This week, we’re looking at the final preparations before Navistar becomes part of TRATON SE and Daimler Truck escapes being lumped in with Mercedes-Benz luxury cars. Also, two views of fuel cells and hydrogen and a not-quite-Oprah-like giveaway.
Getting married brings big changes. Sometimes one spouse brings college or other debt into a union. Something like that is playing out as Navistar International Corp. (NYSE: NAV) draws closer to its merger with Volkswagen AG’s TRATON SE (8TRA.S.DX).
Navistar, which nearly collapsed under the weight of the MaxxForce engine debacle a decade ago, has considerable debt on its books. A big chunk of it stands to go away after its nuptials. Navistar this week told holders of $600 million in notes due in 2025 that it would “conditionally” pay them off early — assuming the merger with the German truck holding company concludes.
Holders would get $1,071.25 for each $1,000 they own. Not exactly the 9.5% interest originally promised. But still a positive return. Navistar could renege in the unlikely event the definitive agreement — under which TRATON is paying $3.7 billion for the 83% of Navistar it did not already own — should fail at the last minute.
Consider it a divorce
Over at Daimler AG, the separation of Daimler Truck AG from its parent is proceeding toward a separate listing for the world’s leading truck manufacturer on the Frankfurt Stock Exchange later this year.
Come July 1, a new Daimler Truck AG Board of Management takes over with a raft of top-level organizational changes. Current Daimler Truck CEO Martin Daum will remain in his role until at least 2025 following a recent contract extension.
Daum’s direct reports are Karin Rådström, responsible for the Europe and Latin America regions and the Mercedes-Benz Truck brand. John O’Leary is CEO of Daimler Trucks North America, overseeing the Freightliner, Western Star and Thomas Built Buses brands.
All essential technology and powertrain activities are being combined into one division called the Truck Technology Group (TT). Andreas Gorbach, currently CEO of cellcentric, the fuel cell joint venture with Volvo Group, will be in charge. More on cellcentric below.
Employees of the future Daimler Truck Financial Services organization will transfer from Daimler Mobility AG to the new company with Stephan Unger as the lead. Unger will become a member of the new management board.
Fuel cells and flux capacitors
A year ago, it appeared the planned fuel cell joint venture of Daimler Truck AG and Volvo AB was a catch-up move to stay in the game for decarbonizing the future of long-haul trucking. Neither manufacturer was particularly fond of hydrogen fuel cells before then.
Daimler had decades of investment, most for the Mercedes-Benz GLC F-CELL developed with Ford and Nissan in 2013. Daimler never sold the cars commercially and finally gave up on fuel cell car development a year ago, saying it was too expensive.
Enter cellcentric. Daimler Truck found a cost-sharing partner in archrival Volvo, which plowed $700 million into the 50-50 joint venture. All of a sudden, fuel cells for heavy-duty trucks began to be a popular idea for the near future.
This week, Daum and his Volvo counterpart, Martin Lundstedt, made the first joint pitch for the business. Both brands will sell fuel cell trucks by mid-decade. They expect to reduce the cost by a factor of six to seven times by 2027, according to a Reuters report.
But they also pleaded for help with fueling infrastructure.The two truck makers called for construction of around 300 hydrogen refueling stations for heavy-duty trucks in Europe by 2025 and about 1,000 stations by 2030.
Calling Doc Brown
Here’s an idea for where to get the hydrogen for those stations. Singapore fuel cell spinoff Hyzon Motors and a company called Raven SR LLC agreed to work together to build up to 100 hydrogen production hubs across the United States and globally.
They would convert all manner of organic waste into locally produced, renewable hydrogen for Hyzon’s zero-emission commercial vehicles. Raven SR claims a portfolio of patents for its combustion-free conversion process. No incineration. No gasification. And no toxic pollutants.
The hubs would be built at landfills, starting in California. The hydrogen from waste would power garbage trucks and other classes of heavy-duty trucks.
Anyone thinking about Doc Brown’s flux capacitor from “Back to the Future”?
And you get a truck and you get a truck …
For many months now, Daimler Trucks North America (DTNA) and Volvo Trucks North America have been issuing Class 8 electric trucks to a variety of fleets and other customers to evaluate.
Daimler has loaned more than 20 eCascadia and eM2 units through its Customer Experience fleet. Another half-dozen are planned. The most recent went to the Hub Group. DTNA also has 30 electric trucks with NFI Industries and Penske Truck Leasing.
Volvo has issued fewer VNR Electric models through its LIGHTS program in California. Saia LTL Freight the most recent recipient. But Volvo recently took an order for 14 of the battery-powered Class 8 daycabs — its biggest order on record.
The electric evaluations are targeted and intended to juice interest in leases and purchases.
Nothing like when Oprah Winfrey shocked her studio audience by giving each one a Pontiac G6 sedan back in 2004. The YouTube video of that stunt has been viewed 4.6 billion times.
Passing on the price hikes
A common refrain in earnings calls this week: rising commodity prices. Whether it’s $1,400 for a ton of steel or soaring aluminum prices, suppliers and truck manufacturers are paying up big for materials. And they are paying for premium shipping to get the goods delivered.
What to do about the higher costs?
“Those are just real and transparent conversations that you’re going to have with the customer in order to maintain a viable business. And that’s what we’ve done. No one likes it or said, ‘Thank you, may I have another?’”
— Brent Yeagy, president and CEO, Wabash National Corp.
That’s all for this week. Thanks for reading.
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