E-truck makers set to eat fuel retailers’ lunch
Electrification will see a transfer of value from the liquid in the fuel tank to the hardware in the battery
Truck makers may be weighing up the costs and benefits of going fully electric against fuel cell and e-fuel ICEs. But a leading analyst argues that significant advantages in the BEV option is being overlooked.
“There are two pools of value that we do not think get discussed enough inherent in the battery cell joint venture,” says Rob Wertheimer, lead analyst for the global machinery sector at independent research firm Melius — referring to Germany's Daimler Trucks and US-headquartered Paccar teaming up. “Future trucks will cost more per unit, meaning future revenues will see an upshift. Whether a future truck is 50pc higher in price, or double or triple is yet unknown.
“Secondly, truck OEMs do in fact stand a good chance of making margin on all the content embedded in new truck sales and in service,” Wertheimer continues.
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Crucially, that shift profit away from suppliers of fuel and back to the truck maker. “The truck OEM, in a way, will be capturing value previously delivered by the oil and gas industry, substituting a cheap gas tank and diesel fuel for a more expensive battery and software around it to make it reliable and durable,” he says.
“And it seems very likely future organic growth will have another curve stacked on in the form of more content per vehicle,” Wertheimer concludes.
Truck makers switching to electric can also curry analyst favour by finding innovative ways to keep down the initial high capex costs, such as the US battery cell factory joint venture like the Daimler announced this month in partnership with Paccar, Accelera, the zero-emissions business unit of engine heavyweight Cummins (all 30pc), and Chinese battery maker EVE Energy (10pc). “We appreciate that Daimler is working together with partners to create scale and thereby lower costs as well as investment needs,” says Nicolai Kempf, vice-president, equity research at Deutsche Bank.
“A 30pc stake implies an investment of around $750mn and, spreading this figure over three years, yields $250mn/yr, which equals 25pc of expected capex in 2023. This was already indicated at its capital markets day as part of the strategic capex, so does not imply additional spending,” Kempt continues.
The 21GWh battery cell factory is estimated to cost $2-3bn and will initially focus on lithium-iron-phosphate (LFP) cells for commercial vehicles and industrial applications. LFP “will be able to offer several advantages compared to other battery chemistries, including lower cost, longer life, and enhanced safety, without the need for nickel and cobalt raw materials”, the partnership says.