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Daimler (DDAIF), Volkswagen (VWAGY) & Volvo Unite for EV Chargers

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Daimler’s (DDAIF - Free Report) truck arm, Volkswagen’s (VWAGY - Free Report) heavy-truck business, the Traton Group, and the Volvo Group recently announced the decision to form a joint venture (JV) for developing a network of high-performance public charging stations for electric heavy-duty long-haul trucks and buses around Europe.

These three leading European truck makers will enter into a non-binding agreement, terms of which will be finalized by the end of this year. The three companies plan to jointly invest 500 million euros ($593 million) with the aim to install and operate 1,700 charging points within five years in strategic locations and near highways. Nonetheless, the companies will continue to compete in all other areas, such as vehicle technology.

Reportedly, the JV will function under its own corporate identity out of Amsterdam, with Daimler, Traton and Volvo having equal ownership in the venture. The venture will commence operations next year with the aim to significantly enhance the number of charging points in Europe.

Rationale Behind the Partnership

Inadequate charging infrastructure has been a major deterrent to the mass adoption of battery-powered electric vehicles (EVs) for both individuals and freight companies. Nonetheless, with the partnership between the three companies, charging stations will expand across Europe, thus reducing customer fear of not having enough charging points while using an EV. Moreover, by widening the charging infrastructure, Volvo, Daimler and Traton can also bolster their own sales of electric trucks and buses.

The three companies are highly optimistic about this partnership. Europe only has 10 charging stations, at present and ACEA — the European car industry association — has estimated the need for up to 50,000 high-performance charging points across the continent by 2030. Hence, this alliance will help advance Europe toward this goal by building a reliable public charging network.

Besides, this pioneering relationship between the companies will also facilitate achieving the European Union’s goals of achieving carbon neutrality in freight transportation by 2050 by developing the right infrastructure that complements zero-emission transportation options.

The charging stations will be brand-agnostic and provide overnight chargers as well as fast chargers that can recharge trucks within the 45-minute compulsory rest period that European truckers are required to take for long-distance travelling.

In order to accelerate further, the JV is open for other automakers that can join forces to contribute to the rapid expansion needed to reach the climate-neutral goals.

The latest arrangement can be viewed similar to the JV called Ionity, founded by BMW AG (BAMXF - Free Report) , Daimler, Ford (F - Free Report) and Volkswagen to provide for a high-power charging station network for EVs to facilitate long-distance travel across Europe.

This is not the first time that Daimler Trucks and the Volvo Group have teamed up. Earlier this year, these two competitors came together to produce hydrogen fuel cells for use in heavy-duty big-rigs. The latest venture is another sign that major companies are joining hands to achieve their shared climate goals.

Daimler currently carries a Zacks Rank of 2 (Buy), while Volkswagen has a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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