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Volkswagen AG's (OTC:VWAGY) TRATON Group, which soon will be the parent of Navistar International Corp. (NYSE:NAV), will spend $1.9 billion on truck electrification by 2025. Some of that money could help Navistar advance early battery electric and hydrogen fuel cell programs.
TRATON earlier committed to spend $1.2 billion on electric mobility by mid-decade.
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"TRATON is setting a clear focus on electric trucks," TRATON CEO Mattias Gründler said in a press release Monday. "This transition will not happen overnight. It will be gradual, sustainable and in line with the required network [infrastructure] expansion."
As it increases investment in battery-electric and fuel cell commercial vehicles, TRATON will trim spending on traditional powertrains. Less than one-fifth of product development dollars will be spent on conventional drives.
Consistent with Volkswagen electrification play
The moves are consistent with TRATON's parent Volkswagen, which said last week it will build six gigafactories in Europe by 2030 to make batteries for electric cars. VW said in November it would spend $86 billion on electrification over the next five years.
Electric vehicles will make up about 10% of TRATON's Scania brand in Europe by 2025. Half of its MAN subsidiary's new buses will be battery electric by 2025. Half of Scania's vehicles will be powered by electricity by 2030. Sixty percent of MAN delivery vehicles and 40% of its heavy-duty trucks will use zero-emission technologies by then, TRATON said.
TRATON did not mention Navistar in its release. Its $3.7 billion takeover approved by Navistar shareholders on March 2 is undergoing regulator approvals.
Could Navistar programs get a boost?
Navistar and TRATON cooperate on powertrain development. An electric truck will be among the first vehicles built in a new Navistar plant in San Antonio scheduled to begin production in spring 2022. Navistar is also planning electric versions of its IC buses.
Navistar will build a medium-duty electric truck based on its MV Series. It has a fuel cell demonstration program with Cummins Inc. (NYSE:CMI) to make a heavy-duty hydrogen-powered truck for Werner Enterprises (NASDAQ:WERN).
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In a recent four-way collaboration with General Motors Co. (NYSE:GM) and a privately held hydrogen supplier, OneH2, Navistar trucks will be retrofitted with fuel cells that J.B. Hunt Transport (NYSE:JBHT) will use on dedicated routes in 2024.
Once Navistar is under TRATON's umbrella, some of TRATON's dedicated electrification money could help Navistar scale the program.
TRATON CEO skeptical about fuel cells
But fuel cell trucks have a major drawback compared to battery-electric powertrains — just one-quarter of the energy produced is used to power the truck. The rest is lost in making the hydrogen, Gründler said.
"TRATON's main focus is on battery-electric trucks," he said. "Most of the time, pure electric trucks will outperform their hydrogen counterparts as the more cost-efficient and eco-friendly solution for trucks, especially long-haul trucks."
On that, other truck makers disagree. For example, TRATON competitors Daimler Truck and Volvo Group formed a joint venture to make hydrogen-powered fuel cell trucks in the second half of the decade.
The argument for fuel cells is that long recharging times for battery electric trucks make them less ideal for over-the-road trucking. They are best suited to local and regional hauling where return-to-base overnight charging saves money. And it all but eliminates range anxiety, the fear of being stranded with a dead battery.
Gründler contends the profitability of electric trucks and amortization of their costly batteries is tied to constant, heavy use. Fuel cells, he said, are appropriate where hydrogen from renewable sources, such as wind, is plentiful and cheap.
Related articles:
Navistar, GM and J.B. Hunt collaborate on fuel cell trucks
Navistar will build electric trucks at new plant in Texas
Shareholders greenlight Navistar $3.7B merger with TRATON
Click for more FreightWaves articles by Alan Adler.
27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.