Tomorrow s Vehicles A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025

Tomorrow s Vehicles A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025

Tomorrow s Vehicles A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 Introduction 2 List of Acronyms Scope and Methodology Overview 10 Vehicle Fuel Efficiency United States Canada Sales and Registrations by Weight Class Conclusion 47 About the Author 48 About the Fuels Institute 49 2017 Fuels Institute Disclaimer: The opinions and views expressed herein do not necessarily state or reflect those of the individuals on the Fuels Institute Board of Directors and the Fuels Institute Board of Advisors, or any contributing organization to the Fuels Institute. The Fuels Institute makes no warranty, express or implied, nor does it assume any legal liability or responsibility for the use of the report or any product, or process described in these materials. Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 1

Introduction The future of the vehicle market will directly influence the fuels market the two are inseparable. As the automobile manufacturing industry seeks to comply with increasingly stringent requirements for performance and efficiency, the impact on powertrain diversity and fuel preference could be significant. The media is frequently reporting that the shift in vehicle design to comply with environmental standards will drive the mass introduction and adoption of alternative fuel vehicles. But the reality of market transitions may present a different scenario. The Fuels Institute is interested in providing stakeholders and decision makers credible analyses of market conditions and trends to enable them to reach informed conclusions and develop realistic strategies. To this end, in early 2016 the Board of Advisors commissioned Navigant Research to prepare a vehicle market forecast through 2025, evaluating both sales and vehicle registration trends for vehicles by powertrain and fuel-type. These forecasts were delivered to the Fuels Institute in mid-2016. This report presents the Fuels Institute s analysis of Navigant Research s projections for the medium and heavy duty vehicle market. This report analyzes the projected market shares of the various vehicles expected to be sold and driven in the United States and Canada, beginning with an overall analysis of the market in general and then more closely assessing the evolution of the market with respect to specific vehicle powertrains and fuels. The Fuels Institute makes no inference regarding the inherent value of any powertrain rather, this report seeks to present an objective analysis of the data provided by Navigant Research. This report is one part in a series of three reports produced from the Navigant Research projections. In addition to this report, the Fuels Institute has published: 1) an analysis of fuel consumption by light, medium and heavy duty vehicles, drafted by Navigant Research, and 2) an analysis of market projections affecting the light duty vehicle market, written by the Fuels Institute. All three publications are available for download from fuelsinstitute.org. 2 FuelsInstitute.org

List of Acronyms Used in this Publication Acronym AFV ASTM BEV CNG FCV FFV HEV ICE LDV LNG LPG OEM PAGV Meaning Alternative fuel vehicle International standards organization Battery electric vehicle Compressed natural gas Fuel cell vehicle Flex fuel vehicles (capable of operating on gasoline containing - 83% ethanol) Hybrid electric vehicle Internal combustion engine Light duty vehicle Liquefied natural gas Liquid propane gas Original equipment manufacturer (usually referring to automobile manufacturers) Propane-autogas vehicle Plug-in hybrid electric vehicle Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 3

Scope and Methodology This report provides a comprehensive analysis of the North American light duty and commercial vehicle markets by vehicle class, powertrain technology, and supporting fuel. Figure 1 demonstrates the hierarchy of market segmentation provided within this report, as well as the types of vehicles that belong within each vehicle segment. The vehicle technologies evaluated in this report are listed in Figure 2 alongside the fuels capable of powering them. Technology and fuel pairing vary by vehicle class; for instance, liquefied natural gas (LNG) is not consumed in light duty vehicle (LDV) or medium duty conventional markets, and diesel is not consumed within the light duty hybrid or plug-in hybrid markets. Figure 1 North American Vehicle Market Hierarchy (Source: Navigant) Figure 2 Vehicle Technologies and Fuels Vehicle Technology Conventional Flex Fuel Vehicle* Hybrid Plug-in Hybrid Battery Electric Fuel Cell Electric Natural Gas Propane Autogas Fuel or and all ethanol blends up to E85* or **,, and Electricity Electricity Hydrogen CNG or LNG** LPG * Light duty market only ** Commercial Market only (Source: Navigant) 4 FuelsInstitute.org

Navigant Research maintains a series of models to produce global sales projections of major alternative fuel vehicle (AFV) technologies. Core elements from each of these models have been combined in two higher-level models that forecast the penetration of all AFV technologies. One model produces sales projections for the global LDV market, and the other for the commercial vehicle market. The resulting sales forecasts by technology are then fed into an additional model that projects vehicle fleet sizes and fuel consumption. An overview of the core model elements that produce the Navigant Research projections for this report are provided in Figure 3. Figure 3 Alternative Fuel Vehicle Penetration Model Influence Diagram Government Policy Vehicle Roadmap Vehicle Sales Vehicle Life Technology Costs Net Outlay Consumer Choice Alt. Fuel Prices Operating Costs Utility/Capability Vehicles in Use Oil Prices New Vehicle Fuel Efficiency Average in Use Vehicle Efficiency Major Inputs Midstream Calculations Report Outputs Vehicle Utilization Fuels Consumption (Source: Navigant) Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 5

Scenarios For the purposes of this report, Navigant Research created two scenarios, Base and Aggressive, by modifying the following core model inputs: oil prices and lithium ion (Li-ion) battery prices (which is an element within technology costs). In the Base scenario, Navigant Research predicted oil prices would remain low in 2016 and rise slightly in 2017 as oil producers gradually trim production levels from 2017 through 2025, the price of oil is expected to rise gradually but is not expected to surpass $80/barrel. In the Aggressive scenario, prices are forecast to rise more sharply in 2017 to almost $80/barrel and then continue to rise modestly to nearly $110/barrel in 2025. Price increases in oil positively affect all AFV technologies, which are assumed to have relatively stable but rising costs throughout the forecast period. Oil price increases also have a marginally negative effect on average LDV travel and the penetration of light duty trucks within the light duty market. Li-ion battery packs make up a significant portion of plug-in electric vehicle (PEV) costs. Li-ion cell prices have witnessed sharp declines over the last decade due in large part to the growth of mobile electronic devices, and prices are expected to fall further over the next decade as battery suppliers scale production lines to meet anticipated demand from global transportation markets as well as stationary energy storage. Automotive battery packaging costs are also anticipated to fall as a function of scale and innovation within battery management system designs. The Navigant Research Base scenario assumes battery pack prices will fall 36% over the next 10 years, while the Aggressive scenario assumes prices will fall by over 5. Battery pack cost declines positively affect PEV and marginally affect hybrid electric vehicle (HEV) technologies. A marginal negative effect from pack cost declines occurs on all other AFVs and conventional vehicles in the Aggressive scenario. Figure 4 Oil Prices by Scenario, World Markets: 2016-2025 $120 $100 Aggressive Base $80 ($/Barrel) $60 $40 $20 $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 (Source: Navigant) 6 FuelsInstitute.org

Figure 5 Li-Ion Battery Pack Price Decline by Scenario, World Markets: 2016-2025 -1 Aggressive Base -2 (% Price Decline) -3-4 -5-6 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 (Source: Navigant) Measuring Vehicle Sales Navigant Research constructs overall market sales forecasts for the light duty and commercial vehicle markets using high-level macroeconomic factors of gross domestic product (GDP) and population in addition to vehicle density and historic sales data sets. In North America, the light duty truck segment of the LDV market has grown increasingly popular over the last decade. However, growth of this segment has fluctuated marginally with the rise and fall of retail fuel prices relative to personal income. Therefore, the light duty truck share of the overall LDV market is stronger in the Base scenario where oil prices are low and weaker in the Aggressive scenario where oil prices are high. Sales for each vehicle technology segment analyzed in this study are determined by estimating the market share of the technology against the overall market as a function of a number of variables that feed into the consumer choice. At a high level, these variables are as follows: Technology Costs: The purchase price of the technology relative to conventional vehicles. This variable is affected by Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 7

fuel efficiency regulations, purchase subsidies, and economies of scale. Energy Costs: The per-mile costs of powering the technology. This variable is affected by fuel efficiency regulations and the price of various alternative fuels. Vehicle Capability: The ability of the technology to satisfy all consumer requirements; this is most tangibly conveyed through driving range, power, and hauling capacity. Accessible Infrastructure: The availability of refueling/ recharging infrastructure relative to conventional vehicles. Geopolitical Concerns: The capacity of the technology to reduce oil consumption. Environmental Concerns: The capacity of the technology to reduce carbon emissions and/or other regulated criteria air pollutants. Maintenance: The estimated required costs of vehicle upkeep relative to conventional vehicles. Automaker Support: The vehicle production roadmap of automakers and anticipated capacities for production by year relative to the conventional vehicle. Various markets will value the above variables differently, and each factor is therefore weighed differently based on how the market is likely to value each variable relative to all others. For instance, commercial vehicle markets are assumed likely to be more concerned with vehicle costs, capabilities, and maintenance than LDV markets, which are assumed more likely to value infrastructure accessibility and geopolitical and environmental concerns. Using the above variables, a score relative to the others is created for each technology. These scores are evaluated against past market performance and then used to calculate how changes to any or all of the above variables going forward will affect market share per technology. Measuring Fleet Vehicles The vehicle fleet is a composition of past vehicle sales and the number of vehicles that are likely still in use from when they were purchased. For each vehicle technology analyzed in this report, Navigant Research constructed a distribution of the vehicle population by age using estimates on the 2015 vehicle fleet size, historic vehicle sales, and average vehicle lifespans. The forecasts assume vehicles in light and medium duty markets have average lifespans of 16 years, while vehicles in heavy duty markets have average lifespans of 25 years. Throughout the forecast period, Navigant Research does not assume average vehicle lifespan by technology in any market will increase or decrease. 8 FuelsInstitute.org

Measuring Vehicle Utilization Average vehicle travel will vary based on the age of the vehicle and the technology. Vehicles less than 8 years old tend to drive more miles than the average fleet vehicle. Some initial market data suggests battery electric vehicles (BEVs) are driven less than conventional vehicles, likely the result of range limitations and infrastructure availability. Navigant Research assumes that as BEV ranges increase and recharging infrastructure expands, average BEV travel will near conventional vehicle averages. Plug-in hybrid electric vehicles (s) use both gridsourced electricity and gasoline and thus avoid the range concerns of BEVs. Navigant Research s analysis of energy consumption in the United States suggests that cars drive around half of their miles on electricity and the other half on gasoline, while trucks are likely to drive more miles on gasoline than electricity initially. truck electricity utilization is anticipated to increase to levels near those of the passenger car segment on behalf of new vehicle introductions in economy and volume segments with larger battery capacities. Overall average vehicle miles traveled will vary based on the cost of retail fuels relative to personal income. Higher fuel costs relative to personal income have a marginally negative effect on LDV travel; therefore, LDV travel is higher in the Base scenario than in the Aggressive. Of note, Navigant Research assumes commercial vehicle travel reactions to oil prices are negligible compared to the LDV market and therefore commercial vehicle travel assumptions remain static. Measuring Fuel Consumption Fuel consumption within this study is a function of the number of vehicles in use, average annual travel by vehicle, and fuel efficiency. The equation below demonstrates the high-level consumption calculation wherein vehicles in use and fuel efficiency are indexed by the vehicle sales year or the year when the vehicle joined the fleet. Fuel efficiency is increasing among conventional technologies in both light duty and commercial vehicle classes largely on behalf of fuel efficiency standards in the United States and Canada (measured in miles driven per fuel unit consumed). Equation 1 Road Vehicle Fuel Consumption Fuel consumed in year (y) = vehicles in use in year (y) by vehicle sales year (x) * average vehicle travel in year (y) vehicle fuel efficiency by vehicle sales year (x) (Source: Navigant) Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 9

Overview The efforts by governments to improve fuel efficiency are not restricted to light duty vehicles. Both the United States and Canada have implemented policies to improve the fuel economy of medium and heavy duty vehicles in order to reduce fuel consumption and resulting emissions. Consistent with the Canada-United States Regulatory Cooperation Council, Canada amended its regulations and incorporated by reference the greenhouse-gas emissions and fuel efficiency regulations established by the United States. Consequently, both countries are implementing the same fuel economy requirements The program affecting the medium and heavy duty classes of vehicles, however, is complicated due to the diversity of vehicle types affected by the regulations. The U.S. Environmental Protection Agency (EPA) defines class of vehicle by gross vehicle weight. Figure 6 EPA Definitions of Vehicle Class Class Definitions 2b 3 4 5 6 7 8 GVWR (lbs) 8501-10000 10001-14000 14001-16000 16001-19500 19501-26000 26001-33000 >33000 (Source: Source: U.S. EPA 1 ) 1 https://www.gpo.gov/fdsys/pkg/fr-2016-10-25/pdf/2016-21203.pdf 10 FuelsInstitute.org

The following chart lays out the required miles per gallon efficiency of vehicles based upon type and utility, as presented in the regulation, for model years 2017 and 2027. Figure 7 Medium and Heavy Duty CAFE Standards Short Box Trailers Refrigerated Van Short Box Trailers Dry Van Long Box Trailers Refrigerated Van Long Box Trailers Dry Van Heavy Haul Tractor Class 8 Sleeper Tractor High Roof Class 8 Sleeper Tractor Mid Roof Class 8 Sleeper Tractor Low Roof Class 8 Tractor High Roof Class 8 Tractor Mid Roof Class 8 Tractor Low Roof Class 7 Tractor High Roof Class 7 Tractor Mid Roof Class 7 Tractor Low Roof 0 2 4 6 8 10 Phase 2 2027 Phase 1 2017 MPG (Source: ICCT 2 ) The requirements of these vehicle segments, however, are significantly different from those of light duty vehicles. Similar to the light duty sector, most fuel efficiency improvements currently being implemented seek to improve the efficiency of traditional powertrains, i.e., those operating on gasoline and diesel-based fuels. Meanwhile, the improvements in fuel economy do not on the surface appear to be extraordinary, but the percent improvement is indeed significant, averaging 22.8% improvement across the vehicle class. Figure 8 Change in Medium & Heavy Duty Fuel Efficiency Short Box Trailers Refrigerated Van Short Box Trailers Dry Van Long Box Trailers Refrigerated Van Long Box Trailers Dry Van Heavy Haul Tractor Class 8 Sleeper Tractor High Roof Class 8 Sleeper Tractor Mid Roof Class 8 Sleeper Tractor Low Roof Class 8 Tractor High Roof Class 8 Tractor Mid Roof Class 8 Tractor Low Roof Class 7 Tractor High Roof Class 7 Tractor Mid Roof Class 7 Tractor Low Roof 5% 1 15% 2 25% 3 35% 4 Percent Change 2017 2027 (Source: ICCT) 2 http://www.theicct.org/sites/default/files/publications/us%20hdv%20phase%202%20frm_policy-update_08252016_vf.pdf Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 11

Vehicle Fuel Efficiency To project the vehicle fleet and the expected energy consumption of that fleet, Navigant Research has developed a proprietary model to project the sales and registration rates of vehicles equipped with certain powertrains along with the fuel efficiency of each class of vehicle equipped with various powertrain options. The following charts depict the forecast trajectory for fuel efficiency in the two countries. Figure 9 U.S. Medium Duty (Base Scenario) MPG 100 80 60 40 20 0 ICE * gallon equivalent ICE HEV HEV Electric* BEV* FCV* NGV* PAGV* Figure 10 U.S. Medium Duty (Aggressive Scenario) MPG 100 80 60 40 20 * gallon equivalent 0 ICE ICE HEV HEV Electric* BEV* FCV* NGV* PAGV* 12 FuelsInstitute.org

Figure 11 U.S. Heavy Duty (Base Scenario) 70 60 MPG 50 40 30 20 10 0 ICE * gallon equivalent ICE HEV HEV Electric* BEV* FCV* NGV* PAGV* 70 60 MPG 50 40 30 * gallon equivalent 20 10 0 ICE ICE HEV HEV Electric* BEV* FCV* NGV* PAGV* Figure 13 U.S. Fuel Efficiency Change by Technology (2016-2025) % Change in MPG (GGE) 25% 2 15% 1 5% ICE ICE HEV HEV Electric BEV FCV NGV PAGV Base Medium Duty Aggressive Medium Duty Base Heavy Duty Aggressive Heavy Duty Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 13

Figure 14 Canada Medium Duty (Base Scenario) MPG 100 80 60 40 20 0 ICE * gallon equivalent ICE HEV HEV Electric* BEV* FCV* NGV* PAGV* Figure 15 Canada Medium Duty (Aggressive Scenario) MPG 100 80 60 40 20 * gallon equivalent 0 ICE ICE HEV HEV Electric* BEV* FCV* NGV* PAGV* Figure 16 Canada Heavy Duty (Base Scenario) MPG 70 60 50 40 30 20 10 0 ICE * gallon equivalent ICE HEV HEV Electric* BEV* FCV* NGV* PAGV* 14 FuelsInstitute.org

Figure 17 Canada Heavy Duty (Aggressive Scenario) 70 60 MPG 50 40 30 * gallon equivalent 20 10 0 ICE ICE HEV HEV Electric* BEV* FCV* NGV* PAGV* Figure 18 Canada Fuel Efficiency Change by Technology (2016-2025) % Change in MPG (GGE) 5 4 3 2 1 ICE ICE HEV HEV Electric BEV FCV NGV PAGV Base Medium Duty Aggressive Medium Duty Base Heavy Duty Aggressive Heavy Duty Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 15

United States Navigant Research projects that the medium and heavy duty market in the United States will increase by 11.7% through 2025, with medium duty vehicles declining 5. and heavy duty vehicle increasing their unit count by 45.4%. Contributing to this increase in market size, sales are expected to increase by 21. through 2025 with sales of medium and heavy duty vehicles both increasing approximately 21.. The shift in market size of registered vehicles is attributed to the longer life expectancy of heavy duty vehicles relative to medium duty vehicles. Medium and Heavy Duty Sales The powertrains that are sold each year provide a trend indicator for where the market is ultimately heading. While sales in one year are unlikely to affect the dynamics of the market because of the slow turnover of the vehicle fleet, understanding these trends provides insight into what powertrains and fuels will secure growing market share in the future. In the United States, there is little variability in the market share of powertrains through 2025 in the commercial vehicle sector (inclusive of medium and heavy duty vehicles). In 2016, gasoline and diesel-powered vehicles combined for greater than 96% market share of all medium and heavy duty vehicle sales. By 2025, this dominant position is forecast to drop slightly to 93%, in the Base scenario. Picking up most of this lost market share will be hybrid vehicles, both gasoline and diesel in both traditional and plug in technologies. In the Aggressive scenario, gasoline and diesel vehicles are projected to lose only slightly more market share, combining for 92% of vehicles sold in 2025. Similar to the Base scenario, hybrid variants are expected to gain market share. The Aggressive scenario does differ from the Base scenario in its projections for natural gas vehicles, forecasting a slightly stronger growth in market share of these vehicles sold in 2025. Figure 19a U.S. Market Share of Commercial Vehicle Sales (Base Scenario) 10 Other 9 8 7 6 5 4 3 2 1 16 FuelsInstitute.org

Figure 19b U.S. Market Share of Commercial Alternative Powertrain Vehicle Sales (Base Scenario) 1 8% 6% 4% 2% HEV HEV BEV FCV CNG LNG PAGV Figure 19c Base U.S. Market Share of Commerical Vehicle Sales (Base Scenario) 37.45% 36.74% 36.84% 36.29% 35.85% 35.6 35.14% 34.92% 34.64% 34.34% 58.93% 59.39% 58.95% 59.04% 58.82% 58.74% 58.85% 58.74% 58.71% 58.69% HEV 0.17% 0.18% 0.22% 0.28% 0.31% 0.34% 0.38% 0.44% HEV 0.48% 0.59% 0.78% 1.08% 1.17% 1.28% 1.39% 1.49% 1.58% 0.17% 0.2 0.22% 0.23% 0.35% 0.38% 0.43% 0.48% 0.52% 0.56% BEV 0.18% 0.3 0.36% 0.47% 0.51% 0.55% 0.58% 0.61% FCV CNG 1.87% 1.88% 1.89% 1.9 1.91% 1.92% 1.92% 1.93% 1.94% 1.95% LNG 0.23% 0.27% 0.28% 0.3 0.32% 0.33% 0.34% 0.36% PAGV 0.65% 0.69% 0.74% 0.8 0.86% 0.93% 0.99% 1.05% 1.11% 1.17% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 17

Figure 20a U.S. Market Share of Commercial Vehicle Sales (Aggressive Scenario) 10 9 Other 8 7 6 5 4 3 2 1 Figure 20b U.S. Market Share of Commercial Alternative Powertrain Vehicle Sales (Aggressive Scenario) 1 8% 6% 4% 2% HEV HEV BEV FCV CNG LNG PAGV 18 FuelsInstitute.org

Figure 20c Aggressive U.S. Market Share of Commerical Vehicle Sales (Aggressive Scenario) 37.45% 36.53% 36.63% 36.07% 35.61% 35.35% 34.86% 34.62% 34.31% 33.99% 58.93% 59.06% 58.62% 58.69% 58.44% 58.32% 58.39% 58.23% 58.16% 58.09% HEV 0.18% 0.2 0.3 0.33% 0.36% 0.4 0.43% 0.47% HEV 0.52% 0.63% 0.84% 1.14% 1.24% 1.36% 1.48% 1.59% 1.69% 0.18% 0.2 0.23% 0.28% 0.31% 0.18% 0.27% 0.4 0.45% 0.51% 0.57% 0.62% 0.68% BEV 0.18% 0.27% 0.36% 0.43% 0.51% 0.6 0.66% 0.72% 0.77% 0.82% FCV CNG 1.87% 2.18% 2.17% 2.16% 2.15% 2.16% 2.16% 2.18% 2.2 2.22% LNG 0.23% 0.28% 0.29% 0.31% 0.32% 0.34% 0.36% 0.37% 0.39% PAGV 0.65% 0.77% 0.82% 0.87% 0.94% 1.01% 1.08% 1.15% 1.21% 1.28% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 19

Medium and Heavy Duty Registrations The forecast for sales indicate only modest adjustments to the composition of the medium and heavy duty vehicle markets. When looking at projected registrations, the adjustments become nearly imperceptible. In 2016, gasoline and diesel vehicles represented nearly 99% of vehicles on the road. In the Base scenario, this market share is projected to drop to 96.5% in 2025. The lost share is expected to mostly be captured by hybrid and CNG powertrains. In the Aggressive scenario, the combined market share of gasoline and diesel vehicles is expected to drop only slightly more than in the Base scenario, with market share retreating to 96.2%. Growth in hybrids and CNG vehicles account for the lost market share. Figure 21a U.S. Market Share of Commercial Vehicle Registrations (Base Scenario) 10 Other 9 8 7 6 5 4 3 2 1 20 FuelsInstitute.org

Figure 21b U.S. Market Share of Commerical Alternative Powertrain Vehicle Registrations (Base Scenario) 5% 4% 3% 2% 1% HEV HEV BEV FCV CNG LNG PAGV Figure 21c U.S. Market Share of Commercial Vehicle Registrations (Base Scenario) 35.1 35.19% 35.29% 35.36% 35.41% 35.45% 35.46% 35.46% 35.45% 35.42% 63.61% 63.34% 63.06% 62.78% 62.5 62.21% 61.93% 61.64% 61.35% 61.07% HEV 0.1 0.17% 0.19% HEV 0.18% 0.22% 0.27% 0.33% 0.39% 0.46% 0.53% 0.61% 0.18% BEV 0.14% 0.19% 0.23% FCV CNG 0.56% 0.64% 0.73% 0.81% 0.9 0.98% 1.07% 1.15% 1.23% 1.32% LNG 0.2 0.21% 0.22% 0.22% 0.23% 0.23% 0.25% 0.25% PAGV 0.31% 0.34% 0.37% 0.4 0.44% 0.47% 0.51% 0.56% 0.6 0.65% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 21

Figure 22a U.S. Market Share of Commerical Vehicle Registrations (Aggressive Scenario) 10 Other 9 8 7 6 5 4 3 2 1 Figure 22b U.S. Market Share of Commercial Alternative Powertrain Vehicle Registrations (Aggressive Scenario) 5% 4% 3% 2% 1% HEV HEV BEV FCV CNG LNG PAGV 22 FuelsInstitute.org

Figure 22c U.S. Market Share of Commercial Vehicle Registrations (Aggressive Scenario) 35.1 35.18% 35.27% 35.33% 35.37% 35.39% 35.39% 35.37% 35.34% 35.29% 63.61% 63.33% 63.02% 62.73% 62.42% 62.11% 61.81% 61.5 61.18% 60.86% HEV 0.1 0.17% 0.2 HEV 0.18% 0.22% 0.28% 0.34% 0.48% 0.56% 0.65% 0.1 0.14% 0.17% 0.21% BEV 0.1 0.2 0.29% FCV CNG 0.56% 0.66% 0.76% 0.86% 0.95% 1.05% 1.15% 1.24% 1.34% 1.44% LNG 0.2 0.21% 0.22% 0.23% 0.23% 0.25% 0.27% PAGV 0.31% 0.34% 0.38% 0.45% 0.49% 0.54% 0.59% 0.64% 0.69% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 23

Canada The market for medium and heavy duty vehicles in Canada is significantly smaller than that in the United States. Total registered vehicles in the two classes is equal to approximately 9% of the market in the U.S. Consequently, smaller increases in registered units and units sold generates a much greater change in percent growth than would be the case in the U.S. Keeping that in mind, Navigant Research projects that the medium and heavy duty market in Canada will increase by 17.6% through 2025, with registered medium duty vehicles declining 35.6% and heavy duty vehicles increasing their unit count by 93.8%. Contributing to this increase in market size, sales are expected to increase by 15.5% through 2025 with sales of medium duty vehicles increasing 16.8% and heavy duty vehicles 15.1%. The shift in market size of registered vehicles is attributed to the longer life expectancy of heavy duty vehicles relative to medium duty vehicles. Medium and Heavy Duty Vehicle Sales Similar to the United States, the powertrain mix in Canada is not expected to change much through 2025, even in sales of vehicles. The Canadian new vehicle market is dominated by liquid fuels, with diesel leading the way. Through 2025, this is not expected to change much. In 2016, gasoline and diesel fuel accounted for 97. of all medium and heavy duty vehicles sold, with diesel representing 85.5%. By 2025, the Base scenario forecasts the market share for these two fuels will drop to 91.4%, with diesel representing 80.5%. Gaining market share will be hybrids and natural gas powered vehicles. In the Aggressive scenario, gasoline and diesel market share is projected to drop to 90.2% with diesel still representing 79.5%. Capturing the lost market share will be hybrids and natural gas most specifically diesel hybrids and CNG. Figure 23a Canada Market Share of Commercial Vehicle Sales (Base Scenario) 10 Other 9 8 7 6 5 4 3 2 1 24 FuelsInstitute.org

Figure 23b Canada Market Share of Alternative Powertrain Vehicle Sales (Base Scenario) 1 8% 6% 4% 2% HEV HEV BEV FCV CNG LNG PAGV Figure 23c Canada Market Share of Commercial Vehicle Sales (Base Scenario) 11.58% 11.42% 11.47% 11.31% 11.21% 11.16% 11.05% 11.0 10.92% 10.84% 85.46% 85.17% 84.58% 84.04% 83.26% 82.58% 82.07% 81.55% 81.05% 80.54% HEV 0.17% 0.19% 0.2 HEV 0.61% 0.67% 0.78% 1.0 1.35% 1.46% 1.61% 1.74% 1.86% 1.98% 0.1 0.17% 0.21% 0.32% 0.35% 0.39% 0.42% 0.45% 0.48% BEV 0.18% 0.25% 0.31% 0.46% 0.52% 0.57% 0.62% 0.67% FCV CNG 1.51% 1.75% 1.99% 2.23% 2.48% 2.86% 3.12% 3.38% 3.62% 3.88% LNG 0.23% 0.27% 0.32% 0.37% 0.43% 0.53% 0.6 0.67% 0.75% 0.83% PAGV 0.27% 0.29% 0.31% 0.33% 0.36% 0.38% 0.39% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 25

Figure 24a Canada Market Share of Commercial Vehicle Sales (Aggressive Scenario) 10 Other 9 8 7 6 5 4 3 2 1 Figure 24b Canada Market Share of Commercial Alternative Powertrain Vehicle Sales (Aggressive Scenario) 1 9% 8% 7% 6% 5% 4% 3% 2% 1% HEV HEV BEV FCV CNG LNG PAGV 26 FuelsInstitute.org

Figure 24c Canada Market Share of Commercial Vehicle Sales (Aggressive Scenario) 11.58% 11.36% 11.4 11.25% 11.13% 11.07% 10.95% 10.88% 10.79% 10.7 85.46% 84.76% 84.12% 83.53% 82.68% 81.91% 81.31% 80.69% 8 79.47% HEV 0.1 0.14% 0.18% 0.2 0.21% HEV 0.61% 0.72% 0.84% 1.08% 1.43% 1.56% 1.71% 1.85% 1.99% 2.11% 0.1 0.14% 0.19% 0.23% 0.29% 0.37% 0.46% 0.5 0.53% 0.57% BEV 0.21% 0.29% 0.38% 0.51% 0.59% 0.67% 0.75% 0.82% 0.9 FCV CNG 1.51% 2.03% 2.29% 2.54% 2.81% 3.23% 3.52% 3.82% 4.12% 4.43% LNG 0.23% 0.32% 0.37% 0.42% 0.49% 0.6 0.68% 0.76% 0.85% 0.95% PAGV 0.28% 0.3 0.32% 0.34% 0.36% 0.38% 0.43% 0.45% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 27

Medium and Heavy Duty Registrations The Canadian market of registered medium and heavy duty vehicles mirrors closely the trends seen in the sales profile diesel dominates with 84.9% market share while gasoline represents the only significant alternative at 14.3%. In the Base scenario, this situation is not expected to change much through 2025. is projected to drop to 83.6% and gasoline to 12.5%. Hybrid diesels and CNG account for most of the lost market share. In the Aggressive scenario, diesel drops to 83.3% and gasoline holds steady with the Base scenario. Again, market share expansion is forecast to be strongest for diesel hybrids and CNG. Figure 25a Canada Market Share of Commercial Vehicle Registrations (Base Scenario) 10 9 Other 8 7 6 5 4 3 2 1 Figure 25b Canada Market Share of Commercial Alternative Powertrain Vehicle Registrations (Base Scenario) 5% 4% 3% 2% 1% HEV HEV BEV FCV CNG LNG PAGV 28 FuelsInstitute.org

Figure 25c Canada Market Share of Commercial Vehicle Registrations (Base Scenario) 14.34% 14.12% 13.91% 13.7 13.48% 13.28% 13.07% 12.87% 12.67% 12.47% 84.89% 84.9 84.86% 84.8 84.68% 84.52% 84.34% 84.13% 83.89% 83.64% HEV HEV 0.25% 0.29% 0.34% 0.4 0.48% 0.56% 0.65% 0.74% 0.84% 0.94% 0.1 0.17% 0.2 BEV 0.1 0.19% 0.23% FCV CNG 0.28% 0.55% 0.71% 0.88% 1.07% 1.27% 1.47% 1.68% LNG 0.14% 0.17% 0.2 0.28% 0.33% PAGV 0.25% 0.25% 0.27% 0.28% 0.29% 0.3 0.3 0.31% Figure 26a Canada Market Share of Commercial Vehicle Registrations (Aggressive Scenario) 10 9 Other 8 7 6 5 4 3 2 1 Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 29

Figure 26b Canada Market Share of Commercial Alternative Powertrain Vehicle Registrations (Aggressive Scenario) 5% 4% 3% 2% 1% HEV HEV BEV FCV CNG LNG PAGV Figure 26c Canada Market Share of Commercial Vehicle Registrations (Aggressive Scenario) 14.34% 14.12% 13.9 13.68% 13.47% 13.25% 13.04% 12.83% 12.63% 12.42% 84.89% 84.87% 84.81% 84.7 84.55% 84.35% 84.12% 83.86% 83.57% 83.25% HEV 0.1 HEV 0.25% 0.29% 0.34% 0.49% 0.58% 0.68% 0.78% 0.88% 0.99% 0.14% 0.17% 0.2 0.23% BEV 0.19% 0.23% 0.28% 0.33% FCV CNG 0.3 0.45% 0.61% 0.79% 0.99% 1.2 1.42% 1.65% 1.9 LNG 0.19% 0.23% 0.27% 0.32% 0.37% PAGV 0.25% 0.27% 0.28% 0.29% 0.3 0.31% 0.32% 0.33% 30 FuelsInstitute.org

Sales and Registrations by Weight Class The vehicle characteristics of medium and heavy duty vehicles, as well as their use and capabilities, are quite different. The following charts summarize the forecast by powertrain for sales and registrations for medium duty and heavy duty vehicles independently. Medium Duty Vehicles: United States The sale of medium duty vehicles in the United States is dominated by gasoline (37.7%) and diesel (59.8%). By 2025, the market share of diesel vehicles is projected to stay the same in the Base scenario while gasoline will lose 3%. This market share is likely to be captured by hybrids (significantly within the diesel hybrid sector) and propane auto gas. In the Aggressive scenario, the fate of gasoline and diesel remains largely unchanged compared with the Base scenario. And again, hybrids (led by diesel hybrids) and propane take up the lost gasoline market share. Figure 27a U.S. Market Share of Medium Duty Vehicle Sales (Base Scenario) and Sales 7 6 5 4 3 2 1 1 8% 6% 4% 2% Alternative Powertrain Sales HEV HEV BEV FCV CNG PAGV Figure 27b U.S. Market Share of Medium Duty Vehicle Sales (Base Scenario) 37.73% 37.02% 37.13% 36.58% 36.16% 35.92% 35.45% 35.24% 34.96% 34.67% 59.83% 60.3 59.88% 59.98% 59.79% 59.72% 59.85% 59.75% 59.73% 59.72% HEV 0.17% 0.19% 0.22% 0.28% 0.31% 0.34% 0.38% 0.44% HEV 0.49% 0.59% 0.79% 1.08% 1.18% 1.3 1.4 1.5 1.59% 0.17% 0.2 0.22% 0.1 0.14% 0.2 0.3 0.33% 0.37% 0.45% 0.48% BEV 0.2 0.31% 0.35% 0.4 0.44% 0.47% 0.5 0.53% FCV CNG 0.95% 0.97% 0.98% 0.99% 1.01% 1.02% 1.04% 1.05% 1.06% 1.08% PAGV 0.65% 0.69% 0.75% 0.8 0.87% 0.93% 1.0 1.06% 1.12% 1.18% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 31

Figure 28a U.S. Market Share of Medium Duty Vehicle Sales (Aggressive Scenario) and Sales 7 6 5 4 3 2 1 1 8% 6% 4% 2% Alternative Powertrain Sales HEV HEV BEV FCV CNG PAGV Figure 28b U.S. Market Share of Medium Duty Vehicle Sales (Aggressive Scenario) 37.73% 36.89% 37.0 36.44% 35.99% 35.73% 35.25% 35.02% 34.71% 34.4 59.83% 60.1 59.66% 59.74% 59.51% 59.41% 59.5 59.36% 59.3 59.26% HEV 0.18% 0.2 0.3 0.33% 0.37% 0.4 0.44% 0.47% HEV 0.53% 0.64% 0.84% 1.15% 1.25% 1.38% 1.49% 1.6 1.71% 0.18% 0.2 0.23% 0.29% 0.31% 0.23% 0.34% 0.38% 0.44% 0.49% 0.54% 0.58% BEV 0.31% 0.37% 0.44% 0.52% 0.57% 0.62% 0.67% 0.72% FCV CNG 0.95% 1.11% 1.11% 1.12% 1.12% 1.13% 1.14% 1.16% 1.18% 1.21% PAGV 0.65% 0.78% 0.83% 0.89% 0.95% 1.02% 1.1 1.17% 1.24% 1.31% As could be expected, there is projected to be little change in the registrations of medium duty vehicles. In 2016, gasoline accounted for 34.5% of vehicles on the road and diesel contributed 64.7%. By 2025, gasoline is projected in the Base scenario to gain slightly more than 0.5% (despite the reduction in sales) and diesel is projected to lose 1.5%. The combination of the two vehicle types yields a 1% growth to alternatives, which is likely to be a combination of hybrid diesels, CNG and propane. In the Aggressive scenario, gasoline still gains 0.5% share but diesel loses 2.5%. Capitalizing on this change will be diesel hybrids, CNG, propane and battery electric vehicles. 32 FuelsInstitute.org

Figure 29a U.S. Market Share of Medium Duty Vehicle Registrations (Base Scenario) and Registrations 7 5% 6 4% 5 4 3% 3 2% 2 1 1% HEV HEV BEV FCV CNG PAGV Alternative Powertrain Registrations Figure 29b U.S. Market Share of Medium Duty Vehicle Registrations (Base Scenario) 34.51% 34.62% 34.74% 34.84% 34.93% 35.0 35.06% 35.11% 35.15% 35.17% 64.66% 64.44% 64.18% 63.93% 63.66% 63.37% 63.09% 62.79% 62.48% 62.17% HEV 0.18% HEV 0.2 0.25% 0.31% 0.38% 0.45% 0.53% 0.62% 0.1 BEV 0.1 0.14% 0.17% 0.2 FCV CNG 0.37% 0.45% 0.49% 0.54% 0.58% 0.63% 0.67% 0.72% 0.76% PAGV 0.27% 0.3 0.33% 0.37% 0.4 0.44% 0.49% 0.54% 0.59% 0.64% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 33

Figure 30a U.S. Market Share of Medium Duty Vehicle Registrations (Aggressive Scenario) and Registrations 7 5% 6 4% 5 4 3% 3 2% 2 1 1% HEV HEV BEV FCV CNG PAGV Alternative Powertrain Registrations Figure 30b U.S. Market Share of Medium Duty Vehicle Registrations (Aggressive Scenario) 34.51% 34.62% 34.73% 34.82% 34.9 34.97% 35.01% 35.05% 35.07% 35.07% 64.66% 64.43% 64.16% 63.9 63.61% 63.31% 63.01% 62.69% 62.36% 62.02% HEV 0.1 0.14% 0.19% HEV 0.14% 0.2 0.32% 0.39% 0.47% 0.56% 0.66% 0.1 0.18% BEV 0.14% 0.18% 0.22% FCV CNG 0.37% 0.42% 0.46% 0.51% 0.56% 0.61% 0.66% 0.71% 0.77% 0.82% PAGV 0.27% 0.31% 0.34% 0.38% 0.42% 0.47% 0.51% 0.57% 0.63% 0.69% 34 FuelsInstitute.org

Medium Duty Vehicles: Canada The sale of medium duty vehicles in the Canada is dominated by diesel (86.) with gasoline holding a distant second place with 11.6% market share. By 2025, the market share of diesel vehicles sales will drop 5.7% in the Base scenario while gasoline will lose close to 1%. This market share is likely to be captured by CNG, which is expected to grow share by close to 3., and hybrid diesels and battery electric vehicles, In the Aggressive scenario, the fate of diesel is projected to lose nearly 7., while gasoline will lose the same 1% it is expected to lose in the Base scenario. The market share winners include the same powertrains that win in the Base scenario, CNG, BEV and diesel hybrids. Figure 31a Canada Market Share of Medium Duty Vehicle Sales (Base Scenario) and Sales 8 6 4 2 1 8% 6% 4% 2% Alternative Powertrain Sales HEV HEV BEV FCV CNG PAGV Figure 31b Canada Market Share of Medium Duty Vehicle Sales (Base Scenario) 11.55% 11.37% 11.4 11.23% 11.11% 11.04% 10.93% 10.85% 10.77% 10.68% 85.96% 85.59% 84.87% 84.21% 83.27% 82.67% 82.06% 81.46% 80.9 80.3 HEV 0.18% 0.2 HEV 0.61% 0.66% 0.78% 1.0 1.33% 1.45% 1.59% 1.72% 1.83% 1.95% 0.1 0.3 0.38% 0.47% 0.58% 0.73% 0.8 0.88% 0.95% 1.01% 1.07% BEV 0.4 0.57% 0.71% 0.94% 1.05% 1.17% 1.29% 1.4 1.51% FCV CNG 0.96% 1.23% 1.51% 1.8 2.1 2.41% 2.74% 3.05% 3.37% 3.7 PAGV 0.25% 0.27% 0.29% 0.31% 0.33% 0.35% 0.37% 0.39% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 35

Figure 32a Canada Market Share of Medium Duty Vehicle Sales (Aggressive Scenario) 9 12% and Sales 7 5 3 1-1 1 8% 6% 4% 2% Alternative Powertrain Sales HEV HEV BEV FCV CNG PAGV Figure 32b Canada Market Share of Medium Duty Vehicle Sales (Aggressive Scenario) 11.55% 11.32% 11.34% 11.17% 11.02% 10.94% 10.81% 10.72% 10.62% 10.52% 85.96% 85.24% 84.46% 83.7 82.63% 81.92% 81.19% 80.48% 79.77% 79.05% HEV 0.1 0.14% 0.18% 0.19% 0.21% HEV 0.61% 0.72% 0.84% 1.07% 1.42% 1.54% 1.69% 1.83% 1.96% 2.08% 0.1 0.14% 0.3 0.42% 0.53% 0.66% 0.84% 0.94% 1.04% 1.13% 1.21% 1.3 BEV 0.47% 0.67% 0.87% 1.17% 1.35% 1.55% 1.72% 1.88% 2.06% FCV CNG 0.96% 1.41% 1.71% 2.02% 2.33% 2.67% 3.03% 3.38% 3.75% 4.13% PAGV 0.29% 0.3 0.32% 0.34% 0.36% 0.39% 0.43% 0.45% As could be expected, there is less variability in the diversity of registered medium duty vehicles. In 2016, diesel accounted for 84.8% of vehicles on the road and gasoline contributed 14.7%. By 2025, diesel is projected in the Base scenario to lose nearly 1. and gasoline will lose 1.4%. Consistent with sales trends, hybrid diesels and CNG are projected to represent the greatest gains in the Base scenario. In the Aggressive scenario, diesel is projected to lose 1.2% share and gasoline will lose 1.5%. As in the Base scenario, hybrid diesels and CNG capitalize on market opportunities, but BEVs also represents a gain in market share. 36 FuelsInstitute.org

Figure 33a Canada Market Share of Medium Duty Registrations (Base Scenario) and Registrations 9 8 7 6 5 4 3 2 1 5% 4% 3% 2% 1% HEV HEV BEV FCV CNG PAGV Alternative Powertrain Registrations Figure 33b Canada Market Share of Medium Duty Vehicle Registrations (Base Scenario) 14.68% 14.58% 14.47% 14.34% 14.2 14.04% 13.87% 13.87% 13.46% 13.23% 84.75% 84.75% 84.73% 84.7 84.63% 84.54% 84.42% 84.42% 84.09% 83.87% HEV HEV 0.21% 0.27% 0.31% 0.37% 0.42% 0.49% 0.49% 0.65% 0.74% 0.25% 0.31% BEV 0.21% 0.21% 0.34% 0.42% FCV CNG 0.1 0.21% 0.29% 0.39% 0.51% 0.51% 0.81% 1.01% PAGV 0.22% 0.23% 0.25% 0.25% 0.27% 0.27% 0.28% 0.29% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 37

Figure 34a Canada Market Share of Medium Duty Vehicle Registrations (Aggressive Scenario) and Registrations 9 8 7 6 5 4 3 2 1 5% 4% 3% 2% 1% HEV HEV BEV FCV CNG PAGV Alternative Powertrain Registrations Figure 34b Canada Market Share of Medium Duty Vehicle Registrations (Aggressive Scenario) 14.68% 14.58% 14.46% 14.34% 14.19% 14.03% 13.85% 13.65% 13.43% 13.19% 84.75% 84.74% 84.71% 84.66% 84.57% 84.45% 84.3 84.11% 83.87% 83.58% HEV HEV 0.21% 0.28% 0.32% 0.37% 0.44% 0.51% 0.59% 0.68% 0.78% 0.1 0.18% 0.23% 0.29% 0.36% BEV 0.19% 0.25% 0.33% 0.42% 0.53% FCV CNG 0.23% 0.32% 0.42% 0.55% 0.71% 0.9 1.11% PAGV 0.22% 0.23% 0.25% 0.27% 0.28% 0.28% 0.29% 0.31% 38 FuelsInstitute.org

Heavy Duty Vehicles United States The heavy duty sector is projected to behave a little differently from the medium duty. In 2016, gasoline and diesel accounted for 94.7% of sales, with diesel dominating with 57.7%. The main difference from the medium duty is an estimated 3.2% of heavy duty vehicles equipped to run on CNG. By 2025, in the Base scenario gasoline loses more than 3. market share while diesel and CNG remain stable. Electric powertrains, led by diesel hybrid and diesel plug in hybrids, plus battery electric vehicles, capture the lost gasoline market. In the Aggressive scenario, gasoline loses 3.5% of share of new sales in 2025, diesel yields more than 1% and CNG gains 0.5%. Growth is experienced in most alternative powertrain markets, with diesel hybrids and plug in hybrids, battery electric and propane picking up market share. Figure 35a U.S. Market Share of Heavy Duty Vehicle Sales (Base Scenario) and Sales 8 6 4 2 1 8% 6% 4% 2% Alternative Powertrain Sales HEV HEV BEV FCV CNG LNG PAGV Figure 35b U.S. Market Share of Heavy Duty Vehicle Sales (Base Scenario) 37.06% 36.34% 36.43% 35.87% 35.42% 35.17% 34.7 34.48% 34.18% 33.88% 57.68% 58.11% 57.66% 57.72% 57.48% 57.38% 57.47% 57.34% 57.29% 57.25% HEV 0.17% 0.18% 0.22% 0.28% 0.3 0.34% 0.37% 0.4 0.43% HEV 0.48% 0.58% 0.77% 1.06% 1.15% 1.27% 1.37% 1.47% 1.56% 0.1 0.17% 0.19% 0.21% 0.23% 0.25% 0.19% 0.28% 0.46% 0.52% 0.57% 0.63% 0.67% BEV 0.21% 0.28% 0.36% 0.43% 0.49% 0.56% 0.61% 0.65% 0.7 0.74% FCV CNG 3.15% 3.16% 3.16% 3.17% 3.17% 3.16% 3.15% 3.16% 3.16% 3.16% LNG 0.56% 0.59% 0.61% 0.64% 0.67% 0.71% 0.75% 0.78% 0.82% 0.86% PAGV 0.64% 0.68% 0.73% 0.79% 0.85% 0.91% 0.98% 1.04% 1.1 1.16% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 39

Figure 36a U.S. Market Share of Heavy Duty Vehicle Sales (Aggressive Scenario) 7 1 and Sales 6 5 4 3 2 1 8% 6% 4% 2% Alternative Powertrain Sales HEV HEV BEV FCV CNG LNG PAGV Figure 36b U.S. Market Share of Heavy Duty Vehicle Sales (Aggressive Scenario) 37.06% 36.03% 36.12% 35.56% 35.09% 34.82% 34.33% 34.07% 33.75% 33.42% 57.68% 57.62% 57.17% 57.22% 56.94% 56.81% 56.85% 56.67% 56.56% 56.47% HEV 0.18% 0.2 0.29% 0.32% 0.36% 0.39% 0.43% 0.46% HEV 0.52% 0.62% 0.83% 1.13% 1.23% 1.35% 1.46% 1.57% 1.67% 0.17% 0.2 0.23% 0.25% 0.28% 0.3 0.22% 0.32% 0.48% 0.53% 0.61% 0.68% 0.75% 0.81% BEV 0.21% 0.33% 0.43% 0.51% 0.61% 0.71% 0.78% 0.85% 0.91% 0.97% FCV CNG 3.15% 3.68% 3.65% 3.62% 3.59% 3.59% 3.58% 3.6 3.62% 3.63% LNG 0.56% 0.68% 0.71% 0.73% 0.77% 0.81% 0.86% 0.89% 0.94% 0.99% PAGV 0.64% 0.75% 0.8 0.85% 0.91% 0.98% 1.05% 1.11% 1.18% 1.25% With regards to registered vehicles, gasoline and diesel vehicles account for 36.3% and 61.5% of heavy duty vehicles in 2016. CNG and LNG combine for 1.6% of heavy duty vehicles on the road. By 2025 in the Base scenario, gasoline will yield 0.5% market share, diesel will lose 2% and CNG will gain more than 1., while LNG will yield some of its market share. Other powertrains projected to increase share include diesel hybrids and plug in hybrids, battery electric vehicles and propane. In the Aggressive scenario, gasoline will lose nearly 1% by 2025, diesel will give up 2% and CNG will gain more than 1% while LNG will hold steady. Moves in other powertrains will be seen with regards to diesel hybrids and plug in hybrids, battery electric vehicles and propane. 40 FuelsInstitute.org

Figure 37a U.S. Market Share of Heavy Duty Vehicle Registrations (Base Scenario) and Registrations 7 6 5 4 3 2 1 HEV HEV 5% 4% 3% 2% 1% Alternative Powertrain Registrations BEV FCV CNG LNG PAGV Figure 37b U.S. Market Share of Heavy Duty Vehicle Registrations (Base Scenario) 36.29% 36.29% 36.29% 36.26% 36.21% 36.15% 36.06% 35.97% 35.86% 35.75% 61.47% 61.25% 61.01% 60.79% 60.58% 60.37% 60.18% 59.99% 59.8 59.62% HEV 0.1 0.1 0.14% 0.18% 0.2 HEV 0.17% 0.19% 0.22% 0.25% 0.3 0.36% 0.47% 0.54% 0.6 0.14% 0.17% 0.2 BEV 0.19% 0.22% FCV CNG 0.94% 1.1 1.24% 1.37% 1.5 1.62% 1.73% 1.84% 1.95% 2.05% LNG 0.62% 0.61% 0.61% 0.61% 0.6 0.6 0.59% 0.59% 0.58% 0.58% PAGV 0.39% 0.44% 0.46% 0.49% 0.52% 0.55% 0.59% 0.63% 0.66% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 41

Figure 38a U.S. Market Share of Heavy Duty Vehicle Registrations (Aggressive Scenario) and Registrations 7 6 5 4 3 2 1 5% 4% 3% 2% 1% Alternative Powertrain Registrations HEV HEV BEV FCV CNG LNG PAGV Figure 38b U.S. Market Share of Heavy Duty Vehicle Registrations (Aggressive Scenario) 36.29% 36.27% 36.25% 36.21% 36.14% 36.06% 35.95% 35.84% 35.72% 35.58% 61.47% 61.22% 60.95% 60.71% 60.46% 60.23% 6 59.78% 59.56% 59.35% HEV 0.1 0.14% 0.17% 0.19% 0.2 HEV 0.17% 0.19% 0.22% 0.31% 0.37% 0.43% 0.5 0.56% 0.64% 0.1 0.2 BEV 0.2 0.28% 0.32% FCV CNG 0.94% 1.13% 1.3 1.46% 1.6 1.74% 1.88% 2.01% 2.13% 2.25% LNG 0.62% 0.62% 0.62% 0.62% 0.62% 0.62% 0.62% 0.62% 0.62% 0.63% PAGV 0.39% 0.42% 0.44% 0.47% 0.5 0.54% 0.57% 0.61% 0.65% 0.7 42 FuelsInstitute.org

Heavy Duty Vehicles: Canada The heavy duty sector is expected to follow a similar trajectory as the medium duty sector in terms of powertrain diversity. is projected to lose nearly 5% market share in the Base scenario, dropping from 85.3% of sales to 80.6%. is expected to yield less than 1% market share while hybrid diesel and CNG are projected to gain share. In the Aggressive scenario, diesel is projected to lose a little more share, dropping nearly 6% to 79.6% while gasoline does not vary much from the Base scenario. Again, hybrid diesel and CNG stand to capitalize on growth opportunities, with CNG increasing share of vehicles sold from 1.7% to 4.5%. Figure 39a Canada Market Share of Heavy Duty Vehicle Sales (Base Scenario) and Sales 10 8 6 4 2 12% 1 8% 6% 4% 2% Alternative Powertrain Sales HEV HEV BEV FCV CNG LNG PAGV Figure 39b Canada Market Share of Heavy Duty Vehicle Sales (Base Scenario) 11.59% 11.43% 11.49% 11.34% 11.24% 11.2 11.09% 11.04% 10.96% 10.88% 85.32% 85.06% 84.5 83.99% 83.26% 82.56% 82.07% 81.57% 81.1 80.6 HEV 0.14% 0.17% 0.19% 0.2 HEV 0.61% 0.67% 0.78% 1.01% 1.35% 1.47% 1.61% 1.74% 1.87% 1.99% 0.1 0.21% 0.23% 0.25% 0.27% 0.29% 0.31% BEV 0.2 0.27% 0.3 0.34% 0.37% 0.4 0.43% FCV CNG 1.67% 1.89% 2.12% 2.35% 2.59% 2.99% 3.23% 3.47% 3.69% 3.93% LNG 0.3 0.35% 0.47% 0.55% 0.67% 0.77% 0.85% 0.96% 1.07% PAGV 0.25% 0.27% 0.29% 0.31% 0.34% 0.36% 0.38% 0.4 Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 43

Figure 40a Canada Market Share of Heavy Duty Vehicle Sales (Aggressive Scenario) and Sales 10 8 6 4 2 12% 1 8% 6% 4% 2% Alternative Powertrain Sales HEV HEV BEV FCV CNG LNG PAGV Figure 40b Canada Market Share of Heavy Duty Vehicle Sales (Aggressive Scenario) 11.59% 11.37% 11.42% 11.27% 11.16% 11.11% 10.99% 10.92% 10.84% 10.75% 85.32% 84.62% 84.03% 83.48% 82.69% 81.9 81.34% 80.75% 80.18% 79.59% HEV 0.1 0.14% 0.18% 0.2 0.22% HEV 0.61% 0.72% 0.84% 1.08% 1.44% 1.56% 1.71% 1.86% 2.0 2.12% 0.1 0.14% 0.19% 0.3 0.32% 0.34% 0.37% BEV 0.19% 0.33% 0.37% 0.43% 0.48% 0.52% 0.57% FCV CNG 1.67% 2.2 2.45% 2.69% 2.94% 3.39% 3.66% 3.95% 4.23% 4.51% LNG 0.3 0.47% 0.54% 0.63% 0.76% 0.88% 0.97% 1.09% 1.22% PAGV 0.25% 0.28% 0.3 0.32% 0.34% 0.36% 0.38% 0.42% 0.45% With regards to registered vehicles, diesel and gasoline vehicles account for 84.8% and 14.7% of heavy duty vehicles in 2016. By 2025 in the Base scenario, diesel is projected to lose 1.2% market share while gasoline will lose 1.5%. Modest gains are projected for hybrid diesels and CNG, as could be expected from sales projections. In the Aggressive scenario, diesel is projected to lose 2. market share while gasoline drops 1.7% by 2025. Hybrid diesels grow to represent 1.1% of vehicles on the road while CNG is projected to grow seven-fold to capture 2.3% of the market. 44 FuelsInstitute.org

Figure 41a Canada Market Share of Heavy Duty Vehicle Registrations (Base Scenario) and Registrations 9 8 7 6 5 4 3 2 1 5% 4% 3% 2% 1% Alternative Powertrain Registrations HEV HEV BEV FCV CNG LNG PAGV Figure 41b Canada Market Share of Heavy Duty Vehicle Registrations (Base Scenario) 13.85% 13.56% 13.32% 13.1 12.9 12.72% 12.55% 12.4 12.25% 12.11% 85.09% 85.08% 85.0 84.89% 84.72% 84.51% 84.28% 84.04% 83.79% 83.52% HEV 0.1 HEV 0.3 0.35% 0.4 0.47% 0.57% 0.66% 0.75% 0.84% 0.94% 1.03% 0.1 0.14% BEV 0.1 0.17% 0.19% FCV CNG 0.3 0.5 0.68% 0.87% 1.05% 1.24% 1.44% 1.63% 1.82% 2.01% LNG 0.18% 0.21% 0.25% 0.29% 0.34% 0.38% 0.43% 0.48% PAGV 0.27% 0.27% 0.28% 0.29% 0.3 0.31% 0.32% 0.33% Tomorrow s Vehicles: A Projection of the Medium and Heavy Duty Vehicle Fleet Through 2025 45

Figure 42a Canada Market Share of Heavy Duty Vehicle Registrations (Aggressive Scenario) Alternative Powertrain Registrations 9 8 7 6 5 4 3 2 1 5% 4% 3% 2% 1% Alternative Powertrain Registrations HEV HEV BEV FCV CNG LNG PAGV Figure 42b Canada Market Share of Heavy Duty Vehicle Registrations (Aggressive Scenario) 13.85% 13.56% 13.31% 13.08% 12.87% 12.69% 12.51% 12.35% 12.2 12.06% 85.09% 85.03% 84.91% 84.75% 84.53% 84.28% 84.01% 83.72% 83.41% 83.09% HEV 0.1 HEV 0.3 0.35% 0.49% 0.59% 0.69% 0.79% 0.89% 0.99% 1.09% 0.17% BEV 0.18% 0.21% FCV CNG 0.3 0.53% 0.75% 0.96% 1.17% 1.39% 1.61% 1.83% 2.05% 2.27% LNG 0.19% 0.23% 0.27% 0.32% 0.37% 0.43% 0.48% 0.55% PAGV 0.27% 0.28% 0.29% 0.3 0.31% 0.32% 0.33% 0.34% 46 FuelsInstitute.org