For far too long, commercial vehicles remained an underserved sector of the electric vehicle market. Despite making up over 23 million vehicles worldwide and 82 percent of vehicle emissions, the sector is still dominated by legacy manufacturers that have struggled to make the shift to electric. In 2023, however, we will see a transformation in the industry as government mandates are implemented and new electric vehicle players start delivering vehicles to customers. This will transform our cities, reducing carbon emissions and having a radical impact on clean air.
Over the past 12 months, governments and cities have introduced regulations and incentives to accelerate the shift to zero-emission vehicles. Regulators are defining more severe emission targets. President Biden’s administration introduced a 50 percent electric vehicle target by 2030, and the European Commission has pledged to have at least 30 million electric vehicles on the road by the end of this decade. Beyond such measures, governments have offered significant electric vehicle subsidies to encourage more responsible purchasing decisions. In 2023, businesses will begin to answer to these mandates.
Against this backdrop, businesses have begun to upgrade their infrastructure as they commit to changing over their fleets to electric, but while they are cheaper to run, the upfront price remains the key deciding factor. A lack of available options, alongside the considerably higher purchase price for electric vehicles compared to petrol or diesel vehicles, have made the transition difficult to justify and plan for. Only when these barriers are overcome will the choice for electric commercial vehicles become obvious. Once this transition begins, however, it will happen faster than we expect.
In 2023, several new electric vehicle makers will bring their products to market alongside the incumbents. Rivian will continue producing vans for Amazon, Canoo is expected to deliver vehicles to Walmart, and Arrival will be providing electric vans for UPS. With these new players, businesses will have a much wider variety of options to select from to meet their needs.
Innovation will remain critical in the industry to further reduce costs of owning an electric vehicle. There are three broad buckets where this can occur—the vehicle itself, the software, and the production method. Most carmakers focus on the first. After Tesla showed that software is crucial for electric vehicles, many are now focusing on the second as well.
Arrival is tackling all three. In 2023, our team will be producing vehicles in an entirely new way of manufacturing, in local “microfactories.” These are designed to be placed near cities, to support local jobs, to scale in parallel with lower commissioning time and lower costs of assembly, and to be more environmentally friendly than traditional methods of production. Think of a warehouse in your city, building vehicles for your city. To do this we’ve had to rethink the way vehicles are designed and engineered. For instance, we had to create new, lighter materials that do not require painting, and are more durable than steel. We’ve also had to design and build our own components, allowing us to better control the cost and functionality of each system in the vehicle.
In 2023, businesses will have no choice but to begin making the transition to electric vehicles. Commercial vehicles can make the biggest difference to carbon emissions, given they have the most mileage in cities, compared to consumer vehicles. In the US alone, commercial vehicles accounted for 82 percent of transport emissions, despite making up only 5 percent of vehicles on the road. Once we make this shift, we can have a rapid effect on decarbonizing transportation, ensuring that no one is left behind when it comes to meeting net-zero targets.