Affordability the Biggest Challenge for Electric Truck Producers

Electric Trucks Will ‘Forever Be Higher’ in Costs Than Traditional Vehicles, Daimler CEO Says

A Daimler Urban eTruck electric truck during a press conference at the IAA Nutzfahrzeuge (IAA Commercial Vehicles) fair in Hanover, northern Germany on Sept. 21, 2016. Julian Stratenschulte/DPA/AFP via Getty Images

The cost of building an electric truck will always be more expensive when compared to a truck running on a traditional combustion engine, according to Martin Daum, CEO of Germany-based Daimler Truck.

The high price of critical materials needed to build electric trucks makes the vehicle more expensive, Daum said in an interview with FT.

Considering an entire combustion engine costs €25,000 ($27,458), “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],” Daum said.

It would be up to the government to implement steps to narrow the difference between an electric truck and a combustion engine equivalent, he said. Without subsidies, the price of the electric version will “forever be higher.”

The Daimler CEO called for slapping a tax on carbon to minimize cost disparity.

Daimler has focused on both hydrogen and electric trucks. However, if battery costs continue to rise and materials remain scarce, the company would be forced to choose hydrogen, he said.

A new Daimler AG, FUSO battery-powered eCanter urban delivery truck is unveiled during a news conference in New York on Sept. 14, 2017. Brendan McDermid/Reuters

Cost of Materials

Over the past year, the cost of materials crucial to making batteries has risen significantly with nickel prices rising by 40 percent while lithium and cobalt have more than doubled.

The Russia-Ukraine war has further complicated the issue since Russia is a major supplier of materials like nickel and cobalt.

Russia was the second-largest producer of cobalt in 2021 while it roughly supplies 10 percent of global nickel. The longer the war goes on, the longer prices remain elevated.

Elon Musk on affordability

Tesla CEO Elon Musk also recently highlighted the “challenge” of making the company’s upcoming electric vehicle, Cybertruck, more affordable.

“Our primary challenge is affordability. Creating an expensive truck is relatively easy. If it is extremely hard to do so for Tesla, despite our much greater economies of scale & better technology, then it is damn near impossible for others,” Musk said in a March 2 tweet.

Tesla CEO Elon Musk unveils the Cybertruck at the TeslaDesign Studio in Hawthorne, Calif., on Nov 21, 2019. Robert Hanashiro/USA TODAY

During a talk with investors in February, Stellantis CEO Carlos Tavares shed a spotlight on the high costs of manufacturing electric vehicles.

Coming up with ways to offset the additional costs involved in producing electric vehicles is the “gorilla in the room,” something that could weigh on the profits of the company for at least the next five years, he stated.

“We can expect electrification to represent an additional total production cost of around 40 to 50 percent against the conventional vehicle,” Tavares said. “There is no way we can transfer 40 to 50 percent of the additional total production cost to the customer.”