Electric cars

Daimler truck chief warns electricity cost will be ‘ever higher’

Daimler truck chief warns electricity cost will be 'ever higher'

The cost of building a battery-powered truck will ‘always be higher’ than a combustion-engined equivalent, the boss of the world’s largest truckmaker has warned, as war in Ukraine accelerates an already rapid rise in the prices of essential raw materials.

“If you take the whole engine, transmission, axle, tank system, cooling . . . ” Daimler Truck CEO Martin Daum told the Financial Times, “we have a maximum around €25,000 [of material in a combustion engine truck].”

“How much battery do you get for $25,000?” Even if [battery costs fall to] €60 per kilowatt hour, and I need 400 kilowatt hours, then I need €24,000 just for the battery cells [in a single truck]”.

He added that it would be up to governments to make up the difference, using whatever mechanism they chose. “Without any subsidy. . . the price of one [electric] truck will always, forever be higher than a [combustion engine] a truck.”

Daum’s comments come after Daimler Truck, which was an early entrant into the electric market and has been manufacturing battery-powered vehicles since 2017, announced it had more than tripled truck sales and zero-emission buses last year, for a total of 712.

However, this is only a fraction of the 455,000 trucks and buses the company delivered in total in 2021.

Its eActros long-haul model, which went into series production last year, still costs three times the price of its combustion engine equivalent, and that gap is not expected to narrow significantly in the near future.

The cost of the main raw materials used in modern batteries has risen sharply over the past year, with the prices of cobalt and lithium more than doubling and nickel climbing nearly 40%, according to IHS Markit.

As a result, battery prices, which have fallen to an average of $132 per kilowatt-hour in 2021, according to a survey conducted by BloombergNEFare expected to stay above the $100 level until at least 2024.

Daum, who like other industry bosses has called for a carbon tax to reduce the cost gap between combustion-engined trucks and battery-powered models, said he nonetheless backed the German government efforts to help businesses cope with soaring diesel costs.

“We have to increase the price over time,” the executive said, “we can live on two or three euros a liter, but we can’t live if it happens overnight.”

Daimler Truck, whose long-standing strategy is to pursue both battery-powered and hydrogen-powered trucks, could focus more on the latter if battery costs continue to soar and commodities remain in short supply, said added Daum.

In the fuel cell, we have far fewer rare raw materials,” he said, “and we are not competing with millions of passenger cars for the same material.”

Daum praised German Economy Minister Robert Habeck for signing an agreement with Qatar Last week for the delivery of hydrogen, as well as for the supply of liquefied natural gas.

But he criticized antitrust authorities in Brussels for dragging their feet when it comes to approving a joint venture between Daimler and its main rivals Volvo and Traton, which will spend 500 million euros to develop a network of 1,700 charging points for trucks in Europe.

We are ready to invest the money,” he said, “we have someone ready to take on the role of general manager and she can’t do it because we don’t have the approval.

This should have been done three months ago. We should have been operationally up and running.