The growth in electric light commercial vehicles

Government regulation has been a key factor in the electrification of light commercial vehicles (LCVs), according to a recent report.

Electric LCVs now make up more than 5% of annual sales. According to Pranav Jaswani, Technology Analyst at IDTechEx, this trend is expected to continue, with regulation driving eLCV market growth in the short- and medium-term future.

IDTechEx’s report, “Electric Light Commercial Vehicles 2025-2045: Markets, Players, Forecasts,” forecasts that eLCVs will constitute the bulk of the market, totaling over 11 million units by 2045.

As governments strive to meet their Paris Agreement goals and other sustainability targets, global demand for light-duty road freight is set to more than double between 2020 and 2050. Factors such as a growing global population, rising income levels, and a booming e-commerce industry contribute to this increased demand. Consequently, there is an urgent need for zero-emission logistics solutions to be implemented swiftly.

Despite eLCVs being more expensive than their diesel counterparts, governments have introduced various measures to encourage eLCV adoption.

Common regulations include purchase grants and subsidies, local restrictions on emitting vehicles entering designated areas, and outright bans on the sale of fossil fuel LCVs. While these measures are applied to varying degrees worldwide, IDTechEx’s report noted that some regions have been more proactive than others in driving the EV transition.

In contrast to Canada, Europe and China, the U.S. market does not have a combustion engine ban on the horizon. This follows a period of slower electrification in the country, with governments hesitant to invest in technological or infrastructure development, with the exception of California.

However, this is beginning to change. The Inflation Reduction Act of 2022 marked a significant step forward for eLCVs, providing federal grants for the purchase or lease of non-combustion LCVs for the first time. This initiative is expected to boost adoption among U.S.-based fleets, which currently lag behind the rest of the developed world with less than 1% eLCV penetration.

The Inflation Reduction Act also offers financial incentives for plug-in hybrid LCVs. According to Jaswani, these vehicles cannot achieve the same emissions reductions as battery-electric vehicles and are unlikely to become the dominant long-term powertrain option.

The electrification of LCVs is critical for governments to meet their sustainability goals. Governments are ramping up efforts to encourage manufacturers and purchasers to increase their market presence through new regulations. Given the growing demand for road freight, IDTechEx forecasts rapid expansion of the eLCV market, reaching over 11 million units by 2045.

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