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Doowon Cha
Director, CHA Mobility Research Institute
Americans’ Obsession with Pickup Trucks
Americans are obsessed with pickup trucks. According to Cox Automotive, an American vehicle sales, service, and evaluation company, the total sales of pickup trucks in the United States in 2020 are about 2.93 million units, surpassing for the first time the sales of non-luxury passenger cars at 2.83 million units.
Five of the 10 best-selling vehicles in the U.S. in 2020 are pickup trucks. In the first half of 2021, 1.52 million units of pickup trucks were sold, approximately 15% more than the sales of 1.32 million in the first half of 2020. Pickup trucks have strong growth momentum, despite decreased vehicle sales due to COVID-19 and a shortage of automotive semiconductors.
Why are Americans so obsessed with this type of vehicle? One of the best features of pickup trucks is their open cargo area. Although in the past, farmers and merchants used the first pickup trucks mainly for their spacious cargo space, the pickup truck became popular as a multipurpose family vehicle with many advantages.
In the U.S., most pickup trucks have gasoline engines, allowing them to go fast and offering comfort with low vibration and noise comparable to passenger cars. In addition, they boast ample interior space and excellent visibility when driving due to their height for a comfortable driving experience. They are great on rugged roads when carrying heavy loads. Thanks to its many attractive features, the pickup truck became the most famous American vehicle. Also, the rising demand for camping and RVing due to COVID-19 has contributed to the pickup truck’s growing popularity.
In fact, 85% of pickup trucks sold in 2020 are crew cab or extended crew cab pickups, which are five-seater pickups with four doors like regular passenger cars. This shows that pickup trucks are gaining ground as family vehicles. Pickup trucks are currently competing with luxury SUVs rather than with regular passenger cars. As the pickup truck is increasingly equipped with luxury interior and various advanced features, sales continue to increase despite the price now at $50,000, or 40% more than 10 years ago.
The Comeback of HUMMER as an Electric Vehicle and LG Energy Solution’s Battery
In the U.S., pickup trucks are entering a new electrification phase at the height of their popularity. Several brands choose to electrify pickup trucks in response to calls for carbon reduction, environmental protection, and better economic feasibility in light of recent oil price hikes. Electric pickup trucks from GMC (a brand specializing in SUVs and pickup trucks under General Motors), Ford, Stellantis, Tesla, and Rivian have made electric pickup trucks their flagship models. The most noticeable vehicle is the electric version of GMC HUMMER EV, dubbed “Super Truck.”
HUMMER started as Humvee, a high mobility multipurpose wheeled vehicle (HMMWV), famous for military purposes. The Humvee was created in 1983 when the U.S. Department of Defense signed a contract with AM General Corporation to produce 55,000 military vehicles. Later, Humvee was launched for civilian use in 1992 and was called HUMMER.
Then, in 1999, General Motors (GM) purchased HUMMER’s sales and distribution rights from AM General. GM launched later models – the H2 in 2002 and H3 in 2005. HUMMER was made lighter from 10,000 lbs to 8,600 lbs and 5,800 lbs, respectively, and fuel economy has also improved from 10 miles per gallon to 16-20 miles per gallon for the H3 model. However, due to sluggish sales in 2006, the production of the original HUMMER had to be stopped. In 2008, HUMMER was hit hard by the global economic crisis, rising gasoline prices, and increasing environmental issues.
Then, in January 2020, GMC released a teaser on its YouTube channel featuring the new HUMMER EV, and the revival of HUMMER as an electric vehicle drew significant attention. The HUMMER EV is GMC’s first pure electric pickup truck manufactured with Ultium, GM’s electric vehicle dedicated platform. The EV model was produced at Factory Zero, a plant in Detroit dedicated to producing electric vehicles. Starting with HUMMER EV Edition 1 in December 2021, follow-up models will be released continuously, including HUMMER EV 3X in the fall of 2022, HUMMER EV 2X in the spring of 2023 and HUMMER EV2 in the spring of 2024.
As part of the HUMMER EV’s innovation, it is equipped with GM’s Super Cruise, the world’s first true hands-free driving system for the freeway, and Crab Mode, a four-wheel steering mode that allows the truck to slowly move in a diagonal direction, shifting the front and rear wheels at the same angle. In October 2020, 10,000 units were pre-ordered and sold out in 10 minutes.
The GMC HUMMER EV is also equipped with an ‘Ultium Battery’ produced by Ultium Cells, a joint venture between LG Energy Solution and GM. The Ultium Cells made with nickel-cobalt-manganese-aluminum (NCMA) cathode is an 800-volt high-capacity battery system of up to 350 kW. HUMMER EV is powered by electric energy generated from these batteries and receives its propulsion power through Ultimate Drive, an EV drive unit developed by GM. HUMMER EV has exceptional quality and energy efficiency among pickup trucks in its class. It is equipped with three motors that produce 1,000 horsepower, go 0 to 60mph in approximately 3 seconds, and go nearly 100 miles on a 10-minute charge and 350 miles on a single full charge.
The Future of the Pickup Truck Market and the Battery Industry
The pickup truck market is expected to continue to grow in the future. According to market research firm 360 Market Updates, the global pickup truck market size is expected to increase from $166.2 billion in 2020 to $207.7 billion by the end of 2026. The annual growth rate (CAGR) is projected to be 3.2 between 2021 and 2026.
There are several growth factors. As the HUMMER EV case shows, pickup trucks are also transitioning towards electrification to respond to the changing times. With EV, there is no need to replace fuel, spark plugs, fuel filters, and other consumables. HUMMER EV is 35% cheaper to operate and maintain than internal combustion engine trucks, especially diesel trucks. In addition, the $1 trillion bipartisan infrastructure bill signed by President Biden in November 2021 to combat climate change includes an investment of $7.5 billion to install more than 500,000 EV charging stations by 2030. The move is expected to play a positive role in the spread of pickup trucks.
Such advances in battery technology are expected to impact market growth significantly. The battery pack is one of the core components of electric pickup trucks. Since the battery pack accounts for a large portion of the total drivetrain cost, it significantly impacts the truck’s price. Since the battery pack price is determined by technology, including the energy-to-weight ratio of the chemicals used in electrochemical cells, battery life, and charging time, the development of battery technology is critical in lowering the price of electric trucks and driving the market.
Thanks to the growth of the electric vehicles market, the demand for batteries continues to rise, and the battery industry can realize economies of scale. As a result, the proportion of battery cost to the cost of producing electric vehicles is expected to drop to some extent. Ultium Cells, which produces HUMMER EV batteries, is a joint venture established by LG Energy Solution and GM in 2019. The two companies each invested KRW1 trillion in equity, totaling KRW2.7 trillion. Currently, in Rosetown, Ohio, Spring Hill, Tennessee, and Lansing, Michigan, factories are under construction. Their battery production capacity is expected to reach over 120 GWh in the future. This capacity is enough to produce 1.5 million high-performance pure electric vehicles with a 500-km range on a single charge.
LG Energy Solution and GM are building various strategic partnerships. As LG Energy Solution is actively expanding its facilities and realizing economies of scale, it is expected to increase its market share gradually. This is why LG Energy Solution and GM are expected to play a leading role in the pickup truck and global electric vehicle markets.
※ This column was written based on the writer’s views and does not necessarily reflect the opinion or strategy of LG Energy Solution.