Heavy lorries are the next giant domino to fall for big oil

Telegraph

3 days ago

Mike Nakrani has spent a large part of his energy career striving to turn hydrogen hope into commercial reality. Nobody could have tried harder.
He led a joint venture between Daimler, Ford, and Ballard Power to develop fuel cells for heavy-duty trucks. He was in charge of BP's hydrogen operations. But the pace was glacial and rival battery technology for electric vehicles was vaulting ahead.
Like many on the energy front-line, he has reached the clear-headed conclusion that hydrogen will never have a role in the world's transport system, beyond a few specialist niches. Hydrogen vehicles cannot come close to paying their way.
'I bow to the laws of physics,' he said.
'Storing hydrogen is incredibly difficult, transporting it is even harder, and dispensing it is also damned hard. Anything mobile is going to run off electricity.'
Mr Nakrani is today leading the UK's push into electric lorries and buses as chief executive of VEV, a Vitol-backed venture in Teesside, the birthplace of the world's heavy industry now relaunching itself as the world's first decarbonised industrial cluster.
The cost of hydrogen is prohibitive unless it is the 'grey' variety from fossil fuels – in which case, why bother? – and you lose three quarters of the energy before you start. Putting power directly into an electric vehicle is three times more efficient.
The hydrogen car flop has been spectacular, though Japan is hanging on. 'They say there are more hydrogen fuelling stations in Tokyo than Toyota Mirais,' he said.
A grand total of 12,866 hydrogen cars were sold across the planet last year. Sales of electric vehicles (EVs) topped 17 million and are on track to blow through 20 million this year.
Mr Nakrani says the myths die hard.
'First we thought electrification was just for city cars, and then it moved to family cars, and then to SUVs, vans, buses, and now to 40-ton trucks,' he said.
Vested interests have dug in their heels at every stage, fostering a narrative that EVs would never cope with heavier loads.
They continue to push the line that big trucks will always need molecules, whether diesel, liquefied natural gas (LNG), or hydrogen. Too many politicians have been gulled into believing them.
'There were already 50,000 heavy electric trucks of 40 tons-plus running around in China last time I looked,' said Mr Nakrani.
Disbelief and disinformation are as old as the hills. The Tees Valley had a taste in the early 1820s when the old guard tried every trick to stop the Stockton and Darlington railway.
Lord Darlington blocked the enabling bill, saying it would scare away foxes and spoil the hunt. Petitions were submitted warning that women would die from asphyxiation travelling at 20 mph, or that it would take land needed to grow food. Canal owners stoked the fears, and with reason: railways would destroy them.
The Institute for Energy Economics and Financial Analysis says the life-cycle cost of heavy e-trucks in China is roughly 15pc lower than for diesel trucks.
The chief growth is along 'freight corridors' linking 16 Chinese cities, increasingly using instant battery swap stations along the way instead of charging.
The new energy giant CATL is offering a standardised swapping battery known as '75#' that works for 30 different heavy-truck models.
E-truck sales are going parabolic as costs plummet and ranges keep lengthening. They captured 22pc of the Chinese heavy-duty market in the first half of this year, up from 8.6pc over the same period last year.
IEEFA expects the share to reach 50-80pc by 2028. If anything like that happens, it will be the next crashing domino for big oil. E-trucks are also killing the short-lived boom for LNG-powered haulage in China.
Commercial trucks consume 16 million barrels a day of oil (b/d) worldwide, or a sixth of global oil demand.
The Rhodium Group estimates that EVs of all kinds have so far displaced one million b/d. This will rise to 1.6 million over the next 12 months. Diesel use in China peaked in 2023 and has since fallen from 4.7 to 4.0 million b/d.
Replacing legacy fleets takes time, but China's galloping electrification already explains why the International Energy Agency (IEA) keeps cutting its forecast for global oil demand. Events could now move much faster than even the IEA expects.
Britain is a laboratory test case. If e-trucks can reach cost parity with diesel even with Ed Miliband's electricity tariffs, they can do so anywhere.
The price of power is the key variable and UK power is among the most expensive in the world. That is a long-standing failure of state policy.
The Energy Secretary has chosen to make matters even worse.
Mr Nakrani has just run a trial for AV Dawson's, Tata Steel, and British Steel at the port of Middlesbrough, using a 42-ton MAN electric lorry with a 310-mile range to haul steel and supplies on standard routes across the region.
All three companies deem it a roaring success. It cut CO2 tail-pipe emissions by 2.3 tonnes from a single truck in 10 days at an implied life-cycle cost that roughly matches a diesel equivalent.
'The fleet manager was ecstatic,' he said. 'It worked for every journey.'
E-trucks cost two to three times as much to buy – though the gap is closing fast, as it did for EVs – but you recoup on lower running costs. The cheaper the electricity, the sooner the crossover point.
'In Finland, electricity is so cheap it takes 10 months,' said Michael Liebreich, founder of Bloomberg New Energy Finance and a director of PragmaCharge, which is electrifying heavy-goods fleets, ports, and terminals in Europe.
Eurostat figures show that average power prices per kWh for non-household consumers in late 2024 were: Finland €0.08, Sweden €0.09, Denmark €0.12, Spain €0.14, France €0.18, Italy €0.22 and Germany €0.23. The UK was nearer €0.32.
That is not because the UK is greener. It is because the UK is incompetent. Fossil fuels are down to 10pc in Denmark's grid. Finland has almost none at all.
PragmaCharge is launching in Finland, Spain, and the German-Polish freight corridor. 'We are delivering electrified heavy freight at a lower cost than diesel, without subsidies, across Europe. Customers are lining up,' said Mr Liebreich.
Germany has introduced a CO2-based toll charge for diesel trucks equal to €200 a ton that will accelerate the process even faster. The switch is now unstoppable.
So it is not just China. It is Europe too, and Vietnam, Thailand, Brazil and a clutch of other states, responding in the same way to the same price signal. There are already 45 electric truck models on the market in India.
We now know that global sales of combustion-engine cars peaked in absolute numbers in 2017 and have never since recovered. Almost nobody realised that it was happening at the time.
Could it be that fossil truck sales are peaking in the same way right now? If so, 40pc of world oil demand is already going into terminal run-off.
Just Stop Oil can call off their protests. Technology is stopping oil more dramatically than they could ever achieve.