European auto giants Daimler and Volvo this week announced plans to launch a new joint venture to develop and produce fuel cell systems for heavy-duty vehicles.
Under the terms of the deal Daimler will consolidate all its current fuel cell activities in the joint venture, effectively bringing an end to its work to develop fuel cell cars. Volvo said in a statement it is to acquire 50 per cent in the joint venture in a deal worth around €600m on a cash and debt free basis, valuing the new venture at €1.2bn. The deal was preliminary and non-binding, it added.
The FT reported that both parties would each immediately invest a "nine-digit" sum in the new company, supporting its goal to bring fuel cell trucks to market in the second half of the decade.
The new company will initially employ 250 people and will be headquartered in the German state of Baden-Württemberg, where Daimler brand Mercedes has based its fuel cell R&D activity.
"For trucks to cope with heavy loads and long distances, fuel cells are one important answer and a technology where Daimler has built up significant expertise through its Mercedes-Benz fuel cell unit over the last two decades," said Martin Daum, Chairman of the Board of Management Daimler Truck AG and Member of the Board of Management of Daimler AG. "This joint initiative with the Volvo Group is a milestone in bringing fuel cell powered trucks and buses onto our roads."
Martin Lundstedt, Volvo Group president and CEO, said the new venture would also help support the EU's Green Deal plans to deliver net zero emissions across the bloc.
"Electrification of road transport is a key element in delivering the so called Green Deal, a carbon neutral Europe and ultimately a carbon neutral world," he said. "Using hydrogen as a carrier of green electricity to power electric trucks in long-haul operations is one important part of the puzzle, and a complement to battery electric vehicles and renewable fuels. Combining the Volvo Group and Daimler's experience in this area to accelerate the rate of development is good both for our customers and for society as a whole."
However, he added that for hydrogen fuel cell vehicles to be deployed at scale "other companies and institutions also need to support and contribute to this development, not least in order to establish the fuel infrastructure needed".
The investment comes just days after engineering giant Siemens announced it was teaming up with energy giant Uniper to convert some of its coal power plants to zero emission hydrogen production. Meanwhile, a host of energy companies are currently exploring how to scale up production of green hydrogen that is manufactured using renewable power, although the sector remains largely nascent.
Daimler's Daum told the FT he was confident further investment in hydrogen production would follow in the coming years. "I believe in free markets, and where there is demand, there will be supply, and what we did today is create tremendous demand," he said.
The deal is the latest in a string of joint ventures across the auto industry, as manufacturers seek to spread the cost and risks associated with developing a new generation of zero emission vehicles.
The move also represents a major vote of confidence in hydrogen's role in supporting heavy duty transport, although Daimler's decision to exit fuel cell car development further highlights how the nascent sector is struggling to gain traction among lighter vehicle classes.
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