Defence investments will create positive spillovers, says Daimler Truck chief
German group brings forward target to 2028 to double its defence revenue to €1bn
The chief executive of Daimler Truck says investing more in defence will create positive spillovers for its business, as the German manufacturer seeks to increase revenues from military vehicles.
Innovations around autonomous driving and faster development cycles were two ways in which the truckmaker could learn from defence partners, chief executive Karin Rådström told the FT in an interview.
“What we’re seeing now in the defence space is a lot of innovation is happening, which we believe will also benefit the civil side,” she said.
German automotive companies have increasingly turned to the defence industry to generate growth and in some cases fill factories left underutilised by falling demand for their vehicles.
Daimler Truck said in June it was investing mid-three-digit-million euros in expanding its defence offering, developing a wider palette of military vehicles and expanding outside Europe.
The company also announced a target to double revenue from defence to €1bn by 2028, two years earlier than a previous goal set in 2025. Daimler Truck generated €45.9bn in sales in its industrial businesses last year but has seen profits slump in the face of higher US tariffs and a slowdown in the North American market.
Rådström said the company’s defence business was developing “faster than we expected” and that the defence industry was growing more quickly than its traditional business.
Daimler Truck had the ability to scale production more rapidly than traditional defence players who were used to manufacturing smaller volumes, she said.
“We have the capacity to really industrialise because, as you know, what all the defence ministries need right now is more capacity and quite fast,” she added.
Militaries were looking to deploy autonomous trucks to increase safety on the battlefield. Trucks with autonomous technology needed fewer military personnel to operate them, Rådström said.
The lower demand for manpower was also an advantage in drawn-out conflicts where finding recruits was difficult, allowing manpower to be deployed in other areas.
The need to operate vehicles in high-risk conflict zones was promoting the adoption of remote-controlled driving and the development of new features such as “platooning”, where several trucks autonomously followed behind a lead vehicle with a driver, Rådström said.
The same technologies could be applied in a civilian context but with different use cases. “There are some overlaps on the learnings that we’re doing now with our defence autonomous projects for the civil side as well,” she said.
With manpower accounting for 40 per cent of the costs for trucking companies, autonomous technology would help profitability for the logistics sector, she said.
“If you can remove 40 per cent of the cost and you can start running the trucks all night, 24 hours, it’s a huge lever,” said Rådström, adding that the addition of autonomous capabilities represented the “biggest change” facing the industry.
The company aimed to start delivering trucks capable of autonomous driving in designated areas in the US next year, with the “big rollout” planned for 2028, according to Rådström.
The German truck group could also learn from the speed at which new technologies were being deployed by defence start-ups, compared with the longer development process in the auto business.
The battlefield was a testing ground for new autonomous technologies, allowing for fast software and hardware development, she said.
“That cycle is so much faster on the defence side now than in the normal way we do business,” she added.