How new business models can drive the electrification of industrial vehicles

Researchers at Luleå University of Technology will help industry to scale up their electrified vehicle solutions to achieve the goal of net zero carbon emissions.
“The technology already exists. The challenges lie in making it commercially viable, explains David Sjödin”, Assistant Professor of Entrepreneurship and Innovation.

Industry relies heavily on a well-functioning fleet of vehicles. Vehicles are used for transportation and for various stages of the industrial process, such as mining and construction. Vehicles in industry have very high greenhouse gas emissions. EU Member States are committed to reducing carbon dioxide emissions by 55% by 2030 compared to 1990 and to achieving climate neutrality (not emitting more carbon dioxide than is absorbed by forests and oceans) by 2050. There are therefore strong incentives for European industry to switch to a carbon-free vehicle fleet. But it is not just about the climate issue.

“There is great potential for efficiency gains with an electrified vehicle fleet. In addition, the working environment will improve with reduced vibrations and noise, and zero exhaust emissions.” says David Sjödin

New business models are needed

Neither the technology nor the incentives are lacking. What is needed are entirely new business models.

”For achieving net-zero industry goals, we need to move from transactional to relational business models, such as site electrification solutions sales. The latter means OEMs sell an offering which integrates products, services, and software components tailored to solve specific customer problems or fulfill particular business needs, explains Vinit Parida”, explains Vinit Parida, Professor of Entrepreneurship and Innovation.

Vehicle manufacturers need to become more active in their role towards industrial customers to help them in the transition. One possible business model is for the autmobile industry to retain ownership of batteries or the entire vehicle. Instead of buying, the customer leases their vehicles. As part of the leasing agreement, technical service, training and various digital services (e.g. route optimization) are included. The research project involves vehicle suppliers Volvo CE, Epiroc and Swecon, and customers Boliden and Stena Recycling.

But a functioning business model between vehicle supplier and customer is not enough. Changes in working methods and a functioning charging infrastructure are also needed. Therefore, the researchers will involve other actors such as Swecon, and ABB in the project. For the scaling up of electrification solutions to run smoothly, companies need to collaborate within a so-called ecosystem. The concept of an ecosystem, as used in economic research, highlights that a company creates value in collaboration with other actors rather than as a single actor. Firms are more or less linked to each other through, for example, contracts, information exchanges and technological dependencies.

Scaling up electrification

”When we talk about scaling up electrification, this places demands on the companies' capabilities, partnerships and division of roles. Who takes what role, how should solutions be configured? There are many dependencies and you need to develop routines to drive commercialization forward.” says David Sjödin.

The project is a feasibility study that runs from November 2024 to April 2025 with funding of SEK 1 million from Vinnova. The researchers will interview key people at the participating companies to get a picture of the needs and challenges they face. The aim is also to identify more suitable partners. If the feasibility study is successful, the project will be extended for two years with additional funding of SEK 5 million from Vinnova. The aim will then be to study specific cases, including how the transformation processes and the interaction in the ecosystem develop. The project will result in a plan for scaling up that can also be applied internationally.

The ongoing restructuring of battery manufacturer Northvolt has created a public perception that electrification in Sweden has lost momentum. Nothing could be further from the truth, according to Vinit Parida.

”Sweden is not dependent on Northvolt. Electrification should and will happen. Our long-term goal is for the Swedish automotive industry to become a world leader in the electrification of industry. Sweden has very good conditions for realizing those goals.”

• The project has been funded by Net Zero Industry External link, opens in new window.