The Future of Electrification and Autonomous Trucks
Learn how ZF Group is leading the charge toward electrification and autonomous trucks.
Episode 244: Over the years, we’ve seen a lot of advancements when it comes to commercial trucks. One of these was the push for the electrification and automation of trucks. However, where are these trends going? And what can we expect to see in the near future?
My guest today is Shaun Twomey of the ZF Group.
Shaun has been with ZF for more than five years, beginning in ZF’s commercial vehicle steering group. After ZF acquired WABCO in May 2020 and formed a new division in early 2022, Shaun assumed a new role of Director of Americas Strategy, Market and Sales for the world’s largest CV supplier and systems integrator.
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Transcript of Episode:
Jamie Irvine:
You are listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine, and this is the show where you get expert advice about heavy-duty parts that keeps trucks and trailers on the road longer while lowering cost per mile.
If you’re like me, who’s been in the industry for a few years, coming up 25 years, we’ve seen a lot of changes with commercial vehicles. One of the things that we’ve really seen in the last few years is the introduction of a lot of new technology, and that’s what we’re here to talk about today. My guest today is Shaun Twomey of the ZF Group, and Sean has been working with ZF for more than five years.
He began in the commercial vehicle steering group, but after ZF acquired WABCO in 2020, they formed a new division in early 2022, and Sean assumed a new role of director of America’s Strategy Market and Sales for the world’s largest CV supplier and systems integrator. That’s what ZF has become. So Shaun, welcome to The Heavy-Duty Parts Report. Glad to have you here and have an opportunity to talk about something that you’ve got a lot of expertise in.
Shaun Twomey:
Hey, Jamie. Yeah, thank you very much. Glad to be here.
Jamie Irvine:
So let’s start our conversation off by just talking a little bit about the trends. What’s the trends that you’re seeing right now? I hear words like efficiency, safety, autonomy and connectivity. What’s the trends and how is it impacting fleets?
Shaun Twomey:
So we can boil these things down. Jamie, I think the three major mega trends as we call ’em. So one of those is electrification and mobility. Another one is ADAS and AD, which just to define for your listeners is the combination of advanced driver assistance systems and then autonomous driving. And we can talk about that as a spectrum. And then the third, as you mentioned, is really connectivity and digitalization.
And with these three sorts of pillars as the major trends that we see in ZF and in our commercial vehicle division in particular we really oriented both our strategy over the next 10 to 15 years and the portfolio of technologies that we have to support each of these trends. And so I think it would probably be helpful for us to maybe pick apart a little bit of what we see in each of these spaces, Jamie, to get a better sense of, does that ask Crystal ball look like for each of these? And then maybe what are some of the technologies that we have to support each of these trends?
Jamie Irvine:
Right. Well, that makes sense to me. So let’s start off with electrification. We we’re seeing lots of media releases about it. We see states like California and New York adopting mandates towards 2035. This is having a big impact on fleets, and I know I was just at TMC’S fall meeting in Cleveland and some of the conversation around, is there going to be infrastructure? How do I know that I’m making the right decision? When should I start the move towards electrification? These are the kinds of questions that fleets are having every day.
Shaun Twomey:
It’s an interesting dynamic where immobility is concerned because I think on the one hand, there was a lot of momentum in the industry right now to push toward electrification. You mentioned some of the state actions. California, of course, I think is at the state level leading the charge with C.A.R.B., California Air Resources Board and their various policies and regulatory actions. One coming around the corner in 2024 model year is advanced clean trucks, just as one example. But all of these things are sort of generally pointing in the direction of either reducing or outright eliminating emissions at the federal level. One of the biggest, I think carrots, if we talk about regulatory carrots and sticks is, as I’m sure you’re aware the Biden Administration’s Inflation Reduction Act.
And that provides some pretty healthy tax credits for fleets in the form of credits on the purchase of medium and heavy duty vehicles that are electrified up to $40,000 and then for charging stations up to a hundred thousand dollars for recharging those batteries on those vehicles. So there are, like I said, on the one hand, good points of momentum that support electrification. And if we as ZF were to step back and pull out our crystal ball and look at say 2030, we would estimate that somewhere in the ballpark of about 40 to 50% of all medium and heavy duty trucks in North America will be electrified by 2030.
Jamie Irvine:
Really, that much by 2030? I would’ve thought that the trend would’ve taken us out beyond like 2035 to 2040 before we hit that.
Shaun Twomey:
Well, there’s an important distinction there in that that’s production, right? So when you look at say for arguments sake, say 600,000 vehicles being built, half of that,
Jamie Irvine:
Right, because trucks produced in 2029 that are ICE engines would be in use in service for maybe 10, 15 years, taking us past 2040. Okay, I get it.
Shaun Twomey:
Yeah. However, on the other hand, there are, I think as you pointed out, some unknown, some uncertainties that we as an industry still have to work through. One, I think very recurring theme is the infrastructure. So when a long haul class eight electrified tractor goes out on the highway and they run out of juice in say, 300 miles, if it’s a BEV, where do they stop the charge? That’s an open question. Will the supply of batteries that we need and all of those critical earth elements like lithium and cobalt, will that be in plentiful enough supply to allow us to electrify everything we want to?
Will the utility infrastructure be enough to provide what by some estimates is another 230 terawatts of power to charge all of these vehicles? So there are absolutely unknowns, Jamie. I don’t think we have them all figured out as an industry, but I think we are encouraged by the fact that there’s a lot of momentum that points in that direction.
Jamie Irvine:
And from a fleet’s perspective, not only do you gotta get your head around electrification and a completely different powertrain, power source for your commercial vehicles, but then you also have to think about, to your point, the autonomous systems, the assistance for drivers and those ADAS systems with collisions, it’s much more complicated.
There’s a lot of concerns there about how to fix those and make sure those systems are back to exactly the specs, otherwise you could have issues. So there’s all this other technology and that category that are affecting the decisions fleet maintenance managers have to make and the things repair technicians have to learn.
Shaun Twomey:
That’s right. ADAS, AD, if we can sort of pivot to that topic for a minute. I think from a fleet perspective, there’s a fairly clear value proposition for ADAS and AD technologies if we just lead with safety. So safety is far and away way that’s usually important topic to fleets. Drivers like all of us are human. And so as humans we make mistakes. We sometimes get sleepy or we don’t pay attention. And these things, unfortunately for fleets can translate into higher insurance premiums.
And at the other end of the spectrum, the so-called nuclear verdicts, which are very costly and ADAS technologies really help mitigate a lot of that exposure for fleets and ZF are developing lots of technologies in that direction. And in the near term for the next five to 10 years, that suite of ADAS technologies that the industry is launching, we do believe will go a long way in helping fleets better manage their exposure, add a very necessary and critical element of safety, and will be certainly a large stepping stone as we transition, eventually to some degree in the industry of fully autonomous vehicle.
Jamie Irvine:
And connectivity kind of plays a role in all of that as well. There’s an interesting quote here from Joyce Tam, she’s the Vice President of Programs and Product Management from Peloton, and she said that one of the problems with connectivity is that we have too much data and not enough intelligence. So how is your company working to help solve that problem?
Shaun Twomey:
Good question. So we actually announced in a couple of points this year, both at our global technology days event in Germany at our company owned facility as well as in Hanover, not just a few weeks ago, about something that we’re excited to bring finally to the North America market called Scalar.
So Scalar is basically a digital backbone to support fleet orchestration and transportation as a service or a task. But we view this as really our entry point for the market so that we can bring together under one digital roof, one ecosystem, all of the things that a fleet cares about in managing their trucks and vehicles, whether they’re outside in the bay, right beside the office or a thousand miles away, telematics to connectivity, to predicted maintenance, to route planning. Everything under the sun for fleets is intended to be addressed with that solution.
Jamie Irvine:
All right. Well we’ve been talking about the mega trends here in commercial trucking. We’re going to take a quick break. When we get back from our break, we’re going to talk about how all of this technology actually can help fleets and make good decisions for their total cost of operation. We’ll be right back.
Commercial Break
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Jamie Irvine:
We’re back from our break and before the break, Shaun, you did a great job of giving us kind of an overview of these mega trends and breaking it down in a way that we could really understand. You finished off in our previous segment talking about this new backbone for fleets that you’re developing. What’s it called again? Scalar.
Shaun Twomey:
Scalar, exactly
Jamie Irvine:
Right. So let’s talk a little bit about how the actual platform is going to work, how it would get implemented and integrated into a fleets operations.
Shaun Twomey:
So we’re actually right now as a business working internally to decide how exactly when we want to engage fleets with this solution. It’s something that really kind of spans multiple channels and has I think multiple routes to market. There’s certainly an OEM component. There’s first and foremost a hardware piece and a software piece to make these things come together and talk and communicate. There’s also I think, a distinction that we’re trying to make channel wise between OE, so first fit and aftermarket, but I think we’re going to have much more to say about that as we launch this and the second half of this year.
Jamie Irvine:
That makes a lot of sense. So conceptually though, when you look at whether a fleet buys a vehicle new from the OE and it has this on the truck or it gets retrofitted into their fleet later, as you mentioned it, we might have more information that later next year. What is the kind of the economic impact on fleets today when they have all this data? They have connectivity, they’ve got telematics, but they’re probably using a lot of different platforms to try to manage it. What kind of an economic impact is that creating on fleets? Because they’re trying to use this information to lower cost of operation, but that isn’t necessarily what’s happening right now.
Shaun Twomey:
I think predictive maintenance is a really good example of that, Jamie. So today for a fleet that doesn’t have any sort of intelligence about their vehicle on the road, doesn’t understand, for example brake pads and the condition, it can be a much more expensive proposition to have to fix something after it’s failed as opposed to predictively knowing what the next time that truck comes into the depot, we need to take a preventative action there.
The other point that you mentioned about multiple platforms is also something that we’re looking to tackle with Scalar and with our front end solutions for that product so that instead of a fleet having to go to multiple platforms across multiple tier ones to have a complete connected view of the vehicle, we’re looking to build an ecosystem that’s basically a one-stop shop so that fleet can use one solution where behind the scenes we make the arrangements and exchange the data with our partners, also players in the industry.
But for the fleet, it’s very transparent, it’s very easy to use and like I said, it’s a one-stop shop so that they can focus on really doing what they do best, which is running their fleet operations and not fiddling with multiple different solutions.
Jamie Irvine:
Even when I was just selling parts, I would travel with a manufacturer rep and we’d go into the field and talk to a fleet maintenance manager and whatever product they were selling, let’s say we were talking about spring brakes or something they would explain to the fleet why buying the cheaper product actually costs them more in the long run and how spending more money on the purchase price, but a better quality product lowers cost of operation.
And I would have that conversation over and over and over again. And I do remember some fleet maintenance managers saying there’s so many factors to consider here when making decisions on programs that sometimes they would just almost feel overwhelmed or get lost in that and then you would just default back to old behavior.
So one of the things I am, I’m excited about seeing where the industry goes with predictive maintenance and a one-stop shop and having all of this brought together into one place, is like how far can we go with lowering cost per mile, lowering total cost of operation? Can we reduce it by 10%? Can we reduce it by 40%? How far can we go with that combination of good data, technology and being able to see a dashboard that allows you to make those intelligent decisions. I think the next few years are going to be very exciting of where we can take that. What’s your thoughts on how far we can go?
Shaun Twomey:
It’s a good question. I’m not sure I have the perfect answer, but as you described this, Jamie, this reduction in total cost of ownership, I’m reminded of our discussion a moment ago in electrification. I think for a fleet in general, when you look at all of these trends coming together and converging over the next 10 to 15 years, I think there are huge opportunities for really significant reductions in TCO on electrification. For example, we know just ballpark figures that electrified powertrains probably means something like a 30 to 40% reduction of maintenance costs, ADAS and AD.
We talked about the fact that the reduced safety incidents, the reduced potential for crashes or other incidents on the road that should translate into better insurance premiums also for the fleets. Now with connect connectivity on top and things like predictive maintenance that will reduce costs. I think the road ahead for more efficient operations and lower costs for fleets is really phenomenal and it’s really the limit.
Jamie Irvine:
And in addition to all of the cost savings related to the equipment, there’s also the issue of our demographics. We just don’t have enough people to fill all the open positions today. And I personally think that all of this technology is going to help ease some of that pressure because hopefully we’re going to be able to achieve more with less people and that’s not going to cost anybody their jobs because we got more open positions now than we have people anyway. So maybe we might even be able to solve some of the human capital challenges that most companies are having.
Shaun Twomey:
I think you’re right, and in fact, one thing I’ve come across recently that I thought was interesting is as it relates to ADAS and AD, I do think that there’s an understandable perception by drivers over this fear that in the future, a self-driving truck just means the elimination of driver jobs. And I know that on the one hand, we as an industry talk about the prospects of autonomous vehicles in the commercial vehicle space as kind of being a solution for the driver shortage.
But on the other hand, I’ve seen some research from the Department of Transportation and the Department of Labor that basically says that if we fast forward and imagine a future with autonomous vehicles in commercial trucking that while for example, long haul hub to hub routes might be automated, you’ll have an actual greater need than today for humans drivers for the first mile in the last mile and more of the hub centric operations. And so while I don’t believe that we’re going to have the same criticality with the driver shortage in the future due to AVs, I do think that we’ll actually have kind of a mix shift of where the labor is in the value training for trucking. And so I think that’s on the road,
Jamie Irvine:
And I don’t care how good the systems are, we are a ways away from those systems being able to operate in vocational applications. Like anybody who wants to test that, you just come out to where I am in northern Alberta and I’ll take you on a road called the Willow and I can promise you there’s no AD that’s going to be able to handle that in one day it’s minus 40 the next day it can be a complete blizzard and the next day everything can be melting and you can have two feet of mud, at least for the face foreseeable future.
Many of the drivers that are working today, they will long be retired before we have robotics that can handle that kind of environment. So yeah, I think the trend is one that actually, to me, I have a lot of optimism looking forward. I don’t think it’s doom and gloom for the industry. I think anybody working in the industry right now is going to be able to finish out their careers, even if you’re a young person and still you’re, there’s going to be lots of opportunity for you in this industry.
Shaun Twomey:
Totally agree. In fact, as one talking point, the temptation when we talk about autonomous vehicles is to think of the vehicle that literally can drive itself anywhere. And the reality is that for the foreseeable future, as you put it, we don’t have that vision. We don’t believe that in the next 10 years, certainly, if not longer, that there will be level five commercial vehicles on the road handling every single scenario that you can imagine.
We do think that there will be level four commercial vehicles that are geared towards specific operating design domains. And we think that that’s a good example of the fact that while the industry doesn’t have to go to fully autonomous trucking, that even a level four deployment is enough to really be transformative for the industry and really give us a lot of opportunity to see AVs in action.
Jamie Irvine:
Well, we’re very excited to have you back on the show, Shaun, to talk next time about a real world example where someone’s deployed this technology and you can tell us all about how they were able to improve their operation. We’re looking forward to seeing more from your company. The work that you and your company are doing is fantastic for the industry, so thank you for all that you’re doing.
Shaun Twomey:
Thank you very much, Jamie.
Jamie Irvine:
You’ve been listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvin, and we’ve been speaking with Sean Toomey of the ZF Group. To learn more, you can go to zf.com. Links are in the show notes. Shaun, thanks again for being on the show and I look forward to having you back.
Shaun Twomey:
Thank you. Take care.
