Martin Daum makes no bones about the fact that the world is under immense strain right now with every country focusing on itself to improve the lives of its people.
“This is no good with war, taxation and mistrust upsetting the balance and not helping people,” the Chairman of the Board of Management, Daimler Truck, told a select team of journalists at a recent roundtable in Chennai. In the process, this has also wreaked havoc with the automotive supply chain with companies producing much less than what is actually conceivable.
“Until 2019, we were working in a world where a part would perhaps come from India, China or South Africa. We would do our engine blocks in South Africa, ship them to Germany for machining, thereon to Detroit and to Mexico or Australia,” elaborated Daum while citing an ideal scenario of open borders.
By the end of the day, the goal was to have high tech companies on board. “This is how a global world works together and benefits everyone even while there are common problems to cope with,” he added. However, the two years of the pandemic followed by geopolitical tensions have only created silos within the planet which, in turn, have disrupted supplies like never before.
As a result, companies like Daimler Truck (and many other automakers) felt the strain and sales numbers ended up being much lower “than the normal average”. Daum’s comments were in sync with what he had said at the company’s annual general meeting in June this year.
“Globalisation is currently being questioned from various sides. I warn against simply accepting this. Open borders, the unhindered exchange of goods and a global division of labour have brought great prosperity to the world's population in recent years and decades. We must preserve those achievements,” he had driven home the point then.
Strategic Focus On Electric, Hydrogen
On the issue of zero emissions, Daum made it clear at the Chennai roundtable that this was an objective which required “the real evolution”, one that boiled down to electricity generation, transmission and distribution. “If you use energy from a coal burning power plant, you actually eat up the planet. I have no clue what the answer is in India but in the US and Europe, the evolution of our power generation remains a challenge,” he said.
The challenge was to store and transport energy which effectively meant hydrogen remained the best bet. According to Daum, diesel still had a good 10-15 years of relevance left and Daimler Truck would continue to invest in the technology. “We have the best diesel engines for heavy duty trucks worldwide,” he said.
Battery electric is also an option and partnerships with CATL of China will be leveraged for this purpose going forward. It is significantly more expensive and this is an important fact to consider since 50% of the cost of a truck is the powertrain. There is no cheaper Indian battery right now and electric axles, etc. will only add to the cost.
Daimler Truck is upbeat about hydrogen because it can be used in fuel cells and then electric. It can be burnt and the engines can handle H2 combustion comfortably. From Daum’s point of view, natural gas was a no-no because it adds as much carbon dioxide as diesel because of methane slippage. Given this reality, a highly efficient diesel engine is better than natural gas.
Satyakam Arya, Managing Director & CEO, Daimler India Commercial Vehicles said the fuel choices in the subcontinent essentially stem from the imperatives of conserving foreign exchange. India still imports 40% of its gas requirements which is still substantially lower than crude. Crude, in fact, is twice as much at 80%.
“We have not reached a stage where we can predict a stable adoption of gas in commercial vehicles,” said Arya. After all, use of CNG was high till recently but when its prices shot up, customers were back to diesel. “Technology bets cannot be made in this pricing environment uncertainty. Our strategy is electric and hydrogen — which will be accessible to this market as well — and if we see a stable pricing environment for gas, we will then take a call,” he reiterated.
Daum had also said at the June AGM that Daimler Truck was convinced that its trucks and buses would not be exclusively powered by batteries in the future but also by hydrogen-based fuel cells. In his view, for the energy transition to succeed, Europe must be able to import, transport and store green energy — and the medium that makes this possible is hydrogen.
India Market Still Small In Size
Getting back to the Chennai meeting, Daum said he was pleased with what the Indian operations, spearheaded by the BharatBenz brand, had achieved over the last decade thanks to an “amazing team” that was doing tremendous work for other Daimler units. “We are doing terrific work on exports,” he added while acknowledging that technology development had been rapid in India, especially on safety.
The downside, however, was that Daimler’s optimistic estimates about the commercial vehicle market developing faster had not happened and volumes were still lagging. Sophisticated trucks should have gained acceptance faster but the market size “has been small along with slow growth”. All in all, India is a stable player in Asia and Daimler Truck sees a lot of technology exchange happening here and across Japan and Europe.
Arya made it clear that market share was not the sole criteria for BharatBenz, and slicing the cake into different segments would actually show that it was doing well and had even gained substantial share in some regions. “The issue boils down to value which we will deliver. We built a strong foundation over the last decade in India and now with the market back on track, we are ready. We will play a significant role in the transportation business,” he said.
Daum added that safety, reliability and efficiency were the key navigators for the company’s participation in individual truck segments. Beyond this, it was important to focus on cleaner emissions. “If carbon is going to harm our planet, the long term problems will be way too expensive and the consequences are not worth it,” he said.