*3.3. Economic Impact of Powertrain Electrification on the Road Freight Vehicle Fleet*

The evaluation of the economic impact of powertrain electrification on the road freight vehicle fleet was performed in terms of the net cash flow; defined as the difference between the road freight vehicle fleet RCO for a given scenario and the road freight vehicle fleet RCO for the Base scenario. The net cash flows for the alternative scenarios are presented in Figure 12. Since penetration of EDVs in the new vehicle sales is slow during the early stages of deployment, net cash flows for all alternative scenarios remain close to zero until 2030. Differences become larger thereafter. The HBB scenario has the largest net cash flows, with the peak outside the time horizon and reaching 9.6 billion USD/year by 2050. The second largest net cash flows are obtained for the FBB scenario, peaking at 6.7 billion USD/year in 2049, and reaching 6.6 billion USD/year by 2050. The lowest net cash flows are obtained for the HBB scenario, peaking at 4.6 billion USD/year in 2049, reaching 4.5 billion USD/year by 2050. It can be seen that the largest values for the net cash flow are obtained for scenarios with BEV diffusion. Furthermore, if BEVs were to be deployed in compact and mini-sized vehicles, it is more cost-effective to deploy FCEVs than HEVs in normal vehicles.

**Figure 12.** Net cash flow.

Powertrain electrification leads to lower energy consumption in the alternative scenarios than in the Base scenario; with energy savings reaching 4.2, 4.6 and 7.6 billion USD/year by 2050 in the HBB, HFF and FBB scenarios. However, incremental capital and O&M costs increase for all alternative scenarios, reaching 13.8, 9.0 and 14.2 billion USD/year by 2050 in the HBB, HFF and FBB scenarios. Since energy savings cannot outweigh capital cost increments when BEVs and FCEVs are deployed, net cash flows remain positive during the whole time horizon in all alternative scenarios.

### *3.4. Policy Implications*

In order to obtain a complete perspective of the impact of powertrain electrification on the road freight vehicle fleet, the performance of all scenarios was assessed in terms of TTW energy use, WTW CO2 emissions and RCO. Scores for the Base scenario and the three alternative scenarios in 2050 are shown in Figure 13. Ideally, the goal is to reduce energy consumption and CO2 emissions while reducing or maintaining the fleet RCO. However, as seen from the net cash flow, powertrain electrification increases the road freight vehicle fleet RCO compared with the Base scenario. The Base scenario is the top performer in terms of cost. Nevertheless, it has the lowest performance in terms of energy use and CO2 emissions. In contrast, the HFF scenario has better performance in terms of CO2 emissions; however, cost performance is reduced by half compared to the Base scenario. The HBB scenario can offer larger CO2 emissions reductions compared with the HFF scenario; nevertheless, it has the lowest cost performance out of all scenarios. The best performance overall is obtained in the FBB scenario, showing the largest energy consumption and CO2 emissions reductions, with a cost performance between the HFF and HBB scenarios. Therefore, diffusion of FCEVs in normal vehicles and BEVs in compact and mini-sized vehicles is recommended as the best strategy for powertrain electrification in road freight transport in Japan.

**Figure 13.** Scenario scores in 2050.

In order to achieve powertrain electrification in road freight transport, it is important to incentivize OEMs to accelerate the development and mass production of road freight EDVs. As road freight vehicle owners often own several vehicles and are more focused on reducing cost than passenger LDV owners [16], policies to incentivize powertrain electrification can have a faster acceptance in road freight vehicles than in passenger LDVs. Therefore, it is also recommended to design measures to help road freight vehicle fleet owners investing in EDVs. Additionally, diffusion of EDVs in road freight transport can help improving social acceptance and developing infrastructure that can benefit EDV diffusion in passenger LDVs. In that sense, the assessment of powertrain electrification strategies that include passenger LDVs and road freight vehicles considering the dynamics of technology diffusion is suggested for future research.

A large asymmetry was found between the vehicle stock distribution by size class and the CO2 emissions. Normal vehicles account for 13.3% of the road freight vehicle stock in all scenarios. However, they account for more than 61% of TTW and WTW CO2 emissions. Considering normal vehicle stock is the smallest among all road freight vehicle size classes and it is concentrated in few users, it is recommended to prioritize normal vehicles when designing measures for powertrain electrification in road freight transport.
