ CEO and co-founder Tim Reeser. “GM’s inclusive approach to electrification is a great match for Lightning’s position and role as a leading powertrain supplier in the commercial vehicle space. Commercial vehicles and commercial vehicle powertrains are complex, with thousands of unique components, requiring years of custom software development and on-road testing – and Lightning has products in fleet use today and ready for customers to roll out this year.”
Lightning has developed a flexible manufacturing approach that provides scalable and cost-effective electrification for medium-duty specialty vehicles such as utility trucks, school buses, and ambulances. Electrifying these vehicles results in large operating cost savings, better performance, and zero tailpipe emissions. Lightning eMotors has seen dramatic growth in orders over the last three years from its customers.
“GM has a long history in commercial vehicle markets,” says Lightning eMotors’ chief revenue officer Kash Sethi. “Lightning’s products are purpose-fit for these vehicles, classes, and applications, allowing us to move quickly to support our medium-duty truck and bus partners and customers.”
Lightning eMotors will electrify certain GM platforms at its manufacturing campus in Loveland, Colorado. Completed chassis will be shipped to commercial vehicle manufacturers.
“GM has provided chassis to commercial vehicle upfitters and fleets for many years, so to now offer electrified versions of these vehicles with Lightning’s powertrains demonstrates our joint vision towards an electrified future that is putting vehicles on the road today,” says Reeser. “We are at the forefront of speciality vehicle fleet electrification.”
A BRIGHT FUTURE?
With increased vehicle sales and a bright future on the electrification front, it seems as if the MCV market is set for impressive growth. Let us hope that the geopolitical tensions can be resolved soon; people and economies the world over have suffered enough.
* Mathilde Carlier is a transportation and logistics researcher specialising in metal manufacturing, commercial vehicles, two-wheelers, rail freight transport, rolling stock, and related production processes. Her current research at Statista, a leading market and consumer data provider, focuses particularly on global, European, and United Kingdom market trends. Interested mainly in alternatively powered vehicles, heavy-duty trucks, and metal trade, her investigation work pairs industry insights with in-depth contextual information and structure.
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