Munich The high fuel prices could further accelerate the conversion of trucks and buses to electric drives. However, electric trucks are currently hard to come by and expensive to buy initially.
One solution could be retrofitting: Pepper Motion electrifies used diesel commercial vehicles. “We want to convert tens of thousands of trucks and buses over the next few years,” Managing Director Andreas Hager told Handelsblatt.
In order to achieve the climate targets, 2.2 million alternatively powered commercial vehicles weighing more than 7.5 tons would have to be on the road in Europe in 2030. But the manufacturers could only deliver 200,000 new vehicles by then.
“If we don’t electrify the existing vehicles, we have no chance of rotating the fleets,” says Hager. Because a bus with a diesel engine that is newly registered today will still be driving in 2050.
The willingness to change is definitely there in the industry. On the one hand, the operation pays off quickly given the high fuel prices, and there are also massive government subsidies. According to a study by Bain & Company, the majority of fleet managers in Europe want to buy trucks that run on electricity or hydrogen as a preference in three years. “The diesel is gradually becoming obsolete,” said Bain partner Jörg Gnamm.
So far, manufacturers have had comparatively few electric models on offer
However, there are still many obstacles. On the one hand, the manufacturers still have comparatively few electric models on offer. For example, MAN has not yet mass-produced a single all-electric articulated lorry. In addition, many fleet managers still shy away from the acquisition costs.
Pepper wants to solve both problems. “We give the used commercial vehicle an environmentally friendly second life as an electric vehicle,” says Hager. The electrification kits are the “most cost-effective solution”.
The company, which was spun off from Intech, has now been able to convince prominent investors of the business model. The Hamburg family office Lennertz & Co is leading the latest round of financing. The Würth Group is also involved. Friedrich & Wagner Holding, which has been involved since the company was founded, remains the majority owner.
The proceeds of almost 30 million euros are to be used to finance the series ramp-up with strategic partners, further technological development, expansion into other foreign markets and the establishment of an ecosystem of mobility services.
Potential customers for the conversion include the large existing fleet owners such as transport and freight forwarding companies, for whom it is difficult to achieve the emissions targets required by 2030.
Conversion solutions for Mercedes models Citaro, Actros and Atego
The first conversion solutions for the Mercedes models Citaro, Actros and Atego are currently available. Vehicle models from MAN and Iveco are to be electrified in series from next year. Pepper uses a ZF electric portal axle. The heart of the technology is the self-developed Vehicle Control Unit, which controls everything.
Pepper has already won its first pilot customers; dozens of vehicles are to be equipped with electric drives this year and hundreds next year. Overall, Pepper wants to sell more than 1,000 electrification kits per year from 2024. By 2030 there should be up to 60,000 converted and equipped vehicles.
Pepper Motion’s sales should grow correspondingly quickly. According to industry estimates, they should be around 14 million euros this year, as the series is just getting started. In 2026, the proceeds should already be more than one billion euros.
“We give the used commercial vehicle an environmentally friendly second life as an electric vehicle,” says the managing director of Pepper Motion.
(Photo: Pepper Motion)
According to Pepper, he can convert a city bus in six to eight weeks. After the conversion, the buses will have a range of around 250 kilometers.
However, the conversion is expensive at 300,000 euros. At Pepper, however, they are convinced that the whole thing is already worthwhile for fleet operators. After about ten years, the decision has to be made as to whether an old vehicle should be replaced.
A new diesel bus costs 814,000 euros over ten years, including purchase and operating costs, they argue at Pepper. The lower diesel prices before the Ukraine war are still applied.
Despite the supposedly high purchase price, the conversion brings savings of 144,000 euros in ten years of operation, including subsidies it could even be more than 400,000 euros. A new electric bus is also more expensive because of the higher purchase price.
grant from the federal government
The federal government subsidizes the switch to electric drives in a variety of ways. For example, there are special depreciations for e-commercial vehicles and a subsidy program for the purchase of electric buses in local public transport.
If certain criteria are met, the conversion is now equivalent to a new purchase. “The conversion of conventionally operated commercial vehicles to alternative drives can make a significant contribution to the market ramp-up of alternative drives in road freight transport,” said the Federal Ministry of Transport, which set up a conversion task force specifically to define safety and quality standards.
It remains to be seen whether the retrofit system will catch on across the board. In view of the turbulence of the past few years, the freight forwarders only have thin capital resources. Smaller companies in particular are therefore skeptical as to whether the conversion will pay off, especially since nobody can calculate the electricity prices in the next few years.
Pepper also wants to offer “pay per use”, i.e. a kind of rental model in which customers pay a price per kilometer for the package consisting of vehicle including maintenance, charging infrastructure and fleet management.
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But Pepper sees opportunities not only in Germany. A few weeks ago, the company announced its market entry in France. By 2030, Pepper, in cooperation with REV Mobilities, wants to equip around 5,000 electrified buses and trucks larger than 7.5 tons in the French market. A subsidiary was also founded in Austria. The company is also currently working on the development of a fuel cell drive system ready for series production.
One sees “high growth potential for Pepper, not only in Germany and Europe, but also worldwide in a market that will rapidly gain in importance,” said the new investor Philipp Lennertz from Lennertz & Co.
The Würth Group will also be involved as a strategic new shareholder. “Our society must push for climate-friendly and sustainable solutions if we want to make the transition to mobility that is sustainable for the future,” said Managing Director Jörg Murawski. Würth is pleased “to be able to support this exciting project with a strategic participation”.
Managing Director Hager is convinced that the development will be further accelerated by the high fuel prices and the geopolitical upheavals. “Away from oil and gas” is the sign of the times. “It’s a new age that’s just emerging.”
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