Daimler fights Tesla by unveiling electric heavy-duty truck

By Eric M. Johnson and Ilona Wissenbach

PORTLAND, Ore./FRANKFURT (Reuters) - Daimler AG unveiled on Wednesday an all-electric big rig truck it promises to have in production in 2021, as the German automaker mounts a major challenge to European manufacturers and Tesla Inc .

Truck buyers anticipate global regulation to curb pollution from trucks and see advantages from lower fuel and maintenance costs of electric vehicles, but a fleet technology switch is far from certain given challenges of cost, charging infrastructure, range, and the potential for heavy batteries to constrict payloads.

Daimler's Freightliner eCascadia is an 18-wheeler with a 250-mile (400 km) range, aimed for regional distribution and port services, while Tesla has said that its Semi - which it expects to build by 2020 - will be suited to longer-distance runs with a 500-mile range.

Daimler said it will start delivering prototypes to customers later this year for field-testing and expects to have the trucks in production by 2021.

Daimler on Wednesday also unveiled a medium-duty Freightliner eM2 106, with a range of up to 230 miles, designed for local distribution, such as beverage delivery, which some analysts see as the "sweet spot" of the emerging electric truck market.

Truckmaker Navistar International Corp and its partner Volkswagen AG aim to launch their own medium-duty truck in North America by late 2019.

Daimler, with a $66.4 billion market capitalisation and best-known for its luxury Mercedes-Benz brand, has a 40 percent share of the roughly $39 billion North American heavy-duty truck market.

Local delivery "makes an enormous amount of sense because it doesn't have the long-range requirements, yet puts on enough miles on a daily basis where you can get fuel savings," said Tim Denoyer, senior analyst at ACT Research, a commercial vehicle consultancy.

Success for the larger class 8 trucks would hinge on lowering battery costs: "While electric truck sales will be fairly significant in coming years, I don't think it will displace diesel anytime soon especially in highway, long-haul trucking where obviously battery capacity and range anxiety present itself," Denoyer said.

Daimler Trucks North America Chief Executive Officer Roger Nielsen said the truck's payload had been curbed by the size of batteries.

"The class 8 tractor here is designed for local and regional distribution and drayage, especially the short-haul movement of intermodal containers, be they from rail yards or shipyards," Nielsen said.

"Overall, this is an ideal application for customers whose routes have a distinct radius and whose operating model provides time for battery recharge," he said.

A heavy-duty commercial truck runs up to 100,000 miles a year, and Tesla has promised a 20-percent saving on current per-mile operating costs, to some scepticism.

Tesla also has more than 450 reservations for its truck and expects to have a head start, although its plans are still developing and the roll out of its Model 3 sedan has been plagued by production problems. CEO Elon Musk plans to start production in 2020 but there is no Tesla truck factory yet.

Daimler's announcement came after its trucks division said it has set up a research and development centre for autonomous driving in the United States, as the German manufacturer works to get self-driving freight trucks on the road.

Stuttgart-based Daimler will invest more than 2.5 billion euros ($2.9 billion) in R&D at its truck operations by 2019, with more than 500 million euros earmarked for electric heavy-duty commercial vehicles, connectivity and self-driving technology.

Serial production of the eActros truck with an operating range of up to 200 kilometres (125 miles) will start in 2021, said Sven Ennerst, head of truck product engineering at Daimler, citing tests with other models including the eFuso and eCanter trucks.

Daimler Trucks expects a strong second half of the year but second-quarter business remains challenging, its finance chief said Jochen Goetz, its finance chief, citing problems in the supply chain.

A new efficiency programme will not be needed, Goetz said, adding the truckmaker would focus on executing its previous savings plan and aim to lower costs by 1.4 billion euros as planned by 2019.

($1 = 0.8490 euro)

(Reporting by Ilona Wissenbach in Frankfurt and Eric M. Johnson in Portland, Oregon; additional reporting by Alexandria Sage in San Francisco; writing by Andreas Cremer; editing by Mark Potter, Lisa Shumaker and Peter Henderson)