joachim rosenberg, executive vice president, volvo group
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Welcome, welcome, welcome everyone to this episode of Tech. Cars. Machines. This is your host, Ali Tabibian. You’ll find more information about me and this podcast series in the show notes.
Look around you, wherever you may be. Every object was transported by a truck for some if not all of its path to you. Therefore, the opportunities, restrictions and costs of decarbonizing trucking transportation are critical to everyone. Our guest today on this subject, Joachim Rosenberg, is with Volvo Group, where he is Executive Vice President of Strategic Initiatives and President of Volvo Energy. This is the fourth episode where we talk to a world leader in trucking. Our previous three discussions were with Atif Askar, head of strategy & M&A at Traton; Jan Kronig, who plays the same role at Daimler Trucks, and Amy Davis, head of alternative power technologies at Cummins Engine. Those three discussions covered, in reasonable technical depth, the variety of power trains and infrastructure choices the trucking industry is pursuing. Our conversation today with Joachim has technical depth, but is most striking in the sincerity, passion and deep personal commitment to sustainability that Joachim and by extension the Volvo Group exhibit. Quite honestly, I was not expecting this to be my key takeway, especially since words like passion and commitment used quite loosely these days. But listen for yourself, and I think you’ll hear what I mean.
A little bit of background on Volvo Group, which is a publicly traded holding company, and one of the handful of large, global, heavy-duty transportation OEMs. Some business key metrics: 100,000 employees, 13 brands, 190 markets and production facilities in 18 countries. Trucks, buses, construction equipment and marine and industrial engines, as well as financing and services are all part of the portfolio, but -- as a quick reminder -- passenger cars are not. That’s been a separate company for more than 20 years . Some of the Groups brands other than Volvo that you may be familiar with, include Renault Trucks and if you played with toy trucks as a kid, Mack Trucks. The grouphas 15-30% market share in major geographies around the globe, and advertises a more than 50%+ share in European electric trucks. A few financial notes: about $47 billion of profitable revenues in 2022, and, as of today, about $53 billion of enterprise value.
One last thing: “SBTi” which Joachim refers, stands for “Science Based Targets initiative”. It’s part of the Paris climate agreement and is a set of resources and guidance for best practices in setting carbon reduction goals.
Without further ado, let’s get to it!
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Welcome, welcome, welcome everyone. To the most recent episode of Tech, Cars, Machines. We have a wonderful guest for you here today. It's Joachim Rosenberg coming to us from Sweden today. Joachim, thank you so much for joining us.
Joachim Rosenberg:
Thank you for having me, Ali. It's my pleasure.
Ali Tabibian:
Joachim, where specifically are you joining us from today?
Joachim Rosenberg:
Today I'm at the Volvo Group headquarters in Gothenberg, Sweden. Stockholm is on the east coast of Sweden and Gothenberg is the second city of the country located on the west coast and it's the birthplace and home to the Volvo Group.
Ali Tabibian:
Okay. So thank you for joining us from there:
Joachim, tell us a little bit about yourself and your background. I know your role has increased significantly over the last couple months, really over Davos I think is when your role roughly, approximately at that time was expanded. Please tell us what you've been doing at Volvo and what does your most recent role entail?
Joachim Rosenberg:
Oh, thank you Ali. In brief, I'm married with a father of four kids and two dogs I usually say. My background is in engineering and economics. And before I joined the Volvo Group some 18 years ago, I spent eight years with one of the major US-based consultant companies. Within the Volvo Group, I've been, you could say all over the place, but mostly on the sales side of things. Also running complete business areas with the P&L and balance sheets. And 15 of those 18 years I've been based in Asia, five years in China and 10 years in Japan, then on behalf of the Volvo Group.
Ali Tabibian:
Wow, that's a very impressive background and it's one thing that's noticeable in what I'll broadly call the trucking companies, just extraordinarily global companies with a lot of localization, surprising amount of localization for the uninitiated to the product. Maybe give us a little bit of an overview of the group please, Joachim, and how you organize yourself globally, what your major brands are.
Joachim Rosenberg:
Well, thank you. So the Volvo Group divested the car division because I usually get that question. So we divested the car division in 1999 to Ford Motor Company who subsequently in the wake of the global financial crisis sold it to Geely in 2010. So Volvo Group and Volvo Cars are separate. I think that's a good starting point. And the Volvo Group specializes of course in commercial vehicles. So it's more of a B2B business rather than a B2C business, which is for the most car companies.
The way we organize is in business areas, truck divisions and group functions. Business areas we have 10. It's within the truck business, we have a few, for instance, Volvo Trucks, Mack Trucks in the US where I believe you are based Ali, and also we have Renault trucks, which is strong amongst others in Europe then. But we have a few different bus businesses as well, construction equipment, financial services, autonomous solutions, et cetera.
So we have a number of business areas and then to support that, we have what we call truck divisions and there are three: it's a group trucks technology, group trucks purchasing and group trucks operations. And they basically cut across the business areas, supporting them as is obvious from their names with technology, purchasing and operations. Then we have supporting functions. So group functions for instance on the one you would expect, legal people and culture, finance and so on. And one of them, which you alluded to in your introduction, Ali, is called strategic initiatives. And in addition to running one of our business areas, which is called Volvo Energy, which I'm sure will get into, I also since the 1st of January, then take part in the strategic initiatives and I had that function which encompasses amongst others our venture capital arm and the various strategy functions of the group.
Ali Tabibian:
Great, thank you for that background. And Joachim, in terms of class of vehicle, what is approximately the range of vehicles that you address as the group?
Joachim Rosenberg:
Well, from a group perspective, we address everything above 3.5 tons. So it's both light commercial vehicles, medium trucks, and heavy-duty trucks. And of course I will have to go into the buses and construction equipment the whole time and marine and industrial function. But I assume that most of your questions will be related to the truck business. So I stay with trucks, but I would say we have buses of various sizes, construction equipment of varying kinds and sizes and trucks then light, medium and heavy, what I would say an emphasis on heavy. And also our joint ventures predominantly in China and India are focused in China mostly on heavy-duty trucks and in India to an increase in degree on heavy-duty trucks, but a very stronghold in the light and medium-duty segment in India.
Ali Tabibian:
Great, great. Thank you. Thank you for that background. And you're right Joachim, we will be talking a lot about trucks. What's interesting, and it's good for our listeners to know is many of the lessons associated with making trucking more sustainable, actually even to a greater degree apply to marine and off-road vehicles. In some ways those vehicles place greater demands on energy density of the fuel source and of the power that needs to be generated for long sustainable periods of time away from a fueling station, whatever that fuel may be. And so that's what our energy source may be. So it's quite an interesting category and feel free Joachim to touch on that as we go through:
Joachim, let me ask you the question, especially with somebody with your depth of background at Volvo, when you talk about sustainability in general, what is the scope of the word for you? Is it just the fuel that goes into the vehicle or it seems like it's much more than that. I kind of know the answer, but I'd like you to tell us what the answer is.
Joachim Rosenberg:
Well, thank you Ali, and you are quite right. I mean of course it's a very wide scope and I would say the scope is as wide and even maybe wider than the business itself because of course it touches all aspects of what we're doing. Sustainability in the UN definition, the so-called Gro Harlem Brundtland definition is both economic, social as well as environmental sustainability. That is how the term was originally coined, as I'm sure you know.
And for us, I mean it starts with what is our mission as a company? And our mission is to drive prosperity through transport and infrastructure solutions. And of course we have many being a fairly large company of a hundred plus colleagues, we have a fairly large amount of stakeholders, customers, colleagues, governments, regions, municipalities, academia, et cetera, business partners that we interact with and for ourselves and for them, our sustainability strategy is wide and it builds on three pillars. It builds on climate, it builds on resources and it builds on people.
And some of this is, I would say generated by the, you could say mandated by the general confluence of society where society is headed. But a lot of it actually also comes to be honest from ourselves. I mean I take pride in that the Volvo Group added environmental care as its third core value already in 1972 in conjunction with the first US Congress on climate, which actually was hosted then in the capital Stockholm back in 1972. And before that, as I'm sure you're aware of Ali, the other core values of the group were quality and safety since 1927. So it's quite rewarding to be working together with a hundred thousand committed and dedicated colleagues in a company that has been thinking about this for 50-plus years.
I mean can honestly say that the focus that we have now compared to only five years ago is completely different. I think it's fair to say that in most large companies that I am aware of, and also in the Volvo Group, if you go back maybe five, 10 years, the sustainability report and sustainability work was sort of a dedicated unit of people in one part of the organization. While today it's an intrinsic core in everything we do for the simple reason that sustainability A is where we want to be and want to go as well as it is a request and mandated by our demanding customers of course. And they have every right to place those demands on us because that is also from their perspective of where society is going.
So I would say it's really encompassing and that's why, which maybe you'll ask me about later is, so what have you pledged for? Have you promised where is this going? But we have made a numerous amount of pledges and promises to both comply but also and maybe more importantly, lead the way in our industry for the benefit ourselves and for the benefit of coming generations.
Ali Tabibian:
Thank you. Thank you for that Joachim. And you know what? It's really striking to me how deep the commitment is to sustainability amongst most of the entities that we now have this type of podcast episode with. The discussion is never about how you're responding to a government mandate, for example. It really is just something that's ingrained in the cultures now.
Earlier I hadn't imagined that Volvo would've been at this for 50 years, but certainly the companies with the European heritage tend to have come to that conclusion earlier and maybe more deeply than most of the other companies we come across. But even in the United States, that's changed as well. Twenty, 30 years ago on the passenger car side, whenever the US government wanted to increase fuel economy standards, our own vehicle manufacturers in this country would run around and say, "Oh, if you do this, the world will be flat again. It'll be end of the humanity and civilization if we add" ... And nobody really says that anymore, nobody's even bothering arguing it. In fact, probably the OEMs are ahead of where even the governments are in terms of where the mandate is. So it's a very, very impressive.
I was going to ask you, but one thing that you touched on is how fast it's happened as well. Now, I mean, you've been at Volvo at 18 years. Has any change come as quickly and as deeply as this one? The commitment to sustainability?
Joachim Rosenberg:
I don't think so, actually. I think you're quite spot on Ali. I mean won't comment on your US versus Europe, et cetera. I'm sure it's correct, but I think this is one of the most impactful and quick and all encompassing, I would say changes that I've seen. And I've been on the executive team now, this is my 12th year and I haven't seen anything like this. And as I said, only go back 5, 7, 8, pick a number of years, it was completely different. And again, it's not about just keeping pace with what's regulated to your point, Ali, I would say we take pride in being first, being part of Secretary Kerry’s First Movers Coalition where we met pledges on everything from steel to aluminum to trucks, being part of course SPTI and the science-based target initiative, measuring scope one, scope two, scope three, et cetera.
That is not mandated by regulation yet, but we think it's the right thing to do. And of course I have more examples, but it's really ingrained to use your word. I think it's true there. I mean there's no discussion about whether it's good or whether it's good for best. It's a qualifier. This is what I as a citizen expect as well when I'm a consumer, this is what you probably expect and this is what the Volvo Groups customers want to deliver. And then it goes back in the chain and that's how it should be. And the beauty of course of SBTi I'm going to pick one of the initiatives is that the scope three of, I'm sure you're aware of the definitions, maybe not everyone listening, but scope three is when the products are used, and of course our scope three when someone uses our products and we have a fairly large rolling fleet of different vehicles in the world, that's 98% or something similar of all emissions being emitted.
So the production phase, et cetera is rare, is fairly limited from that perspective. And of course our scope three is someone else's scope one or scope two, and that's how it all fits together and that makes the value chain have to deliver to the end customer from the transport buyers to the forwarders, to the OEMs, to our suppliers, all the way back to steel production if you like. And I think that's a pretty neat way to think about it. It's measured and it's promised, it means it has to get done and it also all ties together. And I think those two things, it's measurable and it ties together are two important aspects on that particular note. And I think that's why the SBTi has grown to be fairly large then.
Ali Tabibian:
And Joachim, we can come back to this or we can go on to something else. Do you have a specific example of what you just said, whether in the sourcing, manufacturing, your own operations or the way you affect customer operations where you say, "Here's a change we've made and either the goal is to be measured X amount of change or we've already viewed X amount of change." Is there something like that we should go onto it? Should we come back to it?
Joachim Rosenberg:
Oh, we can talk about it now. I mean I would say, and of course I can't share the details, but you can imagine the impact that those kinds of pledges have. And I would add also of course regulation on the product strategy and the product plan of any OEM and also including the Volvo Group and how much more resources and efforts of course and colleagues that we dedicate to zero emission kind of vehicles compared to just a few years ago in order to keep up with these pledges.
I mean, we have promised for instance, that if I take Volvo Trucks, which is our largest and maybe most well-known business area in the trucking business, we have a few other brands as Ali, I mean they have shared that in 2030, that's only seven years from now, 50% of all vehicles sold should be electric.
Ali Tabibian:
Amazing.
Joachim Rosenberg:
And of course the number for Europe would need to be higher than that. And the number probably for a country like Sweden where I'm based, is probably even higher than the average for Europe. So you could see an evolution where the whole world needs to move, but some countries and regions will have to go first. And of course Europe, the triad with Europe, North America and parts of Asia will have to move sooner than maybe for instance Africa as an example, as a continent. Right?
Ali Tabibian:
Right. So we're touching a little bit on the energy part of the chain and Joachim, I know the Volvo Energy has been your purview for some years and continues to be. Tell us what that's about. What are your responsibilities as for as Volvo Energy?
Joachim Rosenberg:
Yeah, thank you Ali. I mean Volvo Energy is one of our 10 business areas and our mission is to accelerate electrification and circularity. And we do that by focusing our work in a few specific areas. First, we are working with the other parts of the Volvo Group of course, to make sure that we can monitor and optimize batteries while they're on board on the vehicle, capture all the data so that we can decide when the battery should optimally come off the vehicle. Because as you know Ali, the economic and technical life cycle of a battery, if I now take that as an example, maybe we'll come back to few, so a little bit later. So the economic and technical life cycle of the battery and the rest of the truck is not fully aligned. Sometimes they are on the car side, but they're not on the truck side. So by capturing all that data, we can decide the battery's next step. So that's one focus there and I'll come back to that shortly.
Secondly, an electric truck has, if I take a battery electric truck as an example, has the unique feature that it needs to be charged. So the charging infrastructure becomes a quite important element of making sure that our customers gets the effective and efficient solution that they are after. Then of course, sooner or later, as I mentioned, the battery will need to come off. Then there's a lot of refurbishment, recycling involved physically to make that happen. And last but not least, once the battery comes off the vehicle as you know Ali, the state of health is not zero, as one might think it's probably closer in the 70 to 80% range, and that means that that battery has a lot of life left.
So you might not be suitable for a demanding vehicle application anymore, but it can still be and will still suitable for a number of possible stationary applications. And then we want to repurpose the battery. So ideally it would be one life on the truck or maybe a second life on a less demanding application on a different truck, then going on to a stationary application for maybe a decade or so before going to the recycling of course, and then caring for all the materials and then back into the next generation of battery in a different kind of vehicle. So I think once we have that working, it's really caring for the planet, caring for our people, and also caring for the business. And that's really what we're aiming to do then in Volvo Energy. So accelerating electrification and circularity for the benefit of all stakeholders then.
Ali Tabibian:
That's a great, by the way, thank you so much for that explanation of that life cycle. It was very, very nicely, nicely put. And what's interesting is people tend to view clean energy and renewable resources to some extent as free almost, but anything else where you wind up using it a lot, there are going to be side effects both around and inside the field of use. And it's interesting when you describe it so clearly too, how much continued oversight there needs to be over some of the components of sustainability to make sure that it really does wind up being sustainable and being something that's useful to the earth.
Joachim Rosenberg:
Absolutely Ali, and the way I think about it and the way we think about it is what if recycling doesn't come at the end of the value chain? If you move that, then you say, "It's at the first point of the value chain instead." So you have to design for circularity, you have to use recycled material coming in. What would be possible then, and what would you need to do to make that happen? And at the end of the day, we both know that we need to move from a linear society to a circular society for the benefit of all. And the only way to do that is that if recycling is not an afterthought, it has to be thought of from the very, very start.
Ali Tabibian:
Yeah, it's very, very interesting. It really is. And you know Joachim something that's kind of quite interesting when I've seen some of your presentations on the first life and the second life for these batteries, for example, first life is on the chassis if you will, and the second life is afterward. It seems to me that to make this all happen, most of your efforts right now are about Volvo being able to facilitate all of this for your customers rather than assuming that your customers will deliver the solution themselves. Am I getting that correctly? You're sort of consolidating that expertise at Volvo to get things going. Is that accurate?
Joachim Rosenberg:
Well, I think many of our customers, Ali, are, we are a major relationship. Of course our customers have other major relationships, but there are plenty of customers that come to Mack Trucks or rental trucks or Volvo Trucks or any of the other brands or businesses and say, "Please help us to decarbonize." So it's not only about please help us install chargers in our Home Depot or please help me have an electric truck optimized routing for my flows. Those questions are also there, but there are a number of our customers that comes and says, "Please help us to decarbonize our operations." And then what can we offer? We can offer them of course as a group and through our various business areas, as I mentioned, of course to decarbonize the actual transport using today battery electric vehicles and maybe we'll come into that in the future, fuel cell electric vehicles and other solutions because we have several technologies, but also, and in addition, energy storage, I mean energy storage at the Home Depot.
So for instance, you can think about peak shaving, downloading at night, utilizing the energy during the day helps the customer, it becomes greener, it reduces cost. And actually as you, I'm sure you're well aware, Ali, one of the main bottlenecks in our system is the actual grid. So evening out capacity for the grid. And that will be important in this transition phase now that we are more and more together switching towards more electricity. So I think there are many solutions that we can support with, is it all of them that we do ourselves? Absolutely not. But we can be an a speaking partner in that decarbonization journey for more and more of our customers.
Ali Tabibian:
Joachim, when I hear you describe this, I start thinking about companies that today have a large business that really doesn't have that much to do with what they were 50 or a hundred years ago. And in the sense that you're providing so much value around your core product that I can imagine that 30 years in the future, some of these almost accommodations if you will, that you are describing actually become very substantial businesses on their own and perhaps even independent businesses.
One of the famous examples here in California as Wells Fargo, which is a big, big US bank, they used to be a stagecoach company, they used to transport cash from the east to the west coast and they realized we don't need to transport the cash, we'll just give people certificates on both sides. And then they became a bank. And it really does remind me, I mean I wouldn't be surprised if several years from the future you're spinning off some of these entities as really substantial, amazing businesses on their own.
We touched a little bit about the different types of power trains that might be involved here. And we've mostly talked about the electric power trains and the batteries and all that. Is that the main focus of Volvo or do you have an opinion on or an activity in hydrogen fuel cell, direct combustion of hydrogen, or maybe even more efficient combustion engines for certain parts of the world?
Joachim Rosenberg:
Thank you Ali. And the answer is actually all of the above, and I'll explain a little bit more in detail, but the reason why we have several technologies philosophically is that customers are different and our commercial vehicles are tools that our customers use to maximize their own operations. And sometimes people think about, and I'll just use the truck again as an example, as a truck is sort of a big car, right? Because it's transporting more, right? But actually a truck has more to do with a stone crusher than it has to do with a car because they're both utilities that are being used to optimize an operation. So I would say we have several technologies. We were into the battery electric vehicles and of course here, ideally they should all be powered with green energy because of course, and the alternative would not be so healthy.
Then as we have said officially in the second half of this decade, so a few years down the road, we will also have fuel cell electric vehicles hopefully and frequently then powered by green hydrogen as opposed to for instance, grey hydrogen. Then we also believe in the future for the combustion engine, the current internal combustion engine, both as you said, in the meantime we'll make it as always leaner and meaner in terms of fuel efficiency, but at the end of the day it needs to be powered by renewable fuels of course.
And what we have said as a group is that in order to meet our commitment towards Paris and the Paris Agreement and we are shooting for the more strict 1.5 degree target since our trucks and other vehicles are being used for around 10 years, we have said that everything that we put on the market after 2040 needs to be completely emission-free so that the rolling fleet then is completely emission-free by 2050. So that's the roadmap, 2030 certain milestones, 2040 completely emission-free and everything we put on the market, 2050 everything rolling from the Volvo Group should be emission-free. And we are utilizing several different technologies, which all of them have their own advantages. And the simple reason is that customers are different. If you run a cement mixer business, you have very little to do with bread distribution in the city or waste collection. So our customers are quite different and they're optimizing their different P&Ls and balance sheets.
Ali Tabibian:
And it's interesting mean to what extent are you as Volvo also consulting on what the customer's fleet mix should look like given the various duty cycles of these? Now clearly most customers are thinking about that all the time, but I'm wondering as their options are frankly increasing substantially in terms of different types of power trains that related recharging or fueling infrastructure, et cetera, how much is that becoming something that's up to you to help your customers determine versus what the customers usually come to you more or less with some idea in mind of what they want to do?
Joachim Rosenberg:
Well, I think that's one of the differentiating factors of the industry and I would say a key feature of business to business is that every customer has a base, every customer is known. And that is true probably for our competitors as well. And it's certainly true for the Volvo Group. So we are quite used to optimizing usage for and in dialogue with our customers. It can be everything from in the combustion engine era, what kind of axle specifications, what kind of gearbox specifications, what kind of engine specifications as you know Ali and I think you're pointing to in the future, will we support our customers with should you have a battery electric vehicle over here and a fuel cell electric vehicle over there? And the answer is of course, yes.
But I would like to add that in today's world, and that's why Ali, as you mentioned, the complexity increases, the main fuel is diesel, there's some gas and others, but the main fuel is diesel and it's sort of almost available everywhere. In the future it won't only be the propulsion technology of the truck, it will also be, for instance, what infrastructure is available for green hydrogen or for battery electric charging infrastructure? And that will be a key component as well for our customers, not at least over the next one to two decades of transition from this brown platform that we have been working on with diesel to the new green platform where we all want to go.
Ali Tabibian:
So I know Joachim, you had a leadership role. Speaking of the infrastructure now in assembling, and I know they renamed themselves recently, but assembling basically a recharging infrastructure in Europe, working alongside what normally are your competitors at Daimler and Traton. Tell us a little bit about that. Why did you decide to do it, unusual that competitors would be cooperating and where do you hope that that goes either as itself or as a guidance for what other people should be doing?
Joachim Rosenberg:
Well, I think Milence, which is the brand name for this joint venture is owned a third each by the big truck groups, let's say in Europe. And the Volvo Group then holds a third. And it's been a pleasure to work together, of course fully compliant and according to all the rules with those competitors in creating that joint venture. And the reason why we created it is that it's sort of a chicken and egg kind of discussion where the trucks are here. It's important to know that, and I'll take the Volvo Group as an example of course. We have had serious production of medium duty electric, fully electric trucks since 2019. And we are in serial production of several models of heavy duty trucks since last year, 2022, both in Europe and also in North America. So the trucks are here, and then you can ask yourself, "Okay, so what share of all transport missions can those electric trucks do?"
And I'll take the European example, it can do approximately half of all transport missions in Europe could already today be done with an electric truck. And in order for that to come alive and in order to support our customers by lowering the threshold of what's keeping them back, charging infrastructure is generally one of the keys. And so the trucks are here, the charging infrastructure, public charging infrastructure is not, and then we need to fix that. And I think as one of the leaders then we would what we want to show the way on and support this transition, which is in line with what we all want and the EU green deal, et cetera. Now, this joint venture importantly, is open to all competitors of all brands, all makes, all customers in Europe. And the reason why we chose to cooperate is that we jointly concluded that creating this green platform of infrastructure, being a ChargePoint operator is not a competitive in itself.
We will compete on top of that green platform, but it's sort of like if every telecom company in Europe and there are hundreds of them would have to build their own cell phone towers, then you would have cell phone towers everywhere. So instead we said, "Let's cooperate on this and then we will be in full competition of course beyond that." And that's why the companies also governed at arm's length according to all compliance rules, et cetera. So looking forward to seeing Milence grow and making sure that we have those at least 1,700 chargers that we have agreed upon them.
Ali Tabibian:
Very impressive. And I think the initial capital was a 500 million Euro. So it's a serious commitment of resources.
Joachim Rosenberg:
Yes, Ali, 500 million Euros in equity. And then of course, if you think about it, through grants, through subsidies, through potentially leveraging different deals in different countries. And that's why we say at least 1,700 charges because of course there's ways to utilize the capital even more effective and efficient even though we haven't taken any decisions in that respect. But one can of course think about the possibilities.
Ali Tabibian:
Are there any publicly disclosed initiatives that would support a hydrogen or fuel cell transport network?
Joachim Rosenberg:
I mean there is a network available. I think it's the largest probably in the world, but at least the largest in Europe. There is a network where we are not involved as the Volvo Group, but there is a network of around a hundred hydrogen stations already in Germany then. So there are initiatives being made in different countries in Europe and also to my knowledge in the US. So I'm sure that many companies will see the potential of hydrogen also in the transport and the commercial vehicle sector.
Ali Tabibian:
Joachim, we've taken a really wide tour of everything that you're doing and it's quite a matrix. It's horizontal in terms of covering the entire life cycle, but it's also multiple solutions within each of the categories in that horizontal line. So there's a question that basically for me that says, how do you manage all this, the resources, the people, the new people that are required, the different types of people, the partnerships, et cetera? And I know, and we'll gradually get to part of your mandate now, which covers investments. Just as you look at it from a management perspective, how is this all going to work over the next 10 years? All these things going on that require attention without necessarily you being able to make a choice versus on one versus the other anytime soon or ever really? There may never be required to make a choice between hydrogen and electric, for example.
Joachim Rosenberg:
Well, I think first, thankfully it's a great question. Of course a pretty wide one, right?
Ali Tabibian:
Right.
Joachim Rosenberg:
But I mean at the end of the day, if we as a society and as citizens are to meet Paris, which we all want in 2050. I sometimes get the question, you alluded to divorce before and I was there this year and last year. And you get the question, is it hydrogen? Is it battery? What is it? And my personal view, and it is a personal view, is it's all of the above because we're late to the party and we set ourselves at Target 2015 in Paris, and I think we can fairly say we're not tracking as society and we need to accelerate and therefore all green solutions are good solutions and there will be decades of transition to make it happen. So for me, having this debate, is it solar, is it wind, is it battery? Is it hydrogen? I think fortunately, it's all of the above.
Now having said that, if you ask me personally, how do we manage it all as always, and the answer always comes down to people at the center of everything is people. Our world is complex. Our customers who we are working for every day, they are running complex businesses. Logistics is the backbone of society. If you think about it, everything you see in the room where you're sitting Ali, right? And everything I have in the room where I'm sitting has been on a truck at least once. Usually it's multiple types, right? But everything you see in your room, including the glasses you and I are both wearing have been on a truck at least once.
So logistics and transport and the way we have society today is depending on that works. And our customers are doing magnificent work every day carrying food, carrying medicines, carrying whatever, so that we can continue going on with our lives. And in order for that to work, yes, we need to work on different tracks to make sure that we can support them with whatever they need. And they are different. And that's why trucks, if we now use that as an example, trucks look different. The superstructure or the body is different, the propulsion system is different, the axle gear ratio is different because we are all optimizing to try to make them do their work the best way they can.
Ali Tabibian:
Wow. It is a big challenge. It is a big challenge. It'll keep your career interesting for a long, long time I'm sure. Joachim you also now handle investments for the group, is that correct? Where does that fit into what you are trying to do with all of those sort of mostly internal and customer oriented initiatives that we talked about? How do you integrate this?
Joachim Rosenberg:
Well, yeah, maybe if I could make a small correction there, Ali. So together with other colleagues, of course I'm involved in our venture capital arm and that's one part of our investment methodology or vehicle. And then of course we have other investments that we make as well, which are, let's call it a little bit larger in size than the venture capital arm. So for instance, I'll take Milence as an example that you mentioned that investment is not done through our venture capital arm.
But I'll broaden the question a little bit to investments and I would say partnerships. And we have a internal saying that we try to spread, which is partnership is the new leadership. And why do we say that? And it's because our industry as you know very well, Ali, Automotive in general, if you go back to the T4 and back to Henry Ford days, we were sort of a vertically integrated industry where we did everything from the mine to the final assembly.
And we believe that in this new era it's going to be much more important to orchestrate ecosystems and make sure that you partner up with the ones that share your values and your objectives. But we probably can't do everything ourselves in this new, let's call it very complicated world with data, with cyber, with physical, with battery, with cells, et cetera. Very few companies I think feel they would master all those aspects that in the end delivers the offering to the customer. So therefore being an orchestrator, having partnerships with or without equity of course is going to be even more important in the future than it has been in the past in order to deliver the best to our customers.
Ali Tabibian:
That's great. That is great. It really is a different skillset, isn't it, to be able to work with people who's frequently, their business objectives are different from yours and maybe occasionally in conflict, but you actually have to work with them. It's a very, very different skillset that most people really aren't teaching, at least weren't before the last few years that wasn't really being taught.
Joachim Rosenberg:
Exactly. And without going into other examples and there are many, I could take the fuel cell joint venture we have with Diemer, which we call cell centric, but I'll stay with Milence as an example, the charging infrastructure network in Europe. I mean this is the first example to my knowledge at least in the history where three large truck OEM groups come together and say, "We're going to sort of carve out a small piece of our value chain here. And it's not a competition point, it's creating a green platform that then serves everyone in the industry and that we can all compete on because it's the right way forward for all of us."
And I think that serves as an interesting example of cooption if you like, right? Where you have a platform where you don't compete and then you compete on the platform. And I think if you go back five, 10 years, very few people would've thought that would've been possible. So I think that's one example. And I can give of course many, many examples of how we work together with industry leaders in other sectors with the sole objective of trying to bring the best offer to our customers. And again, our customers are different. We need to be able to cater to their differences, but we need to be able to do it in an effective and efficient manner of course, because otherwise the complexity would be not manageable.
Ali Tabibian:
So Joachim, I mean you've provided us with a very detail organized and always hopeful view on what's coming. I mean, I can sense your enthusiasm and your commitment. What are your concerns as we go forward? What are your predictions, hopes and concerns over the next several years, decade, et cetera? What are you offering some of your partners, what would you like to see from them? What would you like to see more from the environment? Tell us a little bit about some of those things that maybe you wish were different or you're trying to make different.
Joachim Rosenberg:
Also a wide question, Ali. I'll give it a shot and maybe you can guide me a little bit. But in terms of prediction, I would say the direction of where we are going is clear. The only thing we can debate a little bit about is the speed. And I think transport is increasing and we know that transport has been emitting CO2 and others into the atmosphere in the past. So we've been part of the problem, therefore we need to be part of the solution and since transport will increase, it has to be so much more sustainable going forward. Otherwise we will not meet our joint ambitious as society. So I think that's one clear prediction.
I would say hoping then that we can reach all those ambitions that we have. And why do I say that? Because as I said, the Volvo Group, we have fully electric, medium and heavy duty trucks in serial production. It could do the job for approximately half of European transports. Is it possible to do all transports today? No, but just a few years down the road it will be possible. So that will not be the limiting factor.
And then you might ask me, so what is the limiting factor then? Well, as I was into before, we're going to need, for instance, if I take the battery electric vehicle charging infrastructure with green energy and how do we get that then? Well, we need more green production. And of course that's debated everywhere and that's probably possible to resolve. But for me, the big bottleneck, and that's my personal view of course, is the distribution, the grid, particularly in Europe, different countries, different legislations. And without go into my specific age then Ali, I can share that in the country of Sweden where I lived, 90% of the grid was put in the ground before I was born.
And as probably in order to meet Paris, we need to move from the current 20% electrification as a share of all energy that we consume on the planet. The other 80 is fossil fuels and coal, coal, oil, gas, et cetera, right? Today we're 20% electricity as such and that needs to move to 50%. And if we still have approximately the same grid over the next few years, that won't work. And the only reason why the grid has been there in a constant fashion is that we have been constant on our electricity usage approximately. But now that needs to skyrocket. That means that the grid will need to change. And I think that is going to be a big challenge for all of us.
If I have any concerns, it's that as a society and as different stakeholders in society, we all need to come together and make that happen. And I know that sounds obvious, but it's not so easy to do in practice. And as an industry in the commercial vehicle industry, I'm certain that my industry colleagues would agree that we will try to do our share. I'm certain that the Volvo Group will do its share, but the question is of course, if we can orchestrate a partnership then across the entire value chain to truly make it happen for all stakeholders, and I hope to be a small part of that together with all of my other colleagues in the Volvo Group then.
Ali Tabibian:
Thank you for that, Joachim. And I know you said maybe it's obvious that the grid needs to get a lot better, whether that's obvious or not, what is far from obvious to most people is by how much. For example, recently I think the government in Germany asked the various industries for their estimates of electric consumption if they electrified, and I believe it was the chemicals industry that said we would need roughly four times the production, electricity production capacity of Germany if we electrified our processes. So I think the scale of what you're saying is something that nobody realizes no matter how much they might say, oh yes, the grid is the problem.
Well, one last question for you. since you have so much experience in Asia, to what extent do you think that what we all view as a critical issue climate change is less of a day-to-day concern for many people around the world?
Joachim Rosenberg:
Thank you Ali. And maybe before we go to Asia, and I'll take a US based example as well. As you probably know, we have a strategic dialogue with pilot company that runs Pilot and flying J and to try to make sure that we have the best offering also for Volvo Trucks and Trucks customers in North America because Pilot has 770 travel centers coast to coast. And I learned from some of the representatives from Pilot during these discussions that there are 3,000 separate grids in the US. Of course they're connected, but there are 3,000 grid, let's call it owners. And I think the complexity of making that happen is probably not to be underestimated. Yes, there are different countries in Europe but also in the US I think we're in for a challenge there and I found that very interesting.
I think China has the same target for 2060 as Europe and North America has for 2050, India said 2070. And I think the balance around making it happen, how we jointly support from the more developed countries who funds what in order to make it happen is at the very conundrum of that dialogue,
Joachim Rosenberg:
But I see your point and maybe I didn't understand your question well enough.
Ali Tabibian:
No, I think we're essentially saying the same things that in some regions the priorities are just different for very different just historical reasons. And it's just neither good nor bad. Your skills in working with your competitors in Europe can hopefully be applied to working with other regions of the world as well and
Joachim, thank you very much. I know we don't want to overstay our welcome in terms of your time. Is there anything you'd like to point out that I didn't wind up asking other? Otherwise, I'm finished with taking advantage of your kindness and the time you offered.
Joachim Rosenberg:
I think you covered it all, Ali. It was a real pleasure meeting you and thank you for those insightful questions and hopefully your listeners will find some enjoyment from this as well. So I appreciate that. Thank you so much.
Ali Tabibian:
There's no question our listeners will find a lot of value in this conversation and thank you, Joachim.
Joachim Rosenberg:
Thank you.