Why Daimler Truck is bullish on Hydrogen fuel in India

India's commercial vehicle market demands a diverse range of fuel technologies, and Daimler AG is committed to staying agile and adapting to the market's evolving needs, says Karl Deppen, head of Daimler Truck Asia.

The German truck and bus maker is devising a strategy to offer a diverse range of vehicles, including battery electric, hydrogen, and biogas options, depending on market readiness. However, Daimler sees hydrogen playing a pivotal role in long-distance truck and bus applications, given the ease of refuelling hydrogen tanks compared to charging batteries.

In a recent media interaction, Deppen outlined Daimler's vision for the Indian market, including its multi-fuel technology strategy and openness to partnerships, as well as the merger of its unit Mitsubishi Fuso with Japanese CV maker Toyota Hino.

What are your plans for electric vehicles in India, beyond the eCanter? Do you have plans for other alternative fuel technologies as well?

Daimler Truck has a broad range of electric trucks available globally. The teams worldwide have done a great job learning fast and transferring knowledge to the different regions. All the markets are benefiting from Daimler's know-how and innovation competence.

We are very proud of eActros, which we have presented for series production in Hanover. We are equally proud of the eCanter here and eCascadia in the US. We want to bring a light-duty BEV solution to India next year.

The energy situation in India is different from Europe and other markets. India is a huge market in terms of geographical spread and operating conditions. We see the infrastructure advancing rapidly on streets, and that is a great thing also for the logistics industry. The key will be to stay adaptive to what the market needs. We do see the difficulties of infrastructure in Europe in terms of grid installation and charger installation, which take more time than vehicles. That is a mismatch in progress.

In India, we see the same concerns for battery electric technology. So, we are convinced that India will need a broad range of technologies to move ahead. Battery electric vehicles will be more suitable in the light-duty segment. In the heavy-duty long-distance segment, we do see a lot of potential for hydrogen applications. India prioritises energy independence, and that triggers some potentially different technology paths than elsewhere.

So, we believe that hydrogen will play a significant role. However, diesel will continue to play a major role for some time. This is why we also need to offer reliable and fuel-efficient diesel systems in the market. We need to have a broad range. In between, we will have the range of biogas and other fuels that will help India decarbonise transportation while working towards energy sufficiency.

Are you looking at India-specific or global solutions, given the cost-sensitive nature of the market?

We have access to the technology of the Daimler Truck Group. This is a great benefit we have. And yet, it has always been the strength of Bharat Benz to find that perfect balance - technology that's available, proven and reliable in other markets, and bring it to India in a practical, usable, and attractive way for customers. The Bharat Benz team is doing a great job of constantly monitoring what's happening in the market and how we can extend our range.         

India is a very cost-competitive market. Therefore, we also need to be in a position to manufacture in India. We have the market knowledge and the competence to localise those technologies for the customers in India.

What is the potential for alliances for petrol and diesel technology in India?

We have never shied away from partnerships. This is a purely practical consideration to use the knowledge and competence of partners where it makes sense. It could be in propulsion technology, but it could also be in other areas. Our industry is known for partnering where needed. The investment requirements are huge, and not everybody can do everything alone.

Therefore, I think that is a natural course, and we have shown that in the past we can cooperate, and we will continue to do so. We cooperate a lot in Bharat Benz with the various brands in the Daimler Group. No matter what the base is or what the partnership is, the customer will always get a Bharat Benz truck in India – this is the number one priority.

Second, with the broad range of technologies we are looking at, we can never rule out potential partnerships in potential technology paths. We are observing this [space], but we are not binding ourselves too early to specific technologies and partners. But this is a normal flow in the industry. First, we have to be convinced about what technology we want to offer, and then determine who can be the best partner to make it faster and better.

How soon will the hydrogen truck be ready for Daimler India? And what is the scope of exports from India?

The first question is when and how India is ready for a hydrogen solution. Then, there is a question of whether it will be gas hydrogen or liquid hydrogen. This is something where the standards need to be shaped a little bit. I think realistically, it will be a few years to see that on a broader scale even in India.

That is something we see in other markets as well. It has to be hand in hand - vehicle technology, infrastructure, and energy provider - all three ingredients need to be there, and this is something that will not happen overnight. But it is important that we start that discussion and start in that direction to make it happen so that we can see it probably towards the end of the decade.

Looking at exports, the question will be how fast the development of those technologies in other markets progresses. Once we master the technology in India, we can always look into export opportunities as we do today. But it depends on which markets will be ready for hydrogen usage as well, at that time.

Do you see establishing the infrastructure for hydrogen fuel as a challenge?

In the short term, the BEV infrastructure seems easier. But that is only true for the first ones that get to the grid. At some point, if the volume increases, the stress on the grid rises exponentially, this is not linear but exponential.

Therefore, at some point, the initial investment seems to be higher on hydrogen but scaling it up large has a lot of advantages…This is already existing technology, so the question is how to scale up. With new applications, I am confident that this could also develop quite swiftly because India has all the required ingredients. It is a question of aligning the right partners and getting in the same direction. I think that is something India can do for sure.

What is the right mix of technology for future trucks?

On the CNG, LNG side, I think that is a development we see in some markets. We see a big part of it in China. I believe what we observe there is also what we see in other markets - the reliability and the cost of operations are not always up to expectations and are not on the level of a proven diesel powertrain.

So, especially for long-haul transportation, I think diesel is still the better and superior technology. We do not deny that there are applications that will push forward with  LNG or CNG options, and we are observing that very carefully. But we believe this is always only an interim technology because it is not really decarbonising anything. It is just a different medium.

So I think the investment to build up that infrastructure may not be the best direction as we will need another infrastructure step up later on for hydrogen or BEVs. So, that could be a costly adventure, and we believe taking the right step is the best strategy. But of course, we have to see what the customers want, and we will be adaptive to that.

What will be the role of alliances and partnerships in India, given the inorganic opportunity in India?

As far as India is concerned, we have always had a very positive attitude. This is why we decided to come to India a long time ago. We do see positive developments in India, and I think the development we have seen, especially looking at the infrastructure, the speed of road construction is clearly amazing and sometimes goes a bit unnoticed in the world, but we observe it very closely and we have high admiration for what's happening in India.

Therefore, our strategy is not set in stone. We are in India to be successful, and we will make sure that we continue to be successful in India. With a growing market, we have all the flexibility to cater to the right segments.

And again, what we just launched recently is a new, rigid, automated transmission [model with] higher power, which is clearly a statement that we are adaptive to the market and will continue to be so. So stay tuned; we have more in the making. It's too early to talk about it.

Bharat Benz will continue to be part of the Indian transportation sector, and we want to continue to develop it forward, provide the right solutions for our customers and build on the strengths and reliability of the Bharat Benz brand.

How is the Mitsubishi Fuso division - Toyota's Hino merger panning out?

The Fuso side's discussion with Hino is still ongoing. This has not changed how we continue working on the potential cooperation scheme. Hino is still in the process of resolving some of its past emission challenges, especially in the US market. Our position from the side of Daimler Truck and Mitsubishi Fuso has not changed. We need a clear understanding of the potential risks we have, before we move ahead.

We started the discussion and still believe it can have value to the industry. We are still convinced that it is a good idea, but we also have to protect our interests and have a clear view of the risks, and this is why we are working with the Hino team as much as possible to clarify that situation.

All these are happening in a severely competitive landscape. We are fierce competitors today. Therefore, we strictly adhere to the antitrust stipulation to make sure we don't step into certain territory. It would be a very complex transaction, but it's too early to determine potential consequences for special markets.

What is the rationale and thought process behind the Fuso-Hino merger? What impact will it have on Daimler India and Daimler Asia?

The industry is facing a tremendous transformation from various perspectives. We have three transformations to manage. One is the move from petrol-based systems to decarbonised transportation systems. Be it electric or hydrogen, these technologies require a broad range of investments and changes to vehicle technology.

The second is the rise of digital technologies, and vehicle architecture getting more advanced. The ever-more complex drivetrain management and intelligence in the vehicle need to be continuously upgraded. Last but not least, we also see a big group of new competitors emerging that makes everybody's life more difficult. With this, we see that the investments that need to be made require tremendous scale to justify them.

Both Fuso and Hino are in the early stages of that investment cycle. So, now is the right time to bundle strengths and resources. It is a big opportunity. We see the benefits for both companies, and we are convinced. But, we also have to see that we protect our interests and avoid any inappropriate risks.

Both companies are strong players in the Asian market. We are awaiting clearance from antitrust agencies in the markets. Therefore, I cannot give a clear indication as it could interfere with the assessment of the antitrust in the market. We have some good ideas, but it depends on what the competitive laws will allow us to do.

How do you look at China dominating the electric vehicle technology space?

We have to recognise that vehicle battery technology is currently dominated by Chinese manufacturers. This is not only true for battery cell technology but also for the entire supply chain.

As we know – depending on the technology – there is an array of raw materials that needs to be obtained. That means not only mining but also refining and preconditioning. I think it is very obvious that the Chinese industry is clearly in the leadership position. And even here in Hannover, you can walk across the fairground; it is very hard to find a vehicle that uses a non-Chinese battery. This is a clear credit that Chinese companies have to be granted. So, anybody promoting battery electric technology must see that as a starting condition.

Of course, there is always a question of whether we can localise it. We all know that batteries are not only expensive but also heavy. So it is also a big logistics challenge to transport these batteries, especially when you look at truck technology, which is even more heavier than for a passenger car.

The second thing is we have to recognise that no other country in the world has as much assembly capacity as China. China's assembly capacity far outstrips its domestic demand. So there's a huge overcapacity in the market. Wherever underutilised capacities are, they look for new markets. We are experiencing this globally.

Also, new competitors are emerging with products and technologies that provide new offerings to our customers. India has been very open in the past. We, as Bharat Benz, came to India and have built an assembly line, a network of suppliers, dealers, and partners. We have gained the loyalty of customers, with trust and recognition. With new competitors emerging, we have to work harder and better to defend our position.

What are your thoughts on the use of synthetic fuel in commercial vehicles?

Synthetic fuels are still too expensive. On the other hand, they are a source of energy that would provide a zero-emission or close to zero-emission powertrain; this is very clear.

We know there is still some residual emission from oil, whether in the engine or some other NOx emissions. But from a pure carbonisation point of view, with synthetic fuels made from renewable energies, there is, of course, technically a zero CO2 fuel. But from all that we have seen around the world so far, there has been no large-scale operation that could provide a competitive cost for synthetic fuel. So in the end, it is a cost balance.

The question is, if we fast forward 5-10 years, will there be enough synthetic fuel available? What will be the cost of hydrogen? What will be the cost of synthetic fuel?

I think that is a trade-off we have to see. My first impression is that hydrogen may be the more common technology because it has advantages and will be used by other industries as well.

So, wherever you can have more scale, I think there is a larger potential that the cost will come down quickly enough to make it affordable for transportation companies in India. In the end, what is technically possible is one question. The other question is what is economically feasible for the people transporting the goods every day. That determines the cost for consumers in the grocery store, because all transportation costs end up there.