Commercial transport is the driving force of the global economy, so a more sustainable trucking fleet will be critical to achieving net-zero emissions, says Michael Grahe, head of operations at truck maker Navistar. “We are fully committed to accelerating the impact of sustainable mobility,” he says.
Grahe believes that there is no single model for cutting mobility emissions. Electrification will dominate, but there will be roles for other power sources as well. “Electricity will be the key, but hydrogen will work better where you need more flexibility,” he says, “and diesel engines will continue to be relevant, so we want to make those technologies as sustainable as possible.”
Electricity will be the key, but hydrogen will work better where you need more flexibility.
To learn more about how commercial transport will tackle the green transition, McKinsey’s Philipp Kampshoff sat down with Grahe at the recent M30 Mobility Summit. An edited transcript of their conversation follows.
Overcoming obstacles to the electrification of transportation
Philipp Kampshoff: Michael, great to see you. Can you start by describing your role at Navistar?
Michael Grahe: I work in operations, so R&D, procurement, program management, and quality. At Navistar, we really want to push the envelope on sustainable mobility.
Philipp Kampshoff: And in all of that, what role is electrification playing?
Michael Grahe: Electrification will be the technology that propels our products in the future. We already have two products in the market with the International brand: the eMV Series and the IC Bus—the school bus—which customers are ordering right now. Further products will follow soon.
Philipp Kampshoff: How do you think about the battle between electrification and hydrogen?
Michael Grahe: It’s not so much of a battle; more a coexistence. But from an efficiency perspective, it is very clear: electrification is the way to go. When you look at it from well to wheel, in a hydrogen vehicle, only 25 percent of the energy has an impact. In an electric vehicle, it’s 75 percent. On that basis, electricity will take the major share.
That said, there will be applications where hydrogen is more feasible, because hydrogen vehicles are more flexible. By that I mean, if you have a defined route, you can optimize the battery electric vehicle to that route. So if the vehicle is going 300 miles every day, then you know what batteries to put in. However, if the vehicle is traveling 50 miles one day and 600 miles the next day, it’s more difficult to tailor the batteries to it. There, hydrogen has an advantage.
Philipp Kampshoff: And how has the industry adapted to electrification?
Michael Grahe: I think everybody acknowledges now that this is happening. And it’s not because of regulation. It is a customer-driven shift. Our customers have their own CO₂ targets and are looking at how companies are dealing with CO₂. Looking ahead, the shift will happen much faster than anybody expects. From a timing perspective, an important metric is the total cost of ownership, and we expect that to favor electric vehicles starting around 2025.
Phillip Kampshoff: That’s fascinating. What other megatrends in the future mobility space are affecting transportation?
Michael Grahe: There are a lot of things that go hand in hand with electrification—for example, digitalization and connectivity, because running a transport system becomes much more complex. It’s not just about planning your route—you need to consider charging, range, and the price of electricity during the day. So you need connectivity and digitalization. And then on top of that, autonomous driving will be the next big thing, which absolutely will be revolutionary.
Philipp Kampshoff: So here is the billion-dollar question everybody wants to know: When will we see trucks without drivers?
Michael Grahe: We are already seeing trucks without drivers on dedicated roads. Last year, we had an autonomous truck running in Texas. However, to have autonomous trucks running everywhere, that will probably take a little bit of time.
Philipp Kampshoff: You told us about electrification. But are you still investing in the traditional technologies?
Michael Grahe: Yes. We are investing heavily because the tail of the combustion engine life cycle will be rather long. So we want to be sustainable there too. Next year, we will launch our new integrated power train, which will bring huge performance and emissions benefits to our customers.
Philipp Kampshoff: There are some people who are skeptical about electrification, especially in the commercial-vehicle space, because batteries are heavy and it takes time to charge them. What do you think are the biggest challenges that the industry will have to overcome?
Michael Grahe: The challenge is not so much on the product side, because we can handle the battery weight. The challenge is definitely the infrastructure. For the long-haul truck, that means highway charging, while for regional hauls and school buses it will be depot charging. I think this technology could develop much faster.
Providing enough charging infrastructure requires
a huge effort, not just from OEMs but also from the government. And there, we see that long-haul on-the-highway charging will take a little bit longer. The depot charging will be there rather soon.
Philipp Kampshoff: That’s great. Thanks so much for your time, Michael. Can you close by talking about some of the aspects of the M30 summit that you liked most?
Michael Grahe: It’s the diversity of the people. Because it’s about much more than shifting to a new propulsion system. It’s how we run the whole ecosystem. And there, you have to partner with and work with others and see their approach, and it’s great to be able to do that here.