Facing great turbulences in the market environment over the recent period, the established automotive companies have been forced to made radical changes to their business models and production plans. Recently, the two giants in truck manufacturing—Daimler AG and the Volvo Group—have announced that they are teaming up to form a new joint venture dedicated to the production and sales of heavy-duty fuel cell vehicles (FCVs). This move, which was announced on April 21, will consolidate the two longtime competitors’ existing programs for the development of hydrogen fuel cell technology.

Reasons cited for this collaboration include pooling resources, sharing the technology development costs, and working together to cope with the new market uncertainties wrought by the COVID-19 pandemic.

Under the joint venture agreement, Daimler will move its entire FCV team into the new entity, 50% of which will be acquired by Volvo for 600 million euros.

Also, the higher-ups in both companies have indicated that they welcome other interested parties to invest in the joint venture, which will be operating as a standalone company.

Martin Daum, chairman of Daimler’s truck business, said that electric powertrains, whether they are based on batteries or fuel cells, will be instrumental in the realization of a transportation system free of carbon emissions. Daum further stated that the new joint venture represents a new milestone in development of FCVs as his company and Volvo will channel their resources into this entity to bring fuel cell trucks and buses onto the road.

Martin Lundstedt, CEO of Volvo, said that the COVID-19 crisis has actually convinced his company to maintain their attention on the FCV segment of the global automotive market.

In addition to Daimler and Volvo, there are many participants in the market for heavy-duty fuel cell vehicles. Some are long established car makers and automotive suppliers, while others are newly formed technology startups. For example, Nikola Motor Co., which was founded in 2016 and based in the US, has been manufacturing hydrogen-powered trucks of various classes and could become a major competitor in the future.

Germany’s Robert Bosch GmbH, which is well known as the leading global supplier of automotive parts, announced earlier this year that it plans to commence mass production of fuel cells in 2022. South Korea’s biggest car maker Hyundai Motor Co. will also be deploying a fleet of fuel cell trucks in Europe later this year.

Toyota Motor Corp. has to be mentioned here as well because it has been the chief proponent of FCVs. This March, its commercial vehicle subsidiary Hino Motors Ltd. also unveiled an initiative to build a fuel cell truck based on an existing chassis design.

Fuel cells are different from batteries. The former require a continuous supply of hydrogen and oxygen to sustain the chemical reaction that generates electricity, whereas the latter store and release electricity through the charging and discharging processes. A fuel cell powertrain includes a hydrogen tank for fuel and a battery for storing electricity produced by the fuel cell stack. Both types of powertrains use an electric motor to propel the vehicle. Battery electric vehicles recharge at a charging station when running low on power, while FCVs need to replenish their hydrogen tank at a hydrogen fueling station.

The assets that Daimler is transferring to the joint venture include Mercedes-Benz’s fuel cell unit, which has been working on the related technologies for around two decades, as well as production facilities in Germany and Canada. There is a possibility that the various types of expertise that are gathered together at this joint venture could be applied to other fields outside of the automotive industry.

The agreement that was announced on April 21 is preliminary and non-binding. Further details will be hammered out at later negotiations, and a final agreement is expected to be signed this September. The joint venture will probably begin formal operations at the end of this year, pending on the completion of the deal.

 (This article is based on information provided Daimler’s official press release as well as reporting from various media outlets including TechNews and Leiphone.com. Photo credit: Daimler AG.)