Commercial vehicle electrification adapts to new realities
30 January 2025

While OEMs and fleets continue to invest in electrified vehicles and equipment, the electrification landscape is changing. In a recent webinar, global consulting firm Roland Berger looked at how the market dynamics of electrification will affect commercial vehicles and off-highway equipment and change the way OEMs approach the technology in the future.
Electrification Hype
Walter Rentzsch, a director in Roland Berger’s automotive practice who is focused on commercial vehicles and transportation, said that in the recent past, electrification of on-highway vehicles — both the light consumer and commercial varieties — followed what he described as a “hype cycle.”
Referencing the S&P 500 U.S. and China electric vehicle (EV) index, which Rentzsch said monitors the performance of the 50 largest companies in the EV industry, he noted that the overall electrification market was at “peak hype” in 2022 following a rise that began in 2019.

During that period, Rentzsch said year-over-year electrification growth rates above 50 percent drove considerable optimism. For light consumer vehicles, the forecast for EV share of new vehicle production was expected to be about 47 percent by 2030.
“The sector was booming,” he said. “The only concern, really, was around potential bottlenecks, like capital equipment, raw material resources and time constraints. All the OEMs were committed, and we also saw that regulations came in place supporting this fast growth.”
However, beginning in late 2022, expectations about electrification began to temper, dropping and stabilizing at a more moderate level. During the last two years, year-over-year growth for EVs has slowed to approximately 12 percent, Rentzsch explained, with that 2030 outlook for BEV share of light consumer vehicle production dropping to 34 percent.
“Market signals have weakened,” he said. “We see Chinese price competition intensifying. Many OEMs [have] increasing losses on their electrification programs, and some have even begun to cancel or at least delay the EV programs.
“Additionally, just this week, the new U.S. government announced policy changes that will scale back the EV incentives and regulations, which will then have a further negative impact on the growth outlook for electric vehicles.”
Rentzsch was quick to note that progress in electrification will continue, albeit not at the pace many anticipated only a few years ago.
“We have to keep in mind that a 34 percent electrification rate over a 15-year timeframe is still a very significant accomplishment,” he said regarding the revised 2030 forecast.
Stakeholders Face Headwinds
Among the challenges facing electrification are the headwinds facing all stakeholders.

“Starting on the supplier side, especially the [battery] cell manufacturers, they are under pressure because their profits are lower than expected,” Rentzsch said. “The OEMs, they made significant investments in their electrification programs, and now timelines and volumes are being pushed out.”
For light commercial vehicles, customer interest is waning, as well.
To address how this downturn is affecting suppliers, Rentzsch explained the use of a tool called the “Winners Matrix” that seeks to categorize suppliers in one of four quadrants based upon their capital growth and five-year average profit. Profits are plotted along the x-axis and capital growth along the y-axis. Each quadrant is as follows:
- Profitless growers (upper left): positive growth, negative profit.
- Winners (upper right): positive growth, positive profit.
- Underperformers (lower left): negative growth, negative profit.
- Cash generators: (lower right): negative growth, positive profit.
“What we have seen over the past five years is that suppliers, especially the powertrain suppliers, have faced immense pressure,” Rentzsch said. “They’re all somewhere in the ‘underperformer’ or maybe ‘profitless grower’ quadrants of the of the matrix.”
Fragmented Supplier Portfolios
He added that while inflation and labor shortages contributed to supplier challenges, the fragmentation of supplier product portfolios has been a key hurdle.
To explain this, Rentzsch looked at two financial indicators — the total enterprise value (TEV) and earnings before interest, taxes, depreciation and amortization (EBITDA) — for powertrain suppliers. He broke them into two groups: those having a diversified product portfolio that served both EVs and internal combustion (IC)-driven vehicles and those focused primarily on IC power.
When plotting TEV and EBITDA on a graph, Rentzsch noted a significant change between July 2023 and August 2024.
“What has happened is that, since the [electrification] hype has cooled down, the gap between the two lines is closing,” he said. “To a certain extent, sometimes even the powertrain players with an ICE-focused portfolio are performing better than the ones with a diversified portfolio.”
Commercial Vehicle Effects
In considering how these electrification trends affect the commercial vehicle market, Rentzsch first explained the formula for success.
“You need the right product, you need the right infrastructure, and you need to have competitive total cost of ownership (TCO),” he said. “And keep in mind that this year really is a multiplication. So, if one of these factors is zero, then the total output of the equation is zero.”

To evaluate the current state of the market, Rentzsch first looked at product availability. He evaluated the availability of medium- and heavy-duty electric on-highway vehicles — including those from Volvo, Daimler, Paccar, Navistar and others — across several use cases and operational ranges.
“What you can see is that for many of the lower medium-duty use cases, the vehicles that are out there, they can already do what is required,” he said.
Rentzsch added, “When you go into heavy-duty, into drayage and distribution tractors, there is a good portion of the overall use case that cannot be covered with today’s technology. But still a good portion of the of the fleet can already be electrified with today’s vehicle out there.”
As such, Rentzsch said the first part of the equation, product availability, seemed satisfied.
In looking at charging infrastructure, there seem to be some concerns. Regarding the lead times for installing chargers at fleet depots, Rentzsch cited an American Trucking Association (ATA) survey.
“The interesting finding is that 80 percent of the fleets report lead times of over a year,” he said. “A third report lead times of even over three years. So, they have trucks sitting in their depots and they can’t charge them because they need to wait two years before they can get the chargers.”
According to the ATA survey, only about 15 percent of fleets said they could get charging infrastructure installed in their depots in under six months.
Additionally, fleets are often hamstrung by deficiencies in the grid.
“You need to have, in some cases, even a dedicated substation just for that specific depot,” Rentzsch said. “That’s a lengthy process. You need to go through the permitting process and the construction process, and it costs money to put that in, so that can cause long delays in putting in charging infrastructure.”
Roland Berger conducted another study with the ATA that examined the estimated charging infrastructure costs associated with completely electrifying all U.S. heavy-duty truck fleets.
“The sum is enormous,” Rentzsch said. “We estimated $600 billion for the charging network and almost $400 billion for the grid upgrades. That gave us almost a trillion-dollar investment in charging infrastructure.”
Rentzsch clarified that such an investment would not have to happen overnight; it could — and would — happen in phases.
“Luckily, there’s already progress underway,” he said. “There are charging corridors that are being planned and being put in.”
Nonetheless, Rentzsch said infrastructure development will be key in determining the speed of electrification for commercial vehicles.
Regarding TCO, Rentzsch said his biggest concern were the still high prices for electric trucks. He noted that without a substantial reduction in EV prices, there would not be a positive TCO for most use cases anytime soon.
Regulatory Concerns
Taken together, Rentzsch said it wasn’t surprising that electrification rates for on-highway commercial vehicles was low. However, he said regulation is a piece of the puzzle that will be crucial in fostering momentum for electrification.
“In Europe and China, I don’t expect any change in enforcement and shifting timelines,” Rentzsch said. “I think they will continue as is with ambitious plans. The key question for me is, what will happen in the North American market?”
Rentzch highlighted the U.S. government’s recent announcements that it would roll back incentives and relax emission regulations, which will have an impact on electrification rates.
“Then if that that’s in place, it’s really down to TCO,” he said. “Can certain use cases pull enough electrification interest through TCO, or are the fleet operators willing to invest in electrification even if they’re not forced by the regulator? That’s all to be seen in coming years.”
POWER SOURCING GUIDE
The trusted reference and buyer’s guide for 83 years
The original “desktop search engine,” guiding nearly 10,000 users in more than 90 countries it is the primary reference for specifications and details on all the components that go into engine systems.
Visit Now
STAY CONNECTED




Receive the information you need when you need it through our world-leading magazines, newsletters and daily briefings.
CONNECT WITH THE TEAM



