Daimler Trucks chief backs higher taxes for commercial diesels

Daimler Truck says electric trucks cost will be “forever higher”
Compared to combustion engines, the electric truck costs are to be high

According to the chief executive of Daimler Truck, Martin Daum, compared to using combustion engines, the electric truck costs would “forever be higher”. It is the result of Russia’s Ukraine invasion that is raising raw materials costs. Being the world’s largest truck maker, the company saw sales Tripple in the zero-emission trucks and buses in the last year.

Daimler Trucks chief backs higher taxes for commercial diesels
Image credits- Financial Times

Daum told, “If you take the entirety of engine, transmission, axle, tank system, cooling . . . , we have a maximum of about €25,000 [of material in a combustion engine truck].” Further added, “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 alone for the battery cells [in a single truck]”.

He said that it would be up to governments to bring a difference in whatever mechanism they want to. “Without any subsidies..the price of an (electric) truck will always, forever be higher than (combustion engine) 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, reported that it had more than tripled the sales of zero-emission trucks and buses last year, to a total of 712.

Raw materials cost

However, that accounts for a fraction of the 455,000 trucks and buses the company delivered in total in 2021. It’s long-haul eActros model, which went into series production last year, still costs three times the price of its combustion engine equivalent, and that gap is unlikely to narrow significantly in the near future. Furthermore, the costs of the key raw materials used in modern batteries has risen sharply over the past year, with cobalt and lithium more than doubling in price and nickel climbing by almost 40 percent, according to IHS Markit.

As a result, battery pack prices, which fell to an average of $132 per kilowatt-hour in 2021, according to a survey conducted by BloombergNEF, are predicted to remain above the $100 level until at least 2024. Daum, who like other bosses in the industry has called for a tax on carbon to narrow the cost disparity between combustion engine trucks and battery-powered models, said he nonetheless supported efforts by the German government to help businesses deal with soaring diesel costs.

The executive said, “We have to raise the price over time, we can live with two or three euros per liter, but we can’t live if that comes overnight.” Daimler Truck, whose longstanding strategy has been to pursue both battery-powered and hydrogen trucks, could focus more on the latter if battery costs continued to soar, and commodities scarce, Daum added.

Credits- FT