The document provides an executive summary of a strategic analysis of the medium- and heavy-duty natural gas commercial vehicle market in Europe. Key findings include: - Natural gas truck and bus penetration is expected to reach 3.4% and 12.7% respectively by 2018. - Compression ignition LNG technology is poised to dominate the natural gas truck market due to infrastructure support projects like the blue corridor project. - The natural gas component revenue market is expected to reach €446.1 million by 2018, with LNG and CNG tanks emerging as top revenue generators.

1. Strategic Analysis of the Medium- to Heavy-duty Natural
Gas Commercial Vehicle Market in Europe
Compression Ignition LNG Technology Poised to Deliver Highest Volume Contribution
Brief Summary
Few Slides from
Complete Study on This
Topic
M8D2-18
January 2013

2. Research Team
Lead Analyst
Contributing Analyst
Saideep Sudhakar
Wallace Lau
Research Analyst, Automotive &
Transportation
+1.416.490.0813
Consulting Analyst
Automotive and Transportation
91.44.6681.4125
saideeps@frost.com
Wallace.lau@frost.com
Research Director
Strategic Review Committee Leader
Sandeep Kar
Franck Leveque
Vice President, Automotive &
Transportation
Research Director, Commercial Vehicles
Automotive and Transportation
1.416.490.7796
+49 (0) 697703321
sandeep.kar@frost.com
Franck.leveque@frost.com
M8D2-18
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3. Contents
Section
Slide Numbers
Executive Summary
4
Research Objective, Scope, Methodology, and Background
16
Definitions/Segmentation
22
Market Overview
26
Mega Trends and Industry Convergence Implications
41
Total Market
-
• External Challenges: Drivers and Restraints
43
• Forecasts and Trends
52
• Component Pricing and Revenue Forecasts
67
• Market Share and Competitive Analysis
79
Truck OEM Profiles
89
Bus OEM Profiles
97
Supplier Profile
106
Conclusions and Future Outlook
114
Appendix
120
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4. Executive Summary
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5. Executive Summary—Key Findings
1
Natural gas truck and bus penetration is expected to reach 3.4% and 12.7% respectively by 2018.
2
Compression Ignition (CI) engines powered by high pressure direct injection (HPDI) and dual fuel
technology will provide the necessary impetus for the natural gas (NG) commercial vehicle(CV)
market.
3
Liquefied natural gas (LNG) technology is expected to dominate the NG truck market owing to the
infrastructure support provided by projects such as the blue corridor project across freight
corridors in Europe.
4
Shift from oil linked to spot pricing of natural gas will reduce the price of natural gas and drive the
natural gas vehicle adoption
5
NG component revenue market is expected to reach €446.1 million by 2018. LNG and
compressed natural gas (CNG) tanks are set to emerge as top revenue generator in the
components market.
Source: Frost & Sullivan
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6. Executive Summary—Market Engineering Measurements
MD and HD Natural Gas CV Market: Europe, 2011
Market Overview
Component
Market
Revenues
Market Stage
Nascent
€71.6 M
31%
(CAGR)
€446.1 M
2,750
(2011)
Compound
Annual Growth
Rate
Component Market
Size at End of
Forecast Period
Market
Units/Volume
(2011)
Price Sensitivity
(2018)
Number of
Competitors
<10
8
(Scale of 1 to 10, Low to
High)
(active market competitors in
base year)
For a tabular version click here.
Decreasing
Stable
Increasing
Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan
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7. Executive Summary—Strategic Fact Sheet
Natural gas penetration in the European MD and HD natural gas CV market will reach 3.8%, and component
revenue is expected to grow at a 29.8% CAGR.
MD and HD Natural Gas CV Market: Natural Gas CV
Penetration Forecast, Europe, 2011 and 2018
MD and HD Natural Gas CV Market: Compound Revenue
Forecast , Europe, 2011 and 2018
500.0
472,000
LNG
404,452
Units
Natural Gas CV
Penetration
18,200
3.8 %
2,750
0.7 %
Revenue (€ Million)
Total Production
400.0
300.0
CAGR
29.8%
200.0
€71.6 M
100.0
2011
2018
2018
MD and HD Natural Gas CV Market : OEM Growth Potential,
Europe, 2011–2018
Growth
OEM
Characteristics
Potential
Broad product line from 3.5 tons to 26 tons
Strong presence in refuse market and early
mover in distribution market
Early mover in dual fuel platform through
Volvo
technology partnerships
Wide experience in manufacture of natural
MAN
gas engine and leader in bus segment
Wide experience in manufacture of natural
Scania
gas engine.
Daimler
High
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€446.1 M
0.0
2011
IVECO
CNG
Low
MD and HD Natural Gas CV Market:
Key Takeaways, Europe, 2011
• IVECO’s broad product line and early mover
advantage will be critical for market share
growth in the truck segment.
• MAN is expected to lead the bus segment.
• The LNG component market will experience
a CAGR of 75.4% due to increasing LNG
infrastructure and wider adoption among
fleets.
Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan
7

8. Global LNG Prices and Major Natural Gas Trade Patterns
Imports from North America can drastically alter natural gas dynamics in Europe.
MD and HD Natural Gas CV Market: NG Trade Patterns and LNG Prices, Global
347.8 MT
UK
$
$9.0
121.7 MT
$
Cove Point
$2.55
$
Belgium
$
$8.85
$
Spain
81.0 MT
110.1 MT
Lake Charles
$
$2.65
115.7 MT
$
$13.60
86.9 MT
79.2 MT
India
Japan
$15.21
$
$2.20
Altamira
$
103.2 MT
$9.64
$15.21
Korea
179.4 MT
$13.61
230.0 MT
$ per million Global LNG
btu
Prices
Major natural gas
trade patterns
• Major NG exporting regions are Russia and Middle East with Europe and United States importing
greatest volumes historically.
• NG production from shale resources has steadily outgrown the demand in NA, resulting in oil companies
turning around to export gas across the Atlantic. US Federal Energy Regulatory Commission’s (FERC)
first approval for LNG exports from the lower 48 states for Cheniere Energy Inc. opens the gateway for
US natural gas producers to take advantage of global price differential.
Source: Frost & Sullivan
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9. Shale Gas Reserves in Europe
Significant recoverable reserves are identified in Poland, France, and Norway.
Shale Gas Market: Exploration and Production Overview, Europe, 2012
Shale Gas Reserves in trillion
cubic feet
83
20
20
42
8
187
180
• Significant recoverable reserves have been
found in Poland, France, and Norway
• Due to the small scale/nascent activity, current
regional policies are believed to be adequate
for governing shale gas production in Europe.
Current policies include
o Mining waste directive
o Groundwater directive
o Water framework directive
o Registration, Evaluation, Authorisation and
Restriction of Chemicals (REACH)
Prospection / Exploration
Moratorium on Exploration
No activity on shale gas
Energy Independence
Vast and well- mapped reserves
Drivers
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Bridge to low carbon future since
NG is more efficient and cleaner
fossil fuel
Strict regulatory framework
Unresolved environmental
concerns
High costs to develop resources
Restraints
Source: EIA, Frost & Sullivan
9

10. Executive Summary—Total Trucks Shipped in the MD and HD CV Market
Penetration of non-diesel fueled powertrain technologies in the truck segment to reach over 5% by 2018.
MD and HD Natural Gas CV Market: Truck Unit Shipment Forecast, Europe, 2011 and 2018
449,300 units
2018 OEM Production Powertrain Split
383,552 units
99.7%
0.1%
2.2 %
4.7%
Units in Thousands
0.2%
3.4%
120
100
3.5%
3.3%
0.9%
80
60
1.5%
0.3%
8.8%
1%
2.4%
2.5%
1.8%
0.6%
40
20
97.9%
92%
DAF
Daimler
88.7%
97.5%
97%
95.6%
94.4%
0
2011
IVECO
HEV
NG
MAN
Diesel
Scania
Volvo Group
2018
• Truck production to increase at a compound annual growth rate of 2.3% over the 2011 to 2018 period.
• An EU mandate of 20% green house gas (GHG) reduction by 2020 will drive market for advanced
powertrain technologies.
• IVECO, Daimler, and Volvo are expected to lead the NG adoption in CVs among European OEMs.
Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan
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11. Executive Summary—Total Bus Market Europe
Advanced powertrain adoption is expected to reach 33% by 2018; the hybrid and natural gas powertrain set
will benefit the most.
MD and HD Natural Gas CV Market: Bus Unit Shipment Forecast, Europe, 2011 and 2018
2018 OEM Production Powertrain Split
12
8.6%
4.9%
Units in Thousands
20,900 units
3.7%
10
22,700 Units
12.1%
8
12.7%
6.7%
6
20.2%
4%
16.2%
6.8%
10.9%
7.4%
4
2
4.1%
12.7%
77.1%
81.7%
80.5%
91.9%
84.2%
67.1%
86.5%
0
Daimler
2011
IVECO
HEV
MAN
Scania
NG
Diesel
Volvo Group
2018
• Medium- and heavy-duty bus production forecast to grow at a 1% CAGR over the 2011 to 2018 period
• Despite slow growth in volumes, NG penetration will reach 12.7% by 2018.
• MAN and IVECO lead the natural gas adoption, while Volvo and Daimler shifting towards hybrid electric
vehicles in addition to showing interest in NG powertrain.
Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan
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12. Executive Summary - European Natural Gas Engine’s Power Bandwidth
Higher Power Spark Ignited Engines are Expected to be Launched by OEMs to Cater the Long
Haul Heavy Duty Segment
MD and HD Natural Gas CV Market: Engine Band Width, Europe, 2011
Power (hp)
“We are pretty happy about our LNG trucks. The
only thing is engine power could be increased”—
Senior Transport Consultant, European Fleet
500hp
500
460hp
400
360hp
HDT
HDT
300
330hp
280hp
260 hp
250hp
245hp
Transit Bus
Transit Bus
245hp
MDT
200
MDT
200hp
200hp
180hp
100
2011
2018
Year
2011
2018
•
The engine power bandwidth in medium duty truck is between 180hp to 200hp while that of heavy duty
truck is between 245 hp to 460 hp and transit bus is 260 hp to 330 hp in 2011.
•
Volvo provides 460hp in D13C 12.8 lit engine in truck segment based on dual fuel technology through
partnership with Clean Air Power.
•
Most OEMs in Europe posses captive spark ignition natural gas engine platforms, hence any development
of high power engines will be swiftly applied to truck platforms in the long haul segment. The trend is
Source: Frost & Sullivan analysis.
moving towards increasing engine sizes in medium and heavy duty trucks.
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13. Executive Summary—Total NG CV OEM Transmission Market
Automatic Transmission Plays a Major Role in Refuse and Bus Market with SI Engines while
Manual Transmission is Important in the Cost Sensitive Distribution Market.
MD and HD Natural Gas CV Market: Duty Cycle Transmission Percentage Forecast, Europe, 2011
100.0
1-5%
10-15%
1-5%
80.0
90-95%
85-90%
60.0
5%
55-60%
40.0
75-80%
20.0
2-5%
30-35%
5-10%
2-5%
0.0
Refuse
20%
Distribution
Manual
Automated Manual
LongHaul
Automatic
Bus
90%
0-5%
• Duty cycle such as refuse and construction require higher torque which is facilitated by means of
automatic transmission in spark ignited engines.
• Dual fuel engines being similar to CI engines generally have higher torque capacity, hence automated
manual transmission provides lower cost alternative to automatic transmission in long haul segment.
“Price is important, but we look at the overall lifecycle cost of the vehicle, which
is lower in case of automatic transmission”— Fleet Manager, European Fleet
Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan analysis.
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14. Executive Summary—Technology Roadmap
On-board natural gas tanks are experiencing new compositions of materials and designs, and new CI engine
architectures are now in focus among OEMs.
MD and HD Natural Gas CV Market: Technology and Product Roadmap, Europe, 2006-2018
Industry Trends
SI
Technology
Vertical integration with OEM
Rich mixture with
EGR
Stoichiometric mixture with cooled E
GR
Lean Burn Mixture
Throttle body injected – SI
Direct injection
Automatic transmission
Transmission
Manual transmission
SCR
CI-HPDI System
Diesel pilot 5–
7%
HPDI – Diesel Pilot 2–3%
Dual fuel 70% diesel substitution
50% diesel substitution
Aftermarket retrofitment
CI-dual-fuel Mode
OEM integration
Direct injection
CNG Tanks
Type IV cylinders
Type III cylinders
Optimized packaging systems
based on OEM platforms
Engine-coolant-driven pressure
release system for fuel pumping
LNG Tanks
HPDI-LNG Tanks
Cryogenic hydraulic pump for delivering high fuel pressure
2006
2010
2014
2018
Source: Frost & Sullivan
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15. Executive Summary—Comparison of Different Technologies
Fuel flexibility, high end power, and torque engine performance is being cited as advantages for the growth of
dual fuel technology.
Dual Fuel Engines
Direct injection NG
NG (Spark Ignited)
Fuel flexibility
Mixture of natural gas and
diesel or 100% diesel
Dedicated NG. Limp
home service mode on
diesel
Dedicated NG
Infrastructure concerns
Not dependent on NG
Infrastructure
Dependent on NG
infrastructure
Dependent on NG
infrastructure
Engine Modifications
No change in base engine
Requires modification to
base engine
Requires modification to
base engine
Engine Performance
Matches diesel power,
torque and efficiency
Power Range: 460 hp
Matches diesel power,
torque, and efficiency
Power Range: 460 hp
Reduced power and
torque
Power range: 200-340
hp
Diesel Substitution
(by energy)
70-90%
> 90%
100%
Source: Clean Air Power, Frost & Sullivan
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16. Executive Summary—Key Conclusions and Future Outlook
Parameters
Market Status
Competition
Technology
Barriers to enter
European Market
Current
• The potential size of the market is vast and not
fully penetrated (only 950 trucks in a total market
size of approximately 384 thousand trucks).
• Top 4 OEMs control more than 90 per cent of the
truck NG market (Daimler, Volvo, Scania and
IVECO).
Future
• Market to experience strong growth driven by
fuelling infrastructure development across the
continent coupled with tightening emission
regulations.
• Total NG unit shipments to reach 18,200 units
by 2018.
• Competition is expected to intensify across the
forecast period with new participants entering
the market.
• 90% of the natural gas market is controlled by five
• There will be partnerships with NG engine
major OEM’s (MAN, Daimler, Scania, Volvo, and
developers.
IVECO) in buses.
• There are dedicated SI engines which run on
• High power dedicated CI engines and dual
CNG for short haul and refuse applications and
power engines will play a major role.
LNG for long haulage and distribution application.
• Natural gas price is oil linked and there are a few
government incentives promoting the use of
natural gas as a fuel
• Co-ordinated EU policy, similar to the NATGAS
Act, and availability of cheap natural gas from
America will promote the advocacy of natural
gas.
Source: Frost & Sullivan
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17. The Last Word—Three Big Predictions
1
By 2018, 3.8% of all medium- and heavy-duty commercial vehicles manufactured
in Western Europe will feature natural gas powertrains. The installation rate in the
medium- and heavy-duty truck market will reach 3.4%, while medium- and heavyduty buses will reach 12.7%.
2
A €8.3/MMBtu price level for natural gas in Europe is expected in 2018 by
Frost & Sullivan. Given current pricing levels and forecasted prices; and LNG and
CNG offering €0.4/DGE cost advantage over diesel fastest payback is expected
for LNG in long-haul trucking and CNG in short-haul bus routes.
3
By 2018, 90% of all natural gas powered buses manufactured in that year will
feature spark ignited technology, while 80% of CNG trucks will feature spark
ignition and 60% of LNG trucks will feature compression ignition technology.
Source: Frost & Sullivan
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19. Market Engineering Methodology
One of Frost & Sullivan’s core
deliverables is its Market Engineering
studies. They are based our
proprietary Market Engineering
Methodology. This approach, developed
across the 50 years of experience
assessing global markets, applies
engineering rigor to the often nebulous
art of market forecasting and
interpretation.
A detailed description of the
methodology can be found here.
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