Scania plans to begin assembling battery-electric trucks at its Rugao plant in China once it obtains a production licence.

The Rugao facility, which opened last year, is Scania's first wholly owned factory in China. It is designed to serve the Chinese and other Asian markets and can produce both conventional and battery-electric trucks.

China's electric truck market

According to a local daily, electric truck sales in China increased by almost 80% in the first half of the year compared with the same period a year earlier. Electric trucks are projected to account for nearly one-third of total truck sales this year, compared with approximately 8% a couple of years ago.

Trade-in subsidies and higher diesel prices following the US-Iran war are contributing to demand. Beijing had set a target for electric trucks to account for 40% of the market by 2030. Based on current growth projections, this target could be reached earlier. Sinopec's Economics & Development Research Institute expects China's diesel consumption to decline by more than 10% this year.

Levin said China's adoption of electric trucks reflects progress in expanding charging infrastructure and strengthening the power grid. He identified these areas as major challenges in many countries, including those in Europe.

Competition and infrastructure

The growth of electric heavy trucks in China is increasing competition for global manufacturers, including Traton, Daimler Truck Holding AG and Volvo AB. Last month, German supplier ZF Friedrichshafen AG said the centre of gravity for electric-drive technology in trucks had shifted to China.

In Europe, limited charging infrastructure, grid capacity constraints and higher operating costs affect the adoption of electric trucks. The structure of the European haulage industry presents additional challenges, as the average haulage company operates seven or eight trucks. Changes in customer requirements can also make routes suitable for electric trucks unavailable. "Then you're left with a stranded asset," Levin said.

With incentives reduced, electric truck adoption in the US is growing more slowly than in China. Levin identified fuel costs as a factor affecting the economic viability of electric trucks. "If diesel prices continue to rise, then purely on its own merits, it will become cheaper to drive on electricity even in the US."

Despite record-high diesel prices, which typically constrain investment in new vehicles, Traton's conventional truck business has maintained sales growth. Its US-based truck division recorded a 48% increase in vehicle sales in the third quarter, contributing to a 10% rise in group sales.

Scania also opened a testing complex in Sodertalje, south of Stockholm, at a cost of 975 million kronor (US$98 million). Covering 850,000 square metres, the facility includes a high-speed oval and designated areas for vehicle handling, rollover protection and autonomous driving systems.

Levin expects autonomous trucks to be deployed at scale in the US before 2030. He expects Europe to progress more slowly because of regulatory obstacles, particularly those affecting cross-border operations. Traton is scheduled to report its third-quarter earnings on October 28th.

China's electric heavy truck market is growing amid policy support and changes in diesel prices. Manufacturers are adjusting their production plans in response to market demand. Developments to monitor include Scania's production licence for its Rugao plant, the expansion of China's charging infrastructure and power grid, the effect of diesel prices on electric truck adoption, and changes in Traton's sales mix as competition in the Chinese truck market develops.