In 2021, Volvo Trucks unveiled the world’s first vehicle created from fossil-free steel: a hauler. In May 2022, the company started to introduce fossil-free steel into other parts of its range. Julia Swales, Advisory Board Manager for the Foundation for Future Supply Chain, interviewed Lars Mårtensson, Director Environment and Innovation at Volvo Trucks to ask about the latest developments and what is on the horizon…
Volvo Trucks now has an agreement with its steel manufacturer SSAB for recycled steel called SSAB Zero™, so it will get access to larger volumes of fossil-free steel. Volvo Trucks is looking into how it can use the two types of steel with a low climate footprint for other steel components in a truck and different types of trucks globally, as well as the standard truck frames. This is still in the development phase, but it is moving quickly.
Volvo Trucks has had interest from customers worldwide, not only from Europe. Of course, Volvo Trucks needs to take this into consideration now and plan for the increased volumes of fossil-free steel and SSAB Zero™ that it will need in the future. SSAB, is based in the US and Sweden, so Volvo Trucks is currently looking into using different companies in other parts of the world where fossil-free steel can be produced.
Volvo Trucks starts the manufacturing process with the truck frames, as they are produced internally using steel rolls, so it has full control over the process. The company relies on suppliers for other types of components made from fossil-free materials, including plastic and rubber. This is a new challenge and an interesting step that Volvo Trucks is taking — by sourcing new components, it will need to connect the fossil-free steel suppliers with the component manufacturers. This is something new and a learning curve, as Volvo has a global supplier base, and by 2040 it is aiming for all materials in its trucks to be fossil-free.
Fossil-free steel production in Europe and the rest of the world are in different stages of development, but it is quickly growing in interest amongst steel producers globally, as if companies want to be at the forefront of the steel industry, they need to take steps in this direction. The tricky part here is that it takes some time for companies to build the necessary production facilities so that they can start delivering. This is important from a competitive perspective in the steel industry.
Only around 10% of steel is used in automotive, the biggest buyer is the construction industry, where they are now using fossil-free steel to build everything from bridges to buildings. There is high demand and the industry uses huge volumes. This means there’s also competition on the buying side for Volvo Trucks, as it needs to meet its ambitious targets.
Suppliers are competing for customers and they are in turn competing for suppliers, especially now in the initial phase of fossil-free steel adoption. The steel manufacturers need to find customers who are willing to commit and pay a premium price. However, at the same time, the demand for steel is increasing, so of course, there is more competition for the fossil-free steel amongst buyers. That is how the market economy works. It is very positive when this happens with a product which will have a lower environmental impact.
It is clear that Volvo Trucks has attracted the attention of its automotive competitors, who are following closely behind, which is good for the industry as it needs to change and become more sustainable. The automotive sector is taking the first step, but fossil-free steel is something that will soon be used for many other types of products going forward. This bodes well for an exciting future from a climate perspective.
Source: Foundation for Future Supply Chain
