Daimler  Truck division is planning  to further cut costs to counter weakening global demand and to cope with the financial burden of investments in new technologies like electric and self-driving vehicles.

“We want to and will permanently cut our costs. This is why we intensified our efficiency measures,” Daimler truck chief Martin Daum said

Daum is targeting around 550 million euros ($596 million) in savings in Europe by the end of 2022 while separate measures are also being planned in markets including Brazil, he added.

Daimler,  the world’s largest maker of commercial vehicles is set to spend around  1.7 billion euros this year and the same again next year, on developing future technologies, including widening tests with self-driving trucks on public roads in the U.S. along with Torc Robotics.

Daimler’s truck division earning as before interest and tax (EBIT) fell 11 per cent to 2.46 billion euros last year as sales declined 6 per cent to 488,500 commercial vehicles, mainly due to waning demand in Europe and Asia.

The company’s operating profit margin shrunk to 6.1 per cent from 7.2 cent  in 2018.

Martin Daum is bracing for another 1.1 per cent contraction in profitability in 2020 to 5 per cent, excluding potential “material adjustments” related to legal proceedings or restructuring. The goal for 2022 is a margin of at least 7 per cent if if market conditions remain stable, according to Daum.

Daimler shares fell 2.2 per cent  on the back of Daum’s comments, valuing the company at about 46 billion euros – ironically almost two-thirds lower than Tesla’s market capitalisation.

Alongside traditional rivals Volvo and Traton, Daimler faces potential competition from Tesla  and Nikola  in electric trucks, however Daum says the main competitive pressure comes from customer demands rather than new emerging rivals.