German-based Traton Group, completing its merger with Navistar as of July 1, is now turning its attention to the Chinese truck market – and to truck electrification.
With the completion of the Navistar merger, Traton said in a news release, the company formerly known as Volkswagen Truck & Bus is entering the final stretch of its Global Champion Strategy.
North America represents 35% of the global profit pool. With the Navistar acquisition, Traton Group will grow by around 30% in terms of sales revenue. (Traton’s brands include Scania, MAN, Volkswagen Caminhoes e Onibus, and RIO – and now International.) The purchase price for Navistar was approximately $3.7 billion.
Navistar said in a news release that as part of Traton, it will be in a better position to meet the growing requirements of the market and to improve its customer offerings, especially in the areas of electric mobility and autonomous driving.
The two companies have been collaborating for several years already. In 2016, Volkswagen and Navistar forged a “wide-ranging strategic alliance,” with VW buying a 16.6% stake in Navistar. The two OEMs said they would act as partners to share technological developments, especially regarding powertrains, and to pursue global sourcing opportunities to increase economy of scale. In early 2017, Navistar unveiled the International A26 engine, based on the crankcase of a D26 engine from VW brand MAN.
A year later, in 2017, the companies announced plans to develop a proprietary, integrated powertrain; a common connected vehicle and cloud platform; and an electric-powered Class 6/7 truck. And in fact Navistar revealed a prototype for a battery-electric drive version of its International MV medium-duty truck, dubbed the eMV, in late 2019 during the North American Commercial Vehicle Show. At the time it expected it to come to market in 2021.
“Over the past five years, Navistar and the Traton brands have worked very well together, and it is exciting to become now part of the global Traton Group,” said Navistar President and CEO Persio Lisboa in a news release. “Our common understanding of the future of transportation and our joint heritage create a very solid basis for our common way forward. The transport industry is changing rapidly. And together we will shape this change – for the sake of our customers. The Navistar team is ready for the next step of collaboration.”
Traton in China
Next up? China, the world’s largest commercial vehicle market.
“Right now, we are analyzing the best ways we can single-handedly leverage our brands’ potential there,” said CEO Matthias Gründler. “Chinese fleet customers are increasingly looking toward higher-end vehicles. They are expecting more and more in terms of efficiency and safety. We want to meet this demand.”
Traton’s brand Scania is building a plant northwest of Shanghai, with series production scheduled to begin next year. This will make Scania the first Western truck manufacturer to have fully independent production in China, according to the company.
The China facility also will house research and development activities. The plan, Traton said, is to create a new technology hub for digitalization. As part of its future strategy, Traton also wants to broaden its business base and open up new areas of activity, playing an even bigger role in shaping transportation “beyond iron and steel,” Gründler said. “We want to create new business models and partnerships that add value. We are expanding our perspective on logistics and digitalization.”
Traton's Last Conventional Drivetrain
Traton’s new 13L common base engine (CBE) will be “the last conventional drive to be developed by the traton family and its brands,” explained Gründler, as the company pivots to electrification. The CBE is set to be installed in Scania vehicles in Europe starting early next year. “After that, we will be taking the engine over to Latin and North America,” he said. MAN will use it beginning in 2024.
Gründler said with this engine, Traton is “building bridges to the future, which will clearly be shaped by battery-electric commercial vehicles. It is highly efficient. Which makes it an eco-friendly solution while electric trucks still have a higher total cost of ownership than diesel ones.”
Its modular system for electrified drives has been on the road since 2020, initially in city buses. Scania began series production of its first electric truck in September, with a range of 250 kilometers. Scania also offers a plug-in hybrid truck that can travel 60 kilometers on electricity alone.
“We want to become an electric leader,” Gründler said, massively increasing spending on research and development relating to electric mobility. Traton plans to spend 1.6 billion euros (nearly $1.9 billion) in this area by 2025.
“To make that happen, we are systematically shifting our development spend away from conventional drives. And we are placing a clear emphasis: for a long time, it looked like the race for alternative drives was anyone’s game. Now, a clear favorite is emerging: battery technology.”
Since 2010, he explained, the kilowatt-hour price has been dropping much faster than predicted, meaning the total cost of ownership of electric trucks will quickly fall below that of their diesel counterparts.
“Electric vehicles are also cheaper to maintain and repair. This means they may already be more appealing than diesel trucks in terms of their total cost of ownership in 2025. By 2030, even a double-digit percentage saving is feasible – a crucial advantage in an industry like transportation, where margins are low.”
Ultimately, he said it is up to the customers, but “batteries will soon have the edge in virtually all applications. Even compared to fuel cells. For the foreseeable future, battery-powered vehicles will be cheaper – especially in terms of their energy costs. Plus, three-quarters of the output energy is used to power the drive. For Hydrogen-powered vehicles, it is only a quarter.”
This is a different strategy than that recently announced by competitor Daimler Truck, which is developing both battery-electric and fuel-cell electric vehicles and believes that in the long run, battery-electric alone is not a feasible way to meet zero-emissions goals.
The biggest challenge, Grundler said, is charging infrastructure. “The biggest task is to establish a powerful, cross-border rapid-charging infrastructure for long-haul transportation by 2025. This requires an enormous collective effort on the part of industry and policymakers, and we need to make a start on this here and now.”
Gründler said the electrification efforts is one way Traton is preparing to face the industry’s future challenges.
“You know the environment we are operating in: the overarching climate targets have been defined for the EU and for Germany. Here in Europe, we have to reduce our CO2 emissions by 55% by 2030. A target of minus 65% is even likely for Germany. Digitalization is continuing to gain momentum: with the pandemic putting wind in its sails. Automated driving is becoming reality.
“Our main goal: we seek to balance the needs of human beings, the environment, and the economy in everything we do. This is something we call the People, Planet, and Performance triad. We are devising a new strategic course to do just that.”
Updated July 1, 10:30 a.m. EDT, to add comment from Navistar.