Emissions Mandates Will Remake Europe’s Trucking Industry

How the MHDT Industry Can Prepare

The anticipated disruptions are significant enough that European trucking industry players should start preparing now. Suppliers and OEMs should update their business models and redesign their workforces to build the capabilities needed for zero-emission trucks. Infrastructure players should begin building and scaling a harmonized truck-charging system, and utilities should prepare to construct a renewable-energy-powered grid to support it.

Regardless of the pace of change, some MHDT industry players will need to make large-scale changes to their product portfolios and operations. Others will have to scale up the physical infrastructure and electrical power network they need to support clean-energy vehicles.

Suppliers must radically change their business models. The switch from making ICE components and related parts to making battery cells, electric drives, power electronics, and related parts will require distinct new capabilities. Not all existing suppliers will manage the transition, creating opportunities for new competitors. Suppliers must define their pathway toward the ZEV space and start thinking about how to wind down their ICE business.

OEMs will bear the brunt of the disruptive shift to ZEVs. Along with suppliers, OEMs will experience the biggest disruptions to their business model. As a result, they must make similar radical changes. OEMs may also have to contend with new competition from foreign ZEV truck makers. To reorient themselves, OEMs must create a ZEV ecosystem that reaches beyond their existing relationships. They need to cultivate strategic partnerships with partners such as technology providers, charging station infrastructure operators, and utility companies, as well as other OEMs.

The changes that OEMs must make require a massive workforce transformation to provide workers with the skills they need to produce and sell ZEVs and support other new offerings. Training alone won’t fully meet demand. Companies must update their recruiting practices and talent pipeline to identify, recruit, and retain people with relevant capabilities and experience.

Infrastructure players must build and scale a charging network. If the T&E scenario plays out, Europe will need 185,000 charging stations for MHDTs by 2035. Infrastructure players must start rolling out a harmonized system of public and private charging stations that is linked to major European transportation routes. Ensuring that truckers can plug in to recharge wherever and whenever they need to will involve overcoming a number of hurdles to implementation, including lack of access to the existing electrical grid and to other infrastructure.

Utilities must speed up the development of renewable power capacity. Electricity is to charging stations what diesel is to traditional truck stops. Utilities must build up their generative capacity with enough renewable electricity to power future ZEV fleets. The estimated 1.8 million ZEV trucks expected to be on the road in 2035 under our high-adoption scenario will require 160 TWh of electricity—a massive increase from the 1 TWh of electricity that the commercial trucking industry used in 2022. MHDT-related utilities must work quickly to expand the existing power grid, using electricity produced primarily through wind or other renewable energy, and distribute it to charging stations at truck stops and elsewhere.

Non-European players entering the market will negatively affect European OEMs and suppliers. Although the ZEV transition will increase the number of jobs and the GDP for the European MHDT industry overall, the entry of non-European competitors into the market will reduce that impact. The loss of local jobs and GDP will be particularly acute if foreign competitors manufacture the vehicles or major components elsewhere and import them to Europe. Conversely, a model of full localization will be most advantageous for the region. Policymakers can influence the impact of non-European competitors by introducing protective measures such as import tariffs or local content requirements, offering subsidies for local production, and setting regulations to ensure that supply keeps pace with demand.

The transition to ZEVs is fast approaching. Getting enough ZEV trucks on the road in time to meet regulatory requirements calls for work across the value chain—from securing raw materials for batteries that will power electric trucks to generating enough electricity to keep them moving. All industry players have a vested interest in making the transition as smooth as possible. They can contribute to that effort by forging closer connections with existing partners and working with new providers. The shifts will create uncertainty, but they will also make the industry more robust and self-reliant, and ultimately create more value.