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High-priced technology pushes trucking rivals into unusual alliances

Japanese truck makers latest to combine powertrain and autonomous efforts

Truck makers are forming alliances to share the cost burden of advanced technologies. (Photo: Toyota)

Battery-electric trucks. Hydrogen-powered fuel cells. Hybrid technologies. Diesel-powered semis. Self-driving trucks. All share a common theme: They are too expensive to develop alone.

Rival truck manufacturers will scrap for every fleet contract. But they increasingly take a pragmatic approach to technology partnerships. 

“We’ve seen it in the past. And it generally works out pretty well,” said Mike Ramsey, a Gartner Inc. vice president and automotive and smart mobility analyst. “Ford and GM hate each other. But they have a transmission they built together.”

The recent tie-up among Toyota Motor Corp. (NYSE: TM), its wholly owned truck subsidiary Hino Motors Ltd. and rival Isuzu Motors Ltd. (OTC: ISUZY) is the latest example of pooling resources to save money on expensive but little differentiated components.

The three companies intend to combine Toyota’s connected, autonomous, shared and electric (CASE) technologies with Hino and Isuzu commercial vehicle platforms. The venture will be called Commercial Japan Partnership Technologies Corp. 

More collaboration

“In general, we’re seeing a lot more collaboration across the industry,” said Sam Abuelsamid, principal analyst at Guidehouse Insights. “It makes sense that we would see more of this in the medium- and heavy-duty commercial sector.”

Toyota, Hino and Isuzu plan battery-electric vehicles (BEVs), fuel cell electric vehicles (FCEVs), autonomous driving technologies and electronic platforms for small commercial-purpose trucks. Logistics and infrastructure development also are in the plans. More “like-minded” partners may be invited to join the partnership.

Separately, Toyota is acquiring 39 million shares of Isuzu for $440 million. It will have a 5.02% voting interest in its trucking competitor. Isuzu is buying the same amount of Toyota shares on the open market.

Not the first

Daimler Truck AG and Volvo Group on March 1 completed creation of a fuel cell joint venture . It combines decades of Mercedes-Benz and Daimler experience and $700 million from Volvo. Both companies, fierce competitors in markets globally, will sell FCEVs under their own brands later this decade. 

“You’ll have the two big Western world commercial vehicle producers all in on fuel cells,” Roger Nielsen, CEO of Daimler Trucks North America (DTNA), told FreightWaves.  

“We also have a customer [Rolls-Royce Power Systems] on the outside for stationary fuel cells. So, that also [gives] us a chance to scale up. Between the stationary fuel cell customer [and] Volvo, we’ll get the scale [and] volume we need to automate the production.”

Neither Daimler nor Volvo showed significant interest in fuel cells until the last year or so.

“All the manufacturers are recognizing the reality of climate change and that regulations are going to get tougher,” Abuelsamid said. “It’s a market reality now. And no one expects they’re going to be able to slip through with conventional internal combustion products.”

Traditional pathway

A formal merger is the traditional approach to leveraging expertise with growth.

Navistar International Corp. (NYSE: NAV) is the smallest of the four major truck makers in the U.S. It is becoming part of Volkswagen AG’s TRATON Group (TRA8.S.DX). The $3.7 billion merger adds to Navistar’s ability to scale its Class 4-8 truck and bus businesses. TRATON gains access to the North American market for its brands like Sweden’s Scania.

Navistar and TRATON have worked together on engine technology since the Volkswagen Truck & Bus Group, now TRATON, bought a stake in Navistar in 2017. They are on a path to saving billions in product development.

“This is going on in the light vehicle sector as well, where the cost of developing both electrified and automated driving technologies is so substantial that it makes sense for manufacturers to collaborate where they can on this stuff,” Abuelsamid told FreightWaves.

Picking spots

In addition to the technology partnership with the much larger and better-resourced Toyota, Hino and Isuzu each recently decided to outsource medium-duty internal combustion engines to Cummins Inc. (NYSE: CMI). 

Daimler also is turning to Cummins for medium-duty engines. Cummins supplies engines, components or both to 16 of the top 20 truck makers in the world.

“For us, what that means is an opportunity for a customer who already trusts us to deliver key technologies to ask us to help them more,” Cummins CEO Tom Linebarger told investors in November 2019, foreshadowing recent developments. “It will take a while for all this to play out because each one has a different technology position at each place.”

Hino said it is relying on Cummins so it can redirect engineering and other resources to BEVs as part of the company’s push to zero-emissions vehicles (ZEVs). Hino calls it Project Z. It includes making fuel cell trucks with Toyota.

“I think there’s a great business for Cummins in the medium and long term — and probably for a really long time,” Ramsey told FreightWaves. “The distinguishing characteristic in the market is nobody gives a hoot anymore who the engine manufacturer is. Does it have good uptime? Does it have good reliability? Is it fuel efficient?”

Truck manufacturers must weigh those considerations plus the cost and ever-tightening emissions requirements against the margin Cummins commands to take on those burdens. 

Autonomy partnerships

Manufacturers have a variety of dance partners when it comes to preparing for self-driving trucks.  

Daimler has an internal effort with subsidiary Torc Robotics and an agreement with Waymo Via for its fifth-generation Waymo Driver System. Both are road-testing in Virginia and New Mexico.

Navistar and TRATON are investors and partners with TuSimple, which runs revenue-generating freight loads in three southwestern states with 50 Level 4 software-equipped trucks. Navistar and TuSimple have more than 5,000 reservations for the soon-to-be-public TuSimple system being integrated in an International Class 8 truck for 2024.

Plus says it has pilots with four truck makers in addition to a joint venture with China’s First Auto Works (FAW) Jiefang. It will produce autonomous systems beginning this quarter for a bank of 10,000 nonbinding orders.

Aurora is partnering with PACCAR Inc. (NASDAQ: PCAR) and Its Peterbilt trucks also were favored by Waymo prior to its deal to fit a Freightliner Cascadia with WaymoDrive. Aurora this week announced a tie up with Volvo Group

Three-year-old startup Kodiak has a 2.5-year partnership with PACCAR and runs mostly Kenworth T680s on revenue-generating routes between Dallas and Houston. 

Ubiquitous systems

In a move that suggests the ubiquity of autonomous systems, Embark Trucks on Wednesday revealed a Level 4 system capable of operating on International, Peterbilt, Volvo and Freightliner Class 8 trucks.

“We know sourcing key components from multiple suppliers is an important option for carriers and a longstanding practice,” Brandon Moak, Embark chief technology officer, told FreightWaves.

“By investing the time and resources to work through the complex integration now, we’re greatly reducing the energy an OEM would need to exert to meet a carrier’s request for Embark-equipped trucks, just as today they might request a specific engine.” 

Daimler Trucks buys majority stake in self-driving tech innovator Torc Robotics

PACCAR and Aurora to develop autonomous trucks

Daimler and Volvo seal fuel cell tie-up

Click for more FreightWaves articles by Alan Adler.

Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.