Navistar International Corp. and Volkswagen’s truck division will jointly develop an electric medium-duty truck for North America as soon as 2019, the companies said at the North American Commercial Vehicle Show in Atlanta on Monday.

They also plan to develop a new line of diesel engines for heavy-duty trucks and will work together to create a global, fully integrated cloud-based logistics platform for their brands, suppliers and customers. Additionally, they are exploring opportunities to market some of Volkswagen’s commercial van offerings in the U.S. market.

Both Navistar and Volkswagen Truck & Bus joined in a business alliance when the German automaker purchased 17 percent of Navistar for $256 million earlier this year and took two seats on the Lisle, Ill, truck company’s board of directors. Besides its own label, Volkswagen also owns the MAN and Scania truck brands.

“It is a forgone conclusion that there is a role for electric vehicles in the commercial vehicle space,” said Troy Clarke, chief executive of Navistar.

The electric truck could debut in late 2019 or early 2020, Clarke said. The company selected the medium-duty market because those vehicles typically travel short distances, operate in urban areas that suffer from poor air quality and generally run routes where they return to a central location at night where they can be charged.

“We believe Class 6/7 is the ideal place for electric powertrain solutions in the near term,” Clarke said. “Our alliance with Volkswagen Truck & Bus will allow us to move much more quickly into electrical propulsion.”

Both companies see increasing demand for electric trucks as more stringent emissions regulations are enacted globally. They plan to share technology.

“The basic hardware components have to be the same or you lose economic scale,” said Andreas Renschler, chief executive of Volkswagen Truck & Bus. “We want to have one common platform.”

The rapidly decreasing price of batteries, which are falling annually at double digit rates, contribute to making electric trucks viable, Clarke said.

Renschler likened the economics of developing the electric truck to the same strategy that has pushed the companies together to launch a new line of diesel powertrains as early as 2021.

“The diesel engines are being developed from scratch and will serve all the partners in the alliance,” Clarke said.

They will be so-called big bore diesel powertrains, which the industry defines as 11-liter to 15-liter engines.

He said Navistar will make sure that planned U.S. greenhouse gas emissions requirements will be factored into the development of the new engine line.

“We are doing this deliberately and correctly,” Clarke said.

Renschler said the alliance is looking to develop one set of global platforms for “digitization and hardware so that we can bring innovations to the market much faster.”

The companies expect their new connectivity platform – created by merging Navistar’s suite of hardware and software called OnCommand Connection with Volkswagen Truck & Bus’s RIO digital brand – to begin by adopting a common in-cab hardware that will launch on a Volkswagen Truck & Bus global connected vehicle platform by the end of the year.

The cloud-based platform is the first step toward creating a connected network of about 650,000 vehicles around the world, “making it the world’s largest global ecosystem for commercial vehicles,” Clarke said.

Navistar stock closed at $19.79 a share after plans for the alliance were first announced in September 2016. The stock closed Monday at $42.14, a 113 percent gain.

Editor’s note: Trucks.com editor Jerry Hirsch contributed to this report.

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