Commercial Vehicle Industry Embraces New Opportunities for Green Transformation

The commercial vehicle industry has received another major boost with the joint issuance of the "Transportation Mass Equipment Update Action Plan" (hereinafter referred to as the "Action Plan") by the Ministry of Transport in conjunction with the National Development and Reform Commission, the Ministry of Finance, and 13 other departments. The plan re-emphasizes the acceleration of the elimination and renewal of old operating diesel trucks and promotes the electrification of urban buses.

Industry insiders believe that the introduction of the "Action Plan" will effectively promote the transformation of old and new kinetic energy in the commercial vehicle industry, speed up the process of scrapping old vehicles, further stimulate the demand for commercial vehicle replacement, and clarify the direction for the green transformation and industrial upgrading of the commercial vehicle industry.

Injecting New Vitality into the Commercial Vehicle Market

"For the commercial vehicle industry, the implementation of the 'Action Plan' is undoubtedly a strong stimulant. It can not only lead China's transportation industry towards a green and low-carbon development direction, but also bring unprecedented development opportunities to the commercial vehicle industry," said Zhong Weiping, Secretary-General of the Commercial Vehicle Professional Committee of the China Automobile Circulation Association. The seven key contents involving the commercial vehicle field in the "Action Plan" are closely related to the future development of the industry, representing a deep insight and active exploration of the development trend of intelligence, electrification, and low carbon. It can not only further stimulate market demand but also inject strong momentum into the transformation and upgrading of the commercial vehicle industry.

"Unlike in the past, this 'Action Plan' not only focuses on scale expansion but also values the improvement of the quality and efficiency of existing vehicles. Its core goal is to achieve incremental growth through quality improvement and efficiency enhancement," said Zhu Keli, Executive Director of the China Information Industry Association and Founding Dean of the National Research Institute for New Economy. With the start of the large-scale transportation equipment update action, this will not only stimulate consumption and expand domestic demand but also accelerate the pace of scientific and technological innovation in the commercial vehicle industry, and promote the optimization of the industrial chain and the upgrading of the industrial structure.

Liu Dacheng, Deputy Dean of the Internet Industry Research Institute of Tsinghua University and Director of the Logistics Industry Research Center, analyzed that the "Action Plan" takes the elimination and renewal of old vehicles and electrification as a breakthrough to promote the development of the commercial vehicle industry towards green and low carbon, which is conducive to enhancing the industry's competitiveness and sustainable development capabilities. At the same time, the promotion and application of new energy operating trucks will drive the development of related industries, including the production and sales of core components such as batteries, motors, and electronic controls, as well as the construction and operation of charging facilities, bringing new growth points and development opportunities to the commercial vehicle industry.

"More importantly, new energy operating vehicles have a higher level of intelligence, which can promote the construction and development of smart logistics, smart highways, and smart ports. With the help of advanced sensors, communication, and data analysis technology, real-time monitoring and analysis of traffic flow, vehicle location, road conditions, and other data can provide decision support for the transportation industry management department and provide multi-field information services for enterprises, thereby greatly improving transportation efficiency." Liu Dacheng further said.

Assisting the Release of Truck Market Demand

Since the State Council issued the "Action Plan for Promoting Large-scale Equipment Update and Consumer Goods Replacement," many provinces have actively responded and introduced policy details to promote the renewal and replacement of transportation equipment. The introduction of the "Action Plan" not only makes the policy more systematic and integrated, forming effective connection and complementarity between policies, but also further clarifies the direction of transportation equipment renewal and replacement, providing strong policy guidance for the sustainable development of the industry.

It is worth noting that the "Action Plan" proposes two major measures for the truck industry: first, to accelerate the elimination and renewal of old operating diesel trucks, especially those still operating at the national three and below standard diesel vehicles, and to encourage the early elimination and renewal of national four standard diesel trucks; second, to actively promote new energy operating trucks and promote their application in urban logistics distribution, port distribution, and trunk line logistics, which also indicates that the truck industry is about to enter a more environmentally friendly and efficient new stage of development.

In the view of commercial vehicle industry expert Ren Shifa, the old-for-new exchange is the core strategy of this "Action Plan," which is expected to stimulate the demand for the replacement of old and new vehicles and has strong practical significance for the truck industry that has entered the stock market from the incremental market.

During the interview, many people in the industry also believe that the release of the "Action Plan" will activate the potential of old vehicle elimination and new car replacement, and then drive the growth of new car sales. The heads of several mainstream truck companies all said that the "Action Plan" is an important means to leverage the new volume of the truck market. On the one hand, accelerating the elimination of old operating diesel trucks will release a huge market space and provide a broad platform for new car sales; on the other hand, the transformation of operating trucks to electrification can not only promote the upgrade of the consumption structure but also inject new vitality into the technical development of truck companies.

According to the analysis data of the China Automobile Center, the current national four and below emission standard commercial vehicle stock has reached nearly 12 million, of which more than 10 years old has reached 3.5 million. Another set of industry measurement data shows that by the end of 2022, the cumulative sales of national four diesel heavy trucks in the market were about 1.8 million. Combining the annual replacement and renewal situation and the operation data provided by the third party, it can be inferred that the national four heavy truck stock is about 1.2 million.

"Under the promotion of the 'Action Plan,' coupled with the help of local elimination subsidies, national four diesel vehicles are expected to accelerate the elimination and are expected to usher in a peak elimination period in the next two years, contributing new volume to the truck market," said Zhong Weiping.

Moreover, the commercial vehicle, especially the truck segment, is closely related to the engineering infrastructure project. One of the core tasks of this "Action Plan" is to promote the equipment renewal and transformation of key industries. It can be foreseen that with the gradual release of the potential demand for large-scale equipment transformation and the update of equipment in the infrastructure field, the demand for engineering vehicles will be significantly boosted, and the truck industry is expected to usher in more development opportunities in this rising cycle.

Issues Cannot Be Ignored, the Industry Needs to Work Together to Overcome

At the same time as the release and implementation of the "Action Plan," relevant supporting policies are also being followed up.

Among them, in terms of increasing financial support, the "Action Plan" proposes to continue to issue subsidies for the elimination and renewal of old operating vehicles and to include equipment renewal projects that meet the conditions into the scope of central financial support; at the same time, encourage localities with conditions to use the urban traffic development reward funds arranged by the central finance to support the renewal of new energy city buses and power batteries.

In terms of improving financial insurance support, the "Action Plan" emphasizes increasing financial support, playing the role of incentive policy tools such as the re-lending policy for scientific and technological innovation and technical transformation, and guiding financial institutions to strengthen support for transportation technology transformation and equipment renewal; encourage banks and insurance institutions to provide a variety of financial services to improve the convenience of financing and the level of insurance protection.

For new energy trucks, the "Action Plan" clearly proposes to encourage regions with conditions to study and introduce policies on the road rights of new energy operating trucks, supporting infrastructure construction, and other policies according to local conditions, actively explore business models such as car and electricity separation; scientifically plan and moderately advance the construction of supporting infrastructure for new energy vehicles along the highway, and explore the construction of supercharging stations, battery swapping stations, hydrogen stations, etc.

"The 'Action Plan' starts from the perspective of development strategy, drawing a blueprint for the future development of the new energy commercial vehicle market, and also points out a clear path for the new energy truck industry to expand scale and achieve sustainable development," said Ren Shifa.

However, in the process of promoting the transformation and upgrading of the commercial vehicle industry, it is inevitable to encounter some challenges and problems. First, the elimination of old diesel trucks requires a lot of funds. Given the high purchase cost of diesel trucks, coupled with the low freight market prices of highway logistics, many transport practitioners do not have enough funds to update vehicles; secondly, the promotion and application of new energy operating trucks also face many problems, such as short driving range, slow charging speed, backward construction of charging