Navistar and Volkswagen will partner on a new electric truck to be built by the end of this decade, although company officials haven’t said whether it will be built in Springfield.
The manufacturers will collaborate to develop an electric-powered, medium duty vehicle for customers in U.S. and Canada. The new truck could be launched in late 2019 or early 2020, according to information from the company, which declined to provide further details on Friday.
Earlier this year, Navistar finalized a strategic alliance in which Volkswagen bought a roughly 17-percent equity stake in the Illinois-based truckmaker. Navistar is a major Springfield employer with about 1,500 current workers and thousands of retirees in the area.
“Our alliance with Volkswagen Truck and Bus is allowing us to move much more quickly into electric propulsion, thanks to our ability to leverage their technology investments and components in segments of the market where we’re already a leader,” said Troy A. Clarke, Navistar’s president and CEO in a statement. “We believe the Class 6/7 vehicle is ideal for electric powertrain solutions in the near term, given its abundance of packaging space, and that these vehicles typically run short distances and can depot to recharge at the end of the day.”
It’s not clear where the truck will be built, although Springfield would make sense, said Stephen Volkmann, an analyst for Jefferies Equity Research who covers Navistar.
No details are available about what impact, if any, the electric truck might have in Springfield, said Jason Barlow, UAW Local 402 president. The union represents most Springfield workers. Navistar also has an assembly plant in Escobedo, Mexico.
“With over $80 million in recent upgrades to the Springfield facility, we are equipped to build any vehicle World Headquarters wants us to build,” Barlow said. “The Springfield facility has capacity on days, along with second-shift capabilities. The UAW membership have contributed to the company’s turnaround and deserve to have additional products made in Springfield.”
Production would likely be on a small scale initially, Volkmann said.
“I would expect this just to be another drivetrain to be assembled on the same line as the others,” he said.
At the same time, it’s clear interest in electric trucks in increasing, he said.
He pointed to companies like Daimler AG, which rolled out the Fuso eCanter earlier this month. The fully electric-powered light truck has a range of a little more than 60 miles. UPS will be the first commercial customer to use that vehicle, according to Daimler, which said it expects to deliver about 500 of that model in the next two years. Larger scale production is expected to start in 2019.
Truck makers like Cummins and electric car manufacturers like Tesla are also developing electric trucks. The market still faces big questions, Volkmann said, like battery life and the residual value of the trucks. But companies are trying to carve out a space now in anticipation of potential growth.
“The current expectations that I have seen call for maybe a third of the market to be electric in the 2025 to 2030 timeframe,” Volkmann said. “Of course that could change with a battery breakthrough or if diesel prices go up dramatically.”
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By the numbers
1,500: Navistar employees at its Springfield plant
$37 million: Net third quarter profit reported by Navistar
$34 million: Loss recorded by Navistar during the third quarter in 2016