Global business media publisher Bloomberg has questioned the speed which major European truck manufacturers are moving at in their quest to achieve ambitious zero emission truck targets pursuing
Bloomberg says that while the world’s biggest truck makers have set ambitious targets for battery-electric and fuel cell trucks and buses. the lofty goals are looking a long way off considering where the major truck makers are in terms of volume and overall share for their current zero emission ranges.
The world’s largest truck maker Daimler zero emission trucks and buses will make up 60 per cent of its Europe sales by 2030 but at present they make up only around 0.3 per cent of its overall production. Similarly Traton and Volvo are pushing for zero emission vehicles to account for 50 per cent of their respective sales in Europe but at present Traton across its three brands, Scania, MAN and Navistar registered 0.3 per cent of itehir combined total volumes while at Volvo things are marginally better with zero emission currently making up 0ne per cent of the Swedish brand’s overall sales.
The Bloomberg report put the task ahead for the thee major truck makers in sharper focus with the three corporations between them currently accounting for about 25 per cent of the World’s total annual truck market of 4.5 million medium and heavy duty trucks.
The media company points out that since it is currently only about half a product cycle away from that 2030 goal line the size of transformation task ahead is going to be major challenge and certainly unique in the sector’s history.
Traton says it is expecting to spend around $AUD 4.34 billion (€2.6 billion) on electrification for the six years up to the end of 2026, which is about the same as Triton’s average annual R&D and capital expenditure budget of the past seven years.
That clearly won’t be enough to meet the task of electrification ahead and in fact Daimler has vowed to commit the “vast majority” of its R&D budget on zero-emission technologies by 2025. Daimler’s R&D spend last year was around $AUD 2.68 billion (€1.6 billion)
While Bloomberg’s predicts that the combination of the small electric truck market at the moment and the substantial investment required will make for some very challenging years ahead for the commercial-vehicle manufacturers, some still believe that the established corporations have a clear advantage over the start up makers like Tesla and Nikola, because the likes of Daimler, Volvo and Traton all have the still strong revenue streams from their conventional ICE powered trucks and buses rolling in to underpin the massive R&D spends.
While that is the case, the car industry has found that a similar transition has been tricky for it and it has a head start of several years on the truck industry.
The truckmakers have apparently learned some lessons from the car industry it seems, focusing primarily on markets with the strongest policy support for zero-emission trucks, and on customers with the highest willingness to pay.
According to BloombergNEF data, at least 60 policies specifically targeting the zero emission truck sector are already in place in China, the US and European markets and in several cases, governments are offering simultaneous support for both producing and purchasing clean vehicles.
As has been witnessed here in Australia buyers currently purchasing zero emission trucks are large fleets, in the ilk of Linfox, Team Global who have their own specific decarbonisation targets and overseas the larger fleets are also likely to have in some cases assign a price on their CO2 emissions. Certainly smaller fleets which are operating on less capital and sharp margins have less motivation at this point in time to commit to zero emission, particularly here in Australia where government incentives are thin on the ground.
However with the big fleets and early adopters even with subsidies of the early market may not be enough alone, to enable the truckmakers to meet the goals they’ve set themselves by the dawn of a new decade.
The companies are all increasing their effort to develop their own battery technologies and manufacturing, as well as working to achieve economies of scale in production. Daimler, MAN and Volvo have all established battery-assembly plants. Volvo is also set to build battery-cell manufacturing capacity in Europe towards the end of the decade, while Scania is developing advanced batteries in collaboration with battery maker Northvolt.
The reality is that most established manufacturers have yet to prove truly their technical competencies with batteries and electric motors, let alone reaching high production volumes.
By contrast many newcomers in the electric vehicle sector demonstrate the benefits of a more vertically integrated business model. For instance the US based Tesla and China’s BYD have built know-how and large manufacturing bases on the back of rapidly expanding passenger-car businesses and as mentioned they are transferring those capabilities to electric trucks.
This may be difficult feat for other start up electric manufacturers to replicate. Daimler and Traton have both been spun off from major well established automotive groups Traton from VW , which still owns around 90 per cent of the truck operation, and Daimler from Mercedes Benz which has a 35 per cent stake in the truck subsidiary.
Bloomberg points out that in the next few years, truck manufacturers will invest in several zero-emission propulsion technologies and their supply chains, while trying to maintain the profitability of legacy operations. Many also plan to establish new service businesses and develop autonomous technologies.
All that is big change for an industry used to long lifecycles and a cyclical business environment and as Bloomberg says we could be in for a bumpy ride.
