Electric Trucks Gear Up To Be Next Big Thing In Auto Space

Customers are spoiled with choices for multiple brand new or soon-to-be launched electric cars flooding the market. These new age models with upgraded features have been wooing clients, leading to a steady rise in sales. In September, electric car sales surged 55% compared with the prior-year period.

However, per a report in The Washington Post, one in six vehicles bought in the United States is a pick-up truck. This swell in demand for trucks, silently entering into the transportation fleet of the Americans, has encouraged top automakers to focus on all-electric battery-powered trucks alongside electric cars.

Trucks play an important role in last mile deliveries in the spate of home delivery services in densely-populated residential areas. Currently, most of these delivery trucks run on gasoline or diesel combustion engines, aggravating the air and noise pollution for residents. Parallel to this, it increases accident risks for the drivers on road.

Hence, silent and emission-free electric trucks can solve a few of the above-mentioned problems. Selection of electric trucks will reduce health risks related to environmental issues. Further, these eco-friendly trucks will help drivers focus more on driving owing to its noiseless facility.

Companies Already in the Race

A few automakers have already started gearing up for introducing their electric trucks or powertrains to cater to the multibillion-dollar trucking industry. With fierce competition heating up, let’s sneak a peek into the plans of a few good companies on determining their electric truck journey.

In August, Cummins Inc. (NYSE:CMI) unveiled its all-electric Class 7 electric truck powertrain for auto manufacturers. The powertrain has a battery of 145 kWh and has the capability to haul a 22 ton trailer stretching up to 100 miles. Also, the recharging time for the batteries will last an hour, using a 140 kW charger. The company is planning to start production of this powertrain in 2019.

Navistar International Corp. (NYSE:NAV) and German automaker, Volkswagen (DE:VOWG_p) AG (OTC:VLKAY) are coming together to unveil an electric medium duty truck in North America by 2019. This collaboration will also develop hardware and systems to connect trucks with the Internet.

In September, Daimler AG (DE:DAIGn) (OTC:DDAIF) , a German manufacturer and seller of premium cars and commercial vehicles, announced its plan to introduce the first series of all-electric light-duty trucks, namely, FUSO eCanter. The company will be manufacturing the truck series through its Trucks business unit, Mitsubishi Fuso Truck and Bus Corporation, which it will cater to the customers across Europe, Japan and the United States.

The production of this series is also expected to start in 2019 and the company has plans to deliver 500 units from the output to its clients. Good news is that the automaker has already gained its first U.S. commercial customer for the series, which is United Parcel Service (NYSE:UPS), Inc.

The most talked-about unveiling in the recent times is Tesla Inc.’s (NASDAQ:TSLA) first electric, almost self-driving heavy-duty semi truck. Per management, the electric-truck would run 60 miles per hour in 1.9 seconds and will be able to cross 620 miles on a single charge.

Additional features will include faster acceleration, better uphill performance and a thermonuclear explosion-proof glass in the windshield. For safety purposes, the truck will be enhanced with a sophisticated autopilot and lane-keeping technology. The production of this truck will begin in 2019.

Also, many companies have already placed their order for the new Tesla Roadster, some of which includes multinational retail corporation Walmart (NYSE:WMT), grocery giant Loblaw Companies, moving company JK Moving Services (provider of storing and moving services) and DHL, each ordering 15, 25, 4 and 10 units, respectively.

However, witnessing Tesla’s Model 3 production backlogs, it will be quite interesting to watch how the company manages to start its semi-truck production by 2019 and complete delivering its orders in time.

Both Cummins and Navistar sport a Zacks Rank #1 (Strong Buy); Daimler and Volkswagen carry a Zacks Rank#3 (Hold) and Tesla has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term growth rate for Cummins, Navistar, Daimler, Volkswagen and Tesla is 12.2%, 5%, 2.8%, 12.9% and 25%, respectively.

Challenges Ahead

A major hurdle that the automakers will face is to develop efficient truck batteries. Carrying large loads over long distances at a single charge will be a challenge for these trucks to cope with. Also, usage of heavy batteries might take a toll on the trucks’ performance as the vehicles have to exhaust energy both for the battery and the vehicle.

Per a report released by Carnegie Mellon University, one would require battery that weighs more than the cargo to drive a semi-truck for 600 miles, which might exceed the gross weight of trucks to 40 tons, thus overstepping the federal limit.

Additionally, in the initial years, the manufacturing companies have to balance its preliminary production costs with slim chances of making profit.

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