Hello, and welcome to our TRATON GROUP webcast on current developments in the battery electric commercial vehicle market. There could be no better day for our discussion on this sustainable vehicle technology, 'cause today, we also celebrate Earth Day. As the transport industry is a major contributor to greenhouse gas emissions, reducing the carbon footprint of truck and bus fleets also will contribute to a cleaner future, and it also offers opportunities for fleet owners. The first 10,000 electric haulage trucks alone could save up to 1 million tons of CO2 annually. So on our agenda today: unveiling the value, why electrifying fleets is more than just green. Navigating the customer journey, defining a path to success. Empowering operators, training and service in the electric age. Collaboration for impact, the power of long-term partnerships.
Joining us for our discussion today, our panel speakers from the TRATON GROUP and our brands, Andreas Kammel, Vice President for Alternative Drivetrains at the TRATON GROUP, Stefan Sahlmann in the U.S., Vice President EV Solutions and Activation at Navistar, and previously Vice President, Head of MAN Transport Solutions at MAN Truck & Bus. And last but not least, Fredrik Allard, Senior Vice President, Head of E-Mobility at Scania Group. Welcome.
Thank you.
Thank you.
So, for you watching, following our panel discussion, we will have a Q&A session, so feel free to send in your questions via the chat function. So now let's kick off our discussion. As I already mentioned, the transformation of the transportation is not only a green endeavor. The shift to electric vehicles in the transport sector also... Electrifying vehicle fleets means changing the rules of the game, which is never easy. In this case, we have to overcome various challenges. One of them is the initial cost of transition. The cost of battery electric vehicles is often seen as a key barrier for a broader adoption. Andreas, do fleet operators really face higher operational costs with the battery electric trucks?
I would argue, done right, it can be quite the opposite, actually, especially in intensively used applications like long haulage. Of course, upfront cost is going to be higher. We see that on the screen as well. That's mostly due to the battery cost. But in haulage, total cost is dominated by energy cost, by driver cost, all these operational expenses that we accrue over time. So especially in an intensively used application, this is what dominates the cost picture. And then, of course, importantly, electricity is cheaper than diesel, and that means that in the end, especially in those applications, we have a significant cost advantage by going electric. So basically, the idea is just to use the product intensively enough, and so we can only encourage all of our customers to just use it, to use it to its fullest.
Of course, we are more than happy to offer our support there with our consulting services.
So the transportation industry already operates on a really thin margin, so higher purchasing costs add another financial burden for our customers. This also means that financing options are more important than ever to make the transition viable. Fredrik, what are Scania and the TRATON GROUP doing to support our customers there?
Yeah, to start with, I would say that electrification... With electrification, it's really important that we are offering total solutions to our customers. And, the financing part of that is one integral part of a total solution. And, we often talk about financing as the glue, putting all the other parts together. So I mean, you basically need an electric truck, you need an R&M contract, you need a superstructure, and you need... We are offering that. Scania has been offering financial services for more than 20 years, and we are— the Scania Financial Services on last year is stepping over and became TRATON Financial Services, giving the same services for all the brands.
Basically, there are two ways that it's not something on the side, that it's it really comes together with the other part of the solution. Another partly new thing is the insecurity of the residual value, of course. When financing something, you need to know what is it worth after a few years in operation. And here, it's us from the OEM that could support and give the real, best input in what is the value of a used electric truck. Because we are exploiting our history of giving or offering financial services to your customers. Stefan, can you elaborate a little about that?
Yeah. Thank you, Fredrik. Absolutely correct. Navistar Financial Services was relaunched October last year under TRATON Financial Services, but as you already mentioned, the brand has a very strong background acting in the market over 75 years. If you... You can imagine how the transport industry has changed over this long period of time, and this was only possible with the flexibility, always offering the best customized financing solutions to our customers. As you already mentioned as well, now moving into this new era of BEV, the financing demand for the vehicles, but also for charging infrastructure, is even increasing and getting bigger. Therefore, our record of success gives us the confidence that we will be able to offer always the best-tailored financing solutions to our customers.
That the backing of TRATON, our customers can really have the faith that we have the financial strength to support them during this transition of fleet electrification. This will give our customers the security for a long-term relationship, and the faith that we will be able to support them, and this will also help the loyalty that our customers will purchase further vehicles here in our brands.
So getting the financing sorted is one of the important steps where we help our customers to get ahead of the game. Andreas, what other factors do they need to consider when they, yeah, want to transition to BEV?
I would definitely say charging. Charging is going to be the main barrier, especially from a time perspective as well. Batteries, in comparison, can be amortized rather quickly, if you, again, the point from before, use those trucks intensively enough. But charging, of course, has to be there, and within the realm of charging, the big game changer is going to be MCS, Megawatt Charging, an upcoming standard that allows us to go for something like a 45-minute recharge just during the mandatory rest period. And that, of course, means that our batteries can be smaller, cheaper, more lightweight, with all kinds of advantages. It means we don't have the payload issues we might otherwise incur in long haulage. It means we don't have the charging time losses
And of course, it means we get the full energy cost advantage that makes this business case so great, with just half or a bit more than half the battery size. So it's almost like cheating. But of course, it takes time to get there, and of course, two conditions have to be met. First of all, the infrastructure has to be there, and secondly, the infrastructure has to be cheap enough. And this is where some preconceptions come in from time to time, where we see some players out there expect prices to be quite high, but they don't need to be. And there are a couple of reasons behind this. The first reason is utilization is going to be much higher than it is, for example, for passenger cars. Many of those comparisons, what it should cost, they come from the passenger car side in the end.
And the second is, of course, the costly part is the grid connection. If you have that, you can use that more intensively. With trucks, then you can get to a point where you're looking at maybe adding overnight charging on top. So you've got the overnight charging, and you've got that high, intense usage with no, like, vacation periods to cater to. Basically, almost equal usage between Mondays and Saturdays. And last but not least, when it comes to that public charging, you've got a lot of flexibility on top. Flexibility, meaning you go with your chargers where the grid is cheap, where the land is cheap.
So all of this combined means prices are not quite as high as we would expect them to be, and that is crucial, because then, of course, the trade-off is worth it to go for a smaller battery, but for more charging instead.
Mm-hmm. You already mentioned that the uptime is important, that the truck is always running, that we have to utilize this. Different to a passenger car, you probably can't just go and stop somewhere and plug the charger in and charge your vehicle. I guess a charging strategy is also really important?
Yeah, and maybe there are different ways to separate this into different regimes or archetypes. One of them could be to maybe look at something like public versus private charging on one axis. Think of it like as en route versus on-site, and the other axis then being more fast versus slow. And if we start with maybe the fast and en route part of things, we see this on the screen as basically number two in here. That is based on MCS. That's exactly where we need those super high power chargers for something on the order of 1 MW, and typically aimed at that midday rest period, those 45 minutes or less that they have to do every 4.5 hours, our drivers, anyway.
So that is the key enabler for long-distance applications, and it can also be something that can help if, for example, private depot build-out is not as fast as we would like to see it, because those depots are where they are. Sometimes it can be easier, sometimes it can be harder to build them out. But that would be, of course, the main archetype, the usual archetype. Looking at those on-site depots, slow overnight charging, typically on the order of... It can differ quite a bit, but on the order of 100 kW. And there we are talking about, basically the main archetype for almost every application out there. And then if we talk about the other two sides of that two-by-two matrix, if you think about the two characteristics, on-site versus en route and fast versus slow, then we have on-site fast.
That could be logistic hubs, that could be destination charging, for example, while loading, while unloading. That can be a bit quicker than the overnight charging, but it will, in many cases, not be at around 1 MW. Can be 1 or 2 hours, for example. And then the last archetype, this comes handy when we already have the grid connection for those fast chargers en route. We can add the slow charging, the overnight charging, at rest bays, of course, as well, with the same grid connection behind it. So that's typically the same kind of charging power as you would get in a private depot overnight as well, just in a public space.
Mm-hmm. So you have told us why intensively used applications are such a good business case for BEVs, but that's not the only reason why we at the TRATON GROUP focus on this strategy.
No, it's of course also because of the emissions. So we do have sky-high efficiency with battery electric vehicles compared to basically every other application. Even if we just go for the electricity mix, we are talking about something on the order of 50% reduction potential today, even including the amortization of the battery, the CO2 footprint of the battery. Simply because the truck is being used so intensively, that CO2 footprint is not that immense in the end, relatively speaking. And of course, that's not the intent. We don't attempt to go for the mix. We go for green electricity, and with that, the effect is much more pronounced. Nothing comes even close. So as you mentioned, the first 10,000 trucks in heavy duty, they can already save up to 1 million tons of CO2 annually.
Mm-hmm.
But of course, ultimately, where we think the most of pressure comes into the market is simply by this being cheaper, by this exerting margin pressure. It's not just down to TCO parity, it's when we are a couple of margins beyond TCO parity, that we expect there to be the most of pressure in the market. Because at some point, it isn't gonna be a choice anymore. So, that means we don't see any true alternative to battery electric vehicles. For example, there's always a lot of discussion on hydrogen or other alternatives out there, but that tends to be something that when energy systems are being treated as they are, as coupled, we don't get to a point where we have cheap hydrogen and cheap electricity. Both move in the same direction.
And then, of course, there are different competitive use cases for hydrogen, and some of them may have better business cases, like energy reconversion in a stationary setting, for example. So we don't expect to see a lot of hydrogen in our business. So we don't really have an option B, to be honest. But it also means our option A, luckily, is significantly cheaper and significantly better from an emissions perspective, which is, of course, coupled because efficiency goes into both equations. And so that's what we're aiming for, and that's what, in our opinion, is gonna be the mainstream going forward.
Mm-hmm. But, if BEVs are so crucial, we have the questions, how do we get to the point where we have actually significant uptake? Stefan, from your experience, what is it that motivates customers to make the switch to an electric fleet?
Yeah, in general, I see three main drivers for that. One thing are the sustainability goals. More and more companies are defining sustainability goals for their business, and by doing that, they are seeking for partners and suppliers whose products and services support this journey to decarbonize their business. Second, I see the rapid advancement of the technology. Battery electric vehicle technology is getting better and better with every new generation of batteries. So, the range of the vehicles is increasing due to higher energy density of the batteries. And at the same time, our customers identify there is cost-saving potential, as Andreas already mentioned, with new, this new technology.
For example, recently, a customer near Nashville, Tennessee, told me that he's saving over 50% of the monthly energy cost, just by operating now the new full electric IC school bus compared to the conventional school bus he operated before. And finally, as a key driver, I see the guiding hand of the regulations here, especially in the North American market. So the regulations from the governmental entities mandates not only the vehicle standard for us as OEM, but also they are defining the purchasing of our customers renewing their fleet. And I see the bringing all these three factors together and working together, all stakeholders, will make this success of the transformation of the transport segment.
Mm-hmm. So Stefan, one important-
You also have something?
One important factor you mentioned are the regulations. Fredrik, can you give us some status update on what's the status there in Europe?
Yeah, absolutely. Because I really see that the European Union is taking a leadership in this question, and this is pushing the complete industry. I think that is what we all need, to have the common targets on where we are heading. So if the proposed CO2 targets will be approved, as it seems, very much seems like they will be, it means that from 2019, the European Union asks for a reduction of 45% in the CO2 emissions from the vehicle of new sales at that year. And the same figure then for 2035 is -65%, and then by 2040, -90%.
This goes very much hand in hand with our with the TRATON targets that we have set up, with 50% of volume should be zero emission vehicles by 2030. And it's them pushing the whole industry because, I mean, we need the economy of scale here as well, because what will drive the cost down of the vehicle and the business of the charging is, of course, scaling. So it's very important. And to support this, with these clear targets, we see different member countries of the European Union is supporting this and pushing their transport sector giving incentives, like in Germany and Switzerland, for instance, on the road tolls.
So having a big difference between if you drive a combustion engine truck or if you drive a zero-emission vehicle. So that will really help the business case in the early phase.
So we have all the same environmental challenges, but the regulations vary depending on the area of the world. At the TRATON GROUP, we have four different brands operating in four different markets and with differing customer demands. Andreas, how do we ensure that each brand can meet these individual demands of their region and their customers?
Well, our solution to that challenge is called the TRATON Modular System.
Mm-hmm.
The idea is to have basically globally standardized technologies that allow us to both, leverage those synergies between our brands, but at the same time, also still retain their original regional identities and also be able to be very customer specific in their requirements. It's not just about, of course, the brand, it's also about the customer. We famously don't sell trucks too many times over, but are very much focused on what exactly the need for each customer is, and this will allow us to do so at a large scale across all of our brands globally. At the same time, of course, this comes at a great moment in history, right? It comes right at the beginning of this disruption of electrification, basically making it into the mainstream in the market.
That means that we have a chance now to take the right decisions going forward, to basically have this result in an industry-shaping portfolio.
Thank you, Andreas. I think now it's time to shift our focus to the Heart of Electrification, the customer journey. We already spoke about the fact that fleet operators face a multitude of challenges and considerations when they enter into the electrification journey. Stefan, at Navistar, you are already working very closely with the customers. Can you tell us what the typical pain points and considerations for fleet operators are when they consider to transition?
Yeah, I think the guiding question for most of our customer is: how does the new technology impact my business model? And therefore, Navistar is guiding the customer exactly through all these questions. And, we're just not selling vehicles, rather offering a comprehensive solution to them. And, also from my experience back from this MAN, it's quite similar what we saw here at Navistar. Both brands had a lot of experience, first in the bus business, by electrifying, for example, the MAN city bus for the European market, or on electrifying the IC school bus at Navistar for the North American market, and now transferring this knowledge also to the truck segment. And the customer expect us to partner with them and to identify the best optimal, tailored solution for their specific operations.
That also includes to define the proper infrastructure and the charging concept, considering their operational needs. And we really stay through the complete process with our customer, from the very early consideration about switching to the new technology, the planning phase, the implementation, and beyond. Sitting down with the customer and understanding their concerns, but also their drivers, why they want to change to the new technology, and understanding their short-term and long-term goals, is essential to define the best optimal solution for their fleet electrification. Therefore, our electrification concept we offer at Navistar to our customers is based on telematic data the customer is sharing with us, and based on this data, we are able to analyze their routes and networks in detail and identify which routes can be electrified easily in the first step.
Also, we are defining the charging strategy, considering the availability of the truck and the buses in the depot, and matching with the time slots of low energy prices to improve their energy cost situation as well. Further, you have to consider different environmental influence factors like topography or climate condition that influence also the consumption of the energy, and therefore also define the charging concept. Working this out together with our customers showed us in the past that they are quite positively impressed by this, and they continue working with us on purchasing new vehicle, and in view of this positive experience we had.
But you also work closely with your customers to identify the right financial setup for them, right?
Yes, correct. So in addition to the financial services, Navistar Financial Services offering, when it comes to the investment in vehicles, services and chargers, we also support our customers to identify government grants. And for example, recently we went through the third round of the EPA Clean School Bus Program, and now waiting for the Heavy Duty Clean Vehicle Program to be announced, hopefully by end of this month. And all these different programs, the criteria are changing all the time, and now, therefore, it's quite complex for our customers to navigate through this landscape.
This is exactly where our team is then coming in, and by identifying the governmental grants that are available for our customers, and we do that not only on the governmental level, but also we are identifying incentives based on from the state level or from local authorities. By exploring how these different programs can be stacked, we give the financial support to our customers that they make the switch to EV viable. This is another way how we support our customer, by consulting them in the topic grant identification and application.
Thank you, Stefan. Fredrik, at Scania, you already have customers who run BEVs on the long-haul segment. Are there any experiences that you have or learnings on in the day-to-day operations? How does it change for the fleet operators?
But I mean, the first experience and really fun part of this is that it works. Simply that the feedback from this operation is that you can really drive 350 km in one go, and you can also use the already existing public charging stations that are available. And within, we talked about the Megawatt Charging standard that will be upcoming soon, but already with the 370 that we have possible right now, and with the infrastructure that is available, you can see that within 45 minutes, you can really top up the truck and continue for several hours again. So it works. That's... I would say is the main conclusion. Then, of course, in the early phase, it is to adapt the routes and the planning, and also to have a good charging strategy.
And just as Stefan is into, we are providing that. We are going into the partnership approach, the advisor approach, and using vehicle data of the existing operations, using that to really make a clear plan. How can you change the vehicle? What kind of routes should you start with? What depot charging setup do you need? How much energy do you need on your depot, and where could you charge on the public side? So that is the main, another main conclusion to have a good strategy of how you do this transformation.
Mm-hmm. Thank you. And Stefan, are there any lessons you have learned from rolling out BEV fleets?
Yeah, to be honest, one of the lessons learned I would like to share is that rolling out a battery electric vehicle fleet is different from rolling out a combustion engine fleet, but it's not more difficult. But at the same time, our customers has to consider and be aware of that this process is time-consuming. So it's feasible to electrify a fleet, but it needs a proper planning. And therefore, I just can recommend to our customers that they reach out in the very early phase to their dealers and us as OEMs to talk about their plans, and this can even be years before they plan the start of the operation of electric trucks or buses. It takes time to get prepared for that. And then there are new influence factors as well.
This is another learning I would like to share. So depending on the usage of the truck, the consumption, influenced by the environmental influence factors, the battery configuration, and the charging concept, you have to consider these new charging times in your operational schedule. So therefore, also time is necessary to do this planning and before you start operating. Then there's a complete new topic coming up. It's called interoperability. Interoperability is the means the communication between the vehicle and the charging infrastructure, and even there are standards in the industry defined for that, and it's essential that the customer is ticking that box before he starts operation and makes a proper testing between his individual vehicle and the infrastructure he installed at his site to be assured that the recharge of the battery works well.
But at the same time, we have positive learnings from the market, from our customers. Recently, the VP from Truck Sales, Debbie Shust, shared with me, she said, "Once the drivers get used to the new e-truck, they really start loving it. They say it's so much more quiet, and there are less vibrations compared to vehicles with a combustion engine." So this is really positive feedback and lessons learned from our customer side, but as well, we as OEM, it is important to learn with every new deployment of trucks. So recently, we received feedback from our customer, Penske, one of the world's largest fleet operators, and based on this feedback, we improved the coverage of the high-voltage harnesses behind the battery to give even more protection to the vehicle and the user.
For example, we recently redesigned the charging plug of our vehicles to make it easier accessible and to make construct it more robust. Yes, so far, lessons learned from the Navistar side, but from Scania, I'm pretty sure, Fredrik, you also have some lessons learned to share.
Yes, and, yeah, I would like to go into two examples where we really have worked with this approach, as you are talking about, Stefan, where we have had customers reaching out, long before their plan to have their first, but all their fleet electrified. One example is GEODIS Logistics, where we have set up BEV transport between the container where they collect the containers and where to their central warehouse. The combination were shown in Sweden, and today, partly due to this, this is a combination that has been approved for large part of the road system in Sweden, so it's good.
But on top of that, both GEODIS Logistics and Scania has learned a lot during this period, and we have now a solid plan how to make the total transformation for GEODIS Logistics with the complete vehicle park. Another example with another customer in a completely other segment is ASKO. It's a wholesale grocery in the grocery business in Germany, in Norway, I should say. And they are driving out groceries in the complete country then, so very remote areas as well. And what we have seen there by working close together is that this operation starts from day one with the charging setup and with the public charging that they are using.
They have a very forward-leaning plan to electrify all their fleet already by 2026, and we have a solid plan to make that happen.
I think it's becoming obvious that it's not just about acquiring a vehicle when it comes to BEVs, but it's more about embracing a holistic approach. So we have to consider a lot of things. I think another vital part is that we ensure that those who drive and service the vehicle are well-equipped. And I know that our brands are aiming to be more than just suppliers. You want to be trusted partners, and you already provide different training programs. I think, Stefan, maybe you can tell us a little bit about what-
Starting the operation the first time with electric vehicles. The mission of the program is to make the customer comfortable with the new technology and to prepare them to start operation efficiently right from the beginning once they receive the electric vehicle. We are training, on the customer side, the drivers, the technicians, test drives with a specific focus on regenerative braking. There are no open questions once they receive the vehicle, and they really can start operating right from the beginning. But that's not everything we are offering. Roughly 45 days after handing over the vehicle, we conduct a follow-up session to assure that there are no open questions that came up during the first test of the vehicles, so we can solve also and answer these questions.
For example, when we deployed the first electric school bus in the state of Wisconsin, we not just educated the driver and the staff of our customers, but we also educated the students riding with the bus to feeling more comfortable, understanding the new technology, learning about regenerative braking, how important that is, and also to train them what to do in the case of an accident. So this is, from our perspective, important that everyone feels comfortable with this new technology. Having a look on the dealership side, we implemented an authorization process for our dealers that they are prepared to give service and maintenance to the new electric vehicle, once the vehicle are first time sold in their region they are responsible for.
Such programs also mean a lot of investment in the dealer facilities, not only for charging infrastructure, but also investing in training of their staff. So having all these programs in place is a commitment towards our customers and dealers that we support them along this journey.
Okay, I think it's fair to say that collaboration is the cornerstone of our TRATON GROUP success story, and we are not only collaborating very closely between the brands, but we also partner with industry examples.
We've been talking so much today about the importance of charging, so I have to go with an example there. As mentioned before, intensive usage of our goods is supremely important. So I'll pick Milence. Milence is our joint venture between us, as TRATON, and Daimler and Volvo, so together, like 70%-80% of the European heavy-duty truck market, to actually enable BEV in long haulage battery electric vehicles. And to quite some extent, at around at least 1,700 charging stations until 2027, and those are not run-of-the-mill charging stations. Those charging posts are like, most of them, at least Megawatt Charging. So really, the 45-minute mandatory rest period, this is what it's aiming at. And we're already seeing some success even today. The first stations have opened, and there are more and more following.
The cadence is quite quick at this point. At the same time, the price point of those stations has been significantly lower than many people had expected. On the passenger car side, you often see something like EUR 0.70-EUR 0.80 on that order. But that first station opened to EUR 0.399, even though it is in an arguably high electricity cost country. So our expectation is this will continue. We are at a point where the charging cost will not be as absurdly high as it is commonly expected. We are at a point where utilization in trucks is, as mentioned, much higher than it is on the passenger car side. So Milence, in our opinion, will be one of the most important players to get this right. But arguably, Fredrik, they will probably not be the only ones, right?
No, they will not be the only ones. There are several initiatives and good initiatives in this direction. That is great. That is what we need. But what we also need is to make public charging hassle-free for our customers or for the transport, for the fleet owners. That's why we have started TRATON Charging Solutions. Basically, building up the service of making public charging hassle-free. So if you have this service, you should be able to go to any charging stations and just plug in your truck and get charged.
Hmm, say a little.
Yeah, certainly. And as you mentioned, MAN is comparable to Navistar, so both brands gained a lot of experience in the bus business first, and then switching this experience and knowledge over to the truck segment, focusing via. And at the end of the same year, 2023, MAN became the leading suppliers of full electric city buses in European market, leading the top markets like Germany, Sweden, Norway, Spain, or Belgium. So, these are just some success story from the brands Navistar and MAN, but not to forget about our Brazilian sister brand, and Andreas, maybe you have something to share about them.
And again, thank you. There's some good news coming out of Brazil. Our colleagues have started production on their eBus. It's called eBus, coming out this year. Then we are, of course, talking about the e-Delivery or starting production this year. Then we are, of course, talking about the e-Delivery, the truck that they have been producing for five years now. It's a fully electric truck made in Brazil and for Brazilian requirements as well, with ranges of up to 250 km, depending on which type you're looking at. And to be fair, it's still a nascent market, the e-truck market in Brazil. But Volkswagen Truck & Bus with that has a market share of 90% in that market at this point. So yeah.
Thank you to all of you. I think with these positive, positive examples, we should close our discussion today. I think one of the key takeaways of our discussion is that electrification not only offers environmental benefits, but also substantial economic advantages for fleet owners through partnerships, innovation, and comprehensive support, this discussion. Now let's open the floor for your questions. You can send them in via the chat function if you haven't done so already, and I will wait to hear from you. All right. I can see we already have some questions here. So the first question would be directed to you, Stefan: The U.S. does not have a midday rest requirement. How do you accommodate range charging for the U.S. market?
Also, in the US, we have a slightly different across different states and also countries here in the North American market, but there are similar regulations, and also our drivers have to make some breaks during operating a truck.
Thank you. Andreas, I think the next question is in your direction: Where will all the energy come from to charge all the trucks at the highway at the same time?
That's an interesting question and an important one, to be fair. We're talking about a total requirement of around an extra, maybe 10% or so, super long-term, towards 2040, 2050, when we expect the fleet share to also be dominated by electric vehicles. But that's quite some time, and there's a lot of build-out of renewables as well in the same point of time. Secondly, we're talking very much about those applications being on highway, being out of cities in most cases. So we're talking about a lot of the electricity being in transmission lines or at the higher end of the distribution line system. So they're not as congested as some of the last mile delivery lines would, for example, be in comparison.
Lastly, and maybe, something that is commonly very much underestimated, most of these midday rest periods, they happen between, like, 9:00 A.M. and 3:00 P.M. during the midday parts of the day. This is also when in basically all, most all European countries by now, there's more and more solar energy coming in. And during those hours of the day, you actually have a hard time getting rid of all of that solar electricity. You have to transport it over long distances, for example, or just turn off the solar plants. And having an equally distributed set of sinks for that electricity, trucks charging at different locations at around that time, actually can help reduce pressure on the grid. That doesn't always happen.
That would be too nice to be true, but it still means, on average, our grid, the grid impact is maybe three or five times lower than you would commonly think it would be with that. And that means the build-out is quite moderate, what you need. And of course, last point, you tend to go for those locations where it's actually easy to get it right, where you think you have lower cost hurdles from a land, from a grid et cetera perspective, and less lead time.
Thank you. There is an addition to this question: What role do you see in immersion cooling regarding megawatt or 35 minutes?
To be fair, such a cable has to be cooled, liquid-cooled, typically. So that has some requirements on the charging cables at those speeds, not the MCS standard per se, but if you go to megawatt or more, then you will have to have that cooling, and you will also need to have a certain maximum length to limit losses in that cable. So typically, you see something like a 4-meter or so cable, one of the reasons why we have a standardized location on the truck, on the left-hand side, for recharging. So the stations are optimized for this, of course.
Okay, thank you. And then we have another question. I think that's one for you, Fredrik. When will the battery trucks become more affordable for transport operators? And in addition, how does charging time influence the TCO when operators cannot use the vehicle the whole day? Or maybe it's also one for you. Who wants to take it?
No, but the first question, when will it be affordable? I mean, we are really aiming... That, that's what I was talking about with the clear targets of volume. I mean, we need to get up, we need to come up in volume, and by that, we will get the economy of scale on the truck as such. So basically, I mean, we are aiming to come down to probably two times the price of a diesel truck in a few years, but we are really dependent also then on the development of the battery, of course. But we see a good development of that as well.
I think that the TCO parity with the truck that is more or less twice as expensive as a diesel truck, and then with the electricity price that is 10%-20% of the cost of diesel, we will have a good TCO parity. When will it happen? It depends on the combination of the two, but I would say that within 3-4 years, we will have a good reduction of the price of the truck.
And maybe to, as a good lead-in to the second part of that, if we had that Mega Charging infrastructure at the price of those stations already today, it would be much easier to be a TCO than it is for some of the less intensively used applications. So again, TCO is effectively gonna be easier in long haulage, but of course, the infrastructure is the bigger hurdle there. You've been mentioning a second part of that question?
Yeah, the second part was, how does charging time influence the TCO?
It does to quite a large extent, at the point where we are right now, so bringing it down to those 45 minutes is instrumental, because in many cases, this means our customers can use their mandatory rest period. Sometimes they can't, and then it's still an added amount of time spent, and then it makes sense to go even further below. For example, if you have slip-seat driving, meaning two drivers operating almost nonstop, and then you want to go for higher charging speeds. And we're typically not there at this point, but those are also only, like, 5% or 10% of the market. Over time, we will get there, though. For the current part of the market that we're focusing on, it's actually about the optimum.
You would want to go for 4.5 hours, 45 minutes of charging, 4.5 hours of driving, et cetera, and ideally do this, like, 24/7. And then you get the most intensive usage out of your product.
Right. So, if you have any further questions, you can still type them in, and I'll have a look if we have any more. We have one which is more in regards to battery techniques. How have battery costs evolved over the past 12 months?
I can get this started.
Yeah.
So battery, there are two sides to this. There has been one curve that has basically been unbroken now for decades, where battery cost every year has been coming down, and quite a lot per year, and that is mostly due to scale effects, due to this becoming more and more of a mainstream technology across different utilization factors, not just trucks. At the same time, there's now an ever-growing factor of that cost, is the cost for lithium, for cobalt, for manganese, depending on your chemistry, all the raw materials in there. So more and more of what we are seeing lately has been basically that part of the material cost coming on top. And, for example, 2022 was a spike in lithium and cobalt prices.
That also means since then, prices have come down quite quickly, but basically only reverting to the back baseline behind this. So we expect that on a long-term average, we will just see that scale effect, those learnings coming in, but we will see some bumps in that ride, depending on raw material prices coming on top.
Thank you. And the next question: How will you enable Megawatt Charging on the vehicle battery side, when the vehicle battery also should be downsized to save costs? For example, coping with high C-rates-
Mm.
Heat generated, and impact on the battery lifetime.
Maybe one way to answer this is we are talking about C-rates that aren't that high.
Mm-hmm.
I mean, we are still talking, even a downsized battery in haulage is still, like, 600 kWh or so. And we are talking, if we're talking about around 1 MW and 45 minutes, still something, 1-point-something Cs. We're not talking about 3 Cs, 4 Cs, what you typically see with passenger cars. So compared to a Porsche, for example, we're actually far less pronounced than it would be on a passenger car battery. So we're not yet talking about really a problematic way. This could be true if we go to the full extent of MCS, which at this point, there's no need for.
Then one in the direction of the fuel cells. Does TRATON envision going hybrid or fuel cell, especially for long-haul application, in the near or long-term future?
Yeah, I mean, if you talk hybrids and fuel cell, was that the questions? Or hybrids-
Hybrid or fuel cell.
Or, or fuel cell. Yes, I mean, we are right now in the pilot phase, you can say, so we are doing a small series of fuel cells. So we are basically testing this and following the development. And we believe that, if we continue to see that it will stand for some 10%-20% by 2029, 2030, we will have a product as well by then.
Thank you. Stefan, one question for you: What are the regional dynamics indicating? Which region is poised to emerge as the primary global hub for battery electric trucks, and which region might experience delays in the short run?
Region, the North American market, certainly, there are different. Every state also have independent from the governmental regulation. There are also state regulations. So there are some states, like the state of California, who push adapting, for example, regulations from states like California. So we assume that there will be governmental regulations that will give the guidance for the complete country, and therefore, we will have a go to a more and more more equal situation over the complete market.
Point to this, in the U.S., blue states, Democratic states, they tend to be stronger on the regulation side and forcing this into the market to some extent, especially the so-called CARB states. But most red states, think of places like Texas or Nebraska or Oklahoma, they tend to have low-cost electricity, and often by half an order of magnitude lower than, for example... This is why we expect there not to be too many differences between different applications in different states.
Okay, thank you. Then we have... So yeah, we have only two minutes left. That's the one thing I need to tell you, but we also have some questions left. So next one focuses on charging: When do you expect Megawatt Charging to be developed in sufficient quantity to allow viable long-distance, heavy-duty transport? Who wants to take this? Fredrik.
Yeah, I mean, it will be available already from next year as a standard on the vehicle. And then, how much of the public charging will be built out with Megawatt Charging? And, as Andreas went into before, I think we have one example with Milence that from their 1,700 charge points ordered by 2027 with Megawatt Charging standard.
Okay. Well, thank you to all of you, and I think we have to finish up at this point in time, 'cause time is over. If anyone has a very urgent questions still left, which we haven't answered, please feel free to reach out to us at TRATON. You can find our contact details at our website. And thank you, everyone, for joining, and I wish you a good rest of the day.