Interview Christian Levin

Christian Levin, CEO of Scania and the TRATON Group, believes that European CO₂ regulations pose a greater threat to Europe’s heavy truck industry than Chinese competition. He also reveals that Scania is currently losing money on every electric truck it sells.

Christian Levin, President and CEO of Scania and also CEO of the TRATON Group, believes that European CO₂ regulations represent a greater threat to Europe’s heavy truck industry than growing competition from China.

Speaking to Commercial Motor in the latest episode of the Torquing Trucks podcast, Christian Levin explained that the European battery-electric truck market simply is not growing quickly enough to allow manufacturers to meet the targets set by the European Union for 2030.

He was speaking shortly after joining six other commercial vehicle manufacturers’ executives at the ACEA press conference held during the IAA Transportation trade fair in Hanover. Together, they called for action to be taken regarding the European timetable for reducing CO₂ emissions by 2030.

Christian Levin claims that manufacturers have fulfilled their part of the agreement by developing electric trucks and launching series production. However, the business model and charging infrastructure needed to convince haulage companies to invest are not progressing at the same pace.

“To put it very simply, we need to make diesel more expensive,” he said. “I know that many of your readers and listeners do not want to hear that. The other solution is to make electricity, or the energy used by electric vehicles, cheaper.”

He adds that the investments required to switch to battery-electric vehicles must also become less expensive.

“If these conditions are not met, no matter how good the vehicles we bring to market are, they will not take off.”

According to Christian Levin, battery-electric trucks accounted for around 2% of the European market last year. Their share has only risen to 2.4% since the beginning of this year, whereas it should reach 35% by 2030 to meet the European CO₂ targets.

“We are not even seeing the beginning of an S-curve,” he explains. “It is therefore very unlikely that this will happen. We are even saying that it is impossible. It will not happen.”

The executive warns that manufacturers face substantial penalties if the targets are not met. He cites the example given at IAA by Karin Rådström, CEO of Daimler Truck: falling ten percentage points short of the target could result in a €1.2 billion fine.

“The same applies to us. This cannot happen. It must not happen,” Christian Levin continues. “This situation represents a greater threat to European industry than the one many people talk about, namely the Chinese threat. Personally, I am talking about the threat coming from Brussels. It is hanging over our heads, and it is absurd.”

Christian Levin also confirms that Scania is currently losing money on every battery-electric truck it sells.

He explains that the company invested in its industrial capacity on the assumption that electric trucks would reach a 50% market share by 2030. At current volumes, these costly facilities remain significantly underused.

“We had invested in anticipation of a 50% adoption rate in 2030, whereas today it stands at just 1 or 2%,” he says.

“In a conventional factory producing diesel vehicles, you need to use 70 to 80% of capacity to break even and start making money. We are only at a few per cent. So, obviously, we are losing money on every vehicle.”

Payload is another area in which governments could, according to Christian Levin, improve the business case for electric trucks. Asked whether higher gross vehicle weights and axle loads could be permitted to compensate for the considerable weight of batteries, he believes both measures would be helpful.

“We are seeing a loss of payload of between two tonnes and potentially five tonnes,” he explains. “Can this be offset? Yes, it is possible, and it should be done.”

He believes the UK could “lead the way”, particularly because three-axle tractor units are widely used there. Greater spacing between the axles could also free up more room for batteries. Axle load limits must also be reviewed, given the difficulties involved in distributing the weight of the batteries across the vehicle.

However, Christian Levin does not believe that hydrogen can compete with battery-electric trucks in the mainstream market.

At IAA, Scania announced plans to put 40 trucks using Toyota’s fuel cell technology into customer operation. Christian Levin nevertheless rejects the idea that this decision represents a reversal of TRATON’s previously expressed scepticism towards hydrogen.

“We are keeping one foot in the field,” he explains, describing the project as a small-scale experiment.

According to him, previous hydrogen trials have always led to the same conclusion: “Operating it is far too expensive. We therefore do not believe it is the way forward.”

Christian Levin is particularly critical of public investment in hydrogen for road transport. He believes this funding would be better used to develop infrastructure for battery-electric vehicles.

“I am also personally concerned that a large amount of investment is currently being directed towards the hydrogen transport economy, even though it will generate no return,” he says.

“If we say that we now need to focus on the conditions required for battery-electric vehicles to develop and put charging infrastructure in place, and then add, ‘But let’s not forget hydrogen’, we create confusion. We disorient the public, our customers and, even worse, policymakers.”

He goes further: “We are wasting public money by pursuing the wrong strategy. So let us focus on battery-electric technology. This is the technology that will dominate the market over the next ten to fifteen years.”

While describing fuel cell technology as “brilliant”, Christian Levin concludes: “I love it, but it should not be used for trucks.”

China inevitably played a major role in the discussion, following the unprecedented and highly visible presence of Chinese heavy truck manufacturers at the IAA Transportation trade fair.

Christian Levin nevertheless believes that the European truck market will be much harder to enter than the passenger car market.

A truck, he points out, is a professional tool purchased to generate a return on investment. Its purchase price and vehicle quality therefore represent only part of the equation. Haulage companies also need a workshop network, spare parts supply, financing solutions and visibility regarding residual values.

“You can arrive with a very capable and inexpensive product, but in our industry, it will take you many years to overcome the trust that has already been established, the customer knowledge and all the services required to become a reliable player and partner,” he explains.

Christian Levin nevertheless acknowledges that the transition to electric trucks creates an opportunity for new entrants.

“A technological shift is a good time to enter the market because customers are looking for new solutions,” he points out.

While he believes that Chinese trucks with internal combustion engines still lag behind their European competitors, his assessment of their electric models is very different.

“The electric vehicles have reached the required level,” he says. He urges European manufacturers to respect their strongest Chinese competitors and monitor them closely.

“We will see in a few years, perhaps five years, how many of them are still around. I am certain that some will survive. We absolutely must respect them and keep a very close eye on them. But not all fifteen or twenty manufacturers we saw trying their luck in Europe at IAA will succeed.”

Regarding the politically sensitive issue of tariffs imposed on Chinese trucks, Christian Levin reiterates his commitment to free trade while believing that Europe must ensure a level playing field.

“We want everyone to play by the same rules,” he says.

He warns that tariffs can lead to retaliatory measures, as demonstrated by the impact of trade barriers in the United States. However, Europe must also take into account the restrictions faced by Western manufacturers operating in China.

“We need to discuss reciprocity,” he says. “If we are talking specifically about China, there are many mechanisms that can exclude Western heavy truck manufacturers or make life more difficult for them.”

He adds: “There is a fine line between destroying the benefits of globalisation and entering trade wars in which everyone loses on all sides.”

Scania itself is investing heavily in China, although Christian Levin states that there are currently no plans to sell Scania trucks manufactured in that country in Europe.

The Chinese operation is intended to supply the local market and potentially other regions across Asia, the Pacific, the Middle East and Africa. It must also provide Scania with something Christian Levin considers equally valuable: the opportunity to learn.

The main lesson concerns speed.

Christian Levin compares what European manufacturers can learn from China today with the lessons they drew from Toyota’s production methods in the early 1990s, which had profoundly transformed their approach to quality and productivity.

“It is all about bringing new technologies to market quickly. Speed is the key. This is what China is teaching the world today,” he explains.

“If you do not learn from this situation, I am certain that you will become completely irrelevant in the future.”

He describes Scania’s investment in China as a “strategic bet” that will enable the company to draw on the Chinese approach to industrialisation.

“Not everything can be transferred to Europe, but a great deal of it can and must be. Otherwise, we will no longer be globally competitive.”

This pressure to reduce costs and increase volumes is also transforming TRATON. Scania is already sharing more powertrain technologies with the group’s other brands, and Christian Levin believes greater standardisation is inevitable.

Asked whether this strategy could one day be extended to cabs, he replies: “So far, we have refrained from doing so. But I think it will be inevitable to examine cab structures and chassis structures.”

More importantly, he believes TRATON must create a common electrical and software architecture for its five brands, as vehicles increasingly depend on software.

Christian Levin nevertheless insists that Scania will remain a premium brand. Energy efficiency, the driver experience and, increasingly, services will enable the brand to continue to differentiate itself.

“There are only two types of drivers: those who drive a Scania and those who dream of driving one,” he jokes.

The full interview with Christian Levin is now available in English on Will’s podcast: Torquing Trucks.

Text: Will Shiers Photos: Scania