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Strategic Outlook of Global Hybridization Trends in Select Off Highway Commercial Vehicle Markets


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  • 1. Strategic Outlook of Global Hybridization Trends in Select Off-highway Commercial Vehicle Markets Growth in Demand is Set to Drive Production to Around 90,258 Units by 2018 NB77-18 NB77-18 February 2013 1
  • 2. Contents Section Slide Numbers Executive Summary 4 Research Scope, Objective, Background and Methodology 19 Definitions / Segmentation 26 Market Overview 30 Technology Trends and Analysis 41 Global Off-Highway Vehicle Powertrain Market – Quantitative Forecast 52 Competitive Dynamics 59 Key OEM Profiles 64 Conclusions, Recommendations, and Future Outlook 76 Appendix 81 NB77-18 2
  • 3. Executive Summary NB77-18 3
  • 4. Impact of Mega Trends on Off-highway Construction and Agricultural Vehicles Markets Expansion of Industrial Agriculture to ROW • More global largescale farms as governments address food security concerns • Large harvesters and combines see sales growth in developing nations for mono-culture farming. • Engines with more horsepower (100−400 hp) to see increasing demand. Growth Industries of the Future Waste Diversion Programs • Government infrastructure investment expected to resurface roads and rebuild bridges • Agriculture: Population growth expected to result in increased food production especially from land sources, because fish and seafood stock are projected to decline. • Waste streams increasingly seen as potential new source of supply for metals, plastics, compost, and natural gas. • This trend is expected to result in lower than projected demand for newly mined resources. Image source:, NB77-18 Smart and Eco Cities, Mass Transit Infrastructure Alternative Fuels • Mass transit infrastructure expected to see high demand in the future. Specifically, high speed, light, and monorail, along with bus rapid transit systems, to see increased market adoption. • Increased demand seen for specialised equipment. • With emissions regulations for diesel engines becoming more stringent, a few OEMs are seeing a resurgence in demand for gasoline, LPG, and CNG engines in smaller equipment. • Demand for bio-diesel and ethanol expected to remain strong. Source: Frost & Sullivan analysis. 4
  • 5. Impact of Mega Trends on Off-highway Construction and Agricultural Vehicles Markets (continued) Decreased demand for construction equipment in developed markets New product opportunity—hybrid heavy construction equipment • The construction market is mature, and has relatively fewer activities in progress. • A transition to rebuilding and maintenance rather than infrastructure expansion is occurring, indicating a demand for smaller vehicles and equipment. • Heavy-use, high duty-cycle heavy equipment demonstrating business case for hybrid power trains allows for smaller internal combustion engines than are normally associated with this equipment. Image source:, NB77-18 Rightsizing and downsizing • Shift toward smaller engines expected, which provide the added benefit of offering greater visibility around equipment. • Users are hobby farmers, small orchards, and vineyards using smaller tractors. Growing regulations • Trends toward stricter and greater regulations for noise and emissions from urban construction vehicles; in turn, this trend is expected to drive demand for low hp equipment. e.g. Tier IVi/Stage III Source: Frost & Sullivan analysis. 5
  • 6. Key Findings Rising fuel prices and increasingly stringent emissions legislation expected to propel hybrid powertrain production to 90,258 units by 2018. • Global level Strengthening emission regulations globally and continued volatility in fuel prices are the key drivers for hybridization of off-highway equipment powertrains. Hybrid powertrains are expected to account for 3.0% (90,258 units) of global off-highway powertrain production in 2018. • • Region level Hybrid technology development is gaining focus in the regions of Europe, Asia and North America in that order. Asia is expected to emerge as the key market among these three regions with an estimated production of 43,000 units in 2018. • • • OEM and techno -logy level • • • Every major OEM in key markets is researching and developing hybrid powertrains. Frost & Sullivan expects key product launches in the short- to medium-term. An estimated potential to reduce fuel consumption by up to 50.0%, these hybrid powertrains are expected to command a price premium of 30.0% over equivalent conventional powertrain equipment. Developments in power electronics, in particular in the field of insulated gate bipolar transistors (IGBTs), are expected to drive cost reduction of hybridization in the medium to long-term. Hybridization is an effective engine downsizing strategy; and hence Frost & Sullivan expects market opportunity in the below 56kW (76hp) power bandwidth. The emission requirements become less stringent below this point. Significant potential for application in urban environments since hybridization results in smaller and quieter engines. Source: Frost & Sullivan analysis. NB77-18 6
  • 7. Drivers and Restraints Hybrid powertrain technology will enable emissions compliance and reduce total cost of ownership. Further technical developments will reduce cost and drive growth, and technology and cost restraints. Significant fuel economy improvement benefits over equivalent IC-only powertrain Technology transfer from the transport sector NB77-18 High cost of battery technology Challenges in battery technology raising application concerns Government incentives driving unit shipment growth Priorities for rental market customers Customer perception of durability Restraints Restraints Suitability for different applications High upfront cost of hybrid technology Technological advancement and maturity accelerating OEM adoption of technology Drivers Drivers Strengthening emission legislation necessitating adoption of hybrid powertrain Corporate social responsibility improving OEM brand image 7
  • 8. Strategic Fact Sheet The hybrid powertrain market is expected to account for 3.0% of the global off-highway powertrain market by 2018. Revenue from components market is expected to reach $644.4 million by 2018. Off-highway Hybrid Commercial Vehicle Market: Powertrain Penetration, Global, 2011 and 2018 Motor Generator Hybrid powertrain 3,000,000 2,500,000 2,000,000 1,500,000 90,258 1,000,000 1,775 500,000 0 2011 Control Electronics Ultracapacitor 800.0 Total Production Battery Revenue ($ Million) Units Produced 3,500,000 Off-highway Hybrid Commercial Vehicle Market: Hybrid Vehicle Component Revenue Forecast, Global, 2011 and 2018 $ 644.4 million 600.0 400.0 200.0 $ 20.8 million 0.0 2018 2011 Off-highway Hybrid Commercial Vehicle Market: Hybrid Vehicle Component Revenue Forecast by Region, Global, 2018 Revenue ($ Million) 350 Motor/Generators $317.1 mil. 300 Control Electronics Power Electronics Ultracapacitors Batteries • • $194.6 mil. 150 • $99.3 mil. 100 $33.4 mil. 50 0 Asia Europe NA RoW 2018 Off-highway Hybrid Commercial Vehicle Market: Key Takeaways, 2011–2018 250 200 Power Electronics By 2018, hybrid powertrain is expected to reach 3.0% of suitable applications or 90,258 units. Certain segments of the off-highway industry are particularly suitable for hybrid powertrain. Ex: excavators, wheel loaders, and forklifts. To drive widespread adoption of hybrid technology mild hybridization needs to be adopted, enabling machinery to be converted quickly and at a lower cost. Economies of scale are also possible with integrators developing flexible hybrid modules. Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan analysis. NB77-18 8
  • 9. Regional Perspectives The Asian market is expected to produce 43,000 hybrid powertrain systems by 2018, thus accounting for nearly half of total global production. Off–highway Hybrid Commercial Vehicle Market: Global Production and Customer Perception by Region, 2011 and 2018 Asia South America Natural resource development will require the development of infrastructure. ROW 50 40 30 20 5 10 0.1 0 2018 Europe Fuel savings and corporate social responsibility are important drivers here, leading to high penetration in certain applications. Leading Hybrid OEMs in Asia Komatsu Toyota 2018 50 43 40 30 20 10 1.1 0 2011 Units produced (‘000) Deutz Heinzmann 2018 Units produced (‘000) Leading Hybrid OEMs in Europe 2011 North America • Corporate social responsibility is an important driver. • Comparatively lower fuel costs affect the business case for adoption. 50 40 28 30 20 10 0.4 0 Units produced (‘000) Caterpillar John Deere Europe 2011 Leading Hybrid OEMs in N. America 2018 50 40 30 14 20 10 0.2 0 2011 Units produced (‘000) North America Asia • Sales are driven by fuel economy and corporate social responsibility. • Reduced noise is an important factor, particularly when operating in built-up urban areas. Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan analysis. NB77-18 9
  • 10. Why Develop a Hybrid Powertrain? Hybridization emerges as one of the key solutions capable of overcoming challenges in emission compliance and fuel efficiency improvement. Off-highway Hybrid Technology Off-highway Machinery Characteristics High Power Requirements Duty Cycle Enables smaller IC engines to be used •Often repetitive •Frequent power reversal •Involves stop/start operation High Fuel Consumption Necessary to attain intermittent high power Solution •Reduced fuel consumption •Reduced exhaust emissions •Quieter operation Regeneration Fuel economy has previously been a secondary consideration Energy normally lost through stop/start operation and braking is captured. Fuel consumption Significant fuel savings can be made on certain applications. Downspeeding Engine operates at lower speed, enabling further fuel savings. Industry Challenges • Off-highway equipment are subject to emissions legislation. • Volatile and high fuel prices • Move to reduce fuel consumption and to reduce dependence on oil Technologies Involved • Serial electric (with and without energy storage) • Serial hydraulic (hydrostatic) • Parallel electric • Focus on reduced noise levels for operator comfort and environmental advantage • Series-parallel • Corporate social responsibility considerations by market participants • Mild hybrid NB77-18 Source: Frost & Sullivan analysis. 10
  • 11. Key Industry Participants The majority of key off-highway vehicle manufacturers focusing on development of hybrid technology and equipment. The following are examples of OEM involvement towards hybrid powertrain: Excav -ators Caterpillar Shantui Komatsu , Doosan, Hitachi, Kobelco Case, Sany, Sunward, Yuchai (P) Bulldo -zer Compact Equipment Key Component and System Suppliers BAE, Henizmann, ZF, Dana, Maxwell, Deutz, Eaton Atlas Weyhausen Mecalac TICO Still Mitsubishi Doosan (P) Volvo John Deere Hitachi Fork -lift P = Planned NB77-18 Wheel Loaders Source: Frost & Sullivan analysis. 11
  • 12. Regional Perspectives (Machinery) The perspectives on hybrid powertrain for off-highway equipment are distinct and varied with a different emphasis in every region. Market Europe APAC Machinery Powertrain Hybridization Factors • Wheel Loader • Excavator • Recent launch. Sales will initially be made for • Hybrid diesel-electric with energy Corporate Social Responsibility (CSR) storage usually in the form of battery for reasons. Later in the cycle fuel economy and wheel loaders and capacitors for emissions will become more important. excavators. • City centre operation and driver comfort will • Engine manufacturers are beginning to drive sales of some machines ensure that future diesel engines are • First excavators are in the 20-tonne class. ‘hybrid-compatible’. Technology will penetrate other machine capacities • Excavator • Fork Lift • Diesel-electric with capacitors • Fork lift uses both serial and parallel technology in the same platform. Batteries are used for energy storage • Bulldozers North America • Hybrid Wheel Loader • Key drivers are fuel economy and operator comfort. Intensive work cycles and high fuel costs create a good business case. • Operator comfort is also recognized as a key benefit (reduced noise). • Bulldozer uses diesel –electric currently • Greater use of batteries will be considered without energy storage. Possible use of when cost reduces and technology improves. batteries as technology matures. • Rental firms (major customer group) are • Wheel loaders moving toward full series beginning to enquire about fuel economy. hybrid Technology premium will be key however. Source: Frost & Sullivan analysis. NB77-18 12
  • 13. Geographic Definitions and Research Timeline Research Scope Base Year 2011 Study Period 2009 to 2018 Forecast Period 2012 to 2018 Vehicle Type Off-highway vehicles Geographic Regions The regional markets covered in this research service are: • North America consists of United States, Mexico and Canada • Europe consists of Western Europe, Eastern Europe and Russia • Asia consists of China, Japan, India, South Korea, Indonesia and Pakistan • Rest of World consists of key markets in South America, Africa, Middle East, Rest of Asia, and Oceania (Australia and New Zealand). Source: Frost & Sullivan research. <0000-00> NB77-18 13 13
  • 14. Key Contacts Ananth Srinivasan Team Leader – Off highway Vehicle Research Linkedin: ansrinivasan Sandeep Kar Global Director- Commercial Vehicle Research Jeannette Garcia Corporate Communications – North America Direct: +1.210.477.8427 Email: <0000-00> NB77-18 14 14
  • 15. Legal Disclaimer Frost & Sullivan takes no responsibility for any incorrect information supplied to us by manufacturers or users. Quantitative market information is based primarily on interviews and therefore is subject to fluctuation. Frost & Sullivan research services are limited publications containing valuable market information provided to a select group of customers. Our customers acknowledge, when ordering or downloading, that Frost & Sullivan research services are for customers’ internal use and not for general publication or disclosure to third parties. No part of this research service may be given, lent, resold or disclosed to noncustomers without written permission. Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the permission of the publisher. For information regarding permission, write to: Frost & Sullivan 331 E. Evelyn Ave. Suite 100 Mountain View, CA 94041 <0000-00> NB77-18 15 15