October 10, 2008

Popularity of heavy-duty hybrid trucks fails to live up to the hype

Construction Corner

Korky Koroluk

There was a time not long ago when hybrid trucks were going to rule the world of commercial vehicles — if you believed the predictions.

Now that elections on both sides of the border are occupying our attention, we’re hearing lots more predictions, and we all have to be wary about which ones we choose to believe — whether they are political in nature, or commercial.

Back in May, 2003, with gasoline in the United States hovering around $1.50 a U.S. gallon, FedEx, the package delivery giant, was predicting that it alone would have 30,000 hybrid trucks on the road in just a few years. The New York Times revisited that prediction this past summer, and did a count. It found that today in the U.S., all companies together have only about 300 hybrids on the road.

The FedEx prediction was an easy one to believe. Stop-and-go traffic is one place hybrids excel, and that’s where you’ll find delivery trucks. They operate many hours every day and a travel a long way in a year, and that multiplies the opportunities for saving fuel. And with gasoline now in the range of $3 a U.S. gallon and up (with diesel somewhat higher), the shift to hybrids should be well under way by now. It isn’t.

What happened?

Well, Kevin Beaty, manager of hybrid power systems for the Eaton Corp., which makes hybrid delivery trucks and other medium- and heavy-duty vehicles, notes that production of hybrids is limited. That means there are few economies of scale, so the price premium for a hybrid is still pretty hefty.

Beaty says, for example, that a delivery truck that costs $40,000 as an ordinary diesel will sell for about $70,000 as a hybrid. That’s a stiff price, and a FedEx spokesman said the company has calculated that, with $3 gasoline, the payback period would be 20 years.

The upshot is that FedEx still has only about 100 hybrids operating. Its big competitor, UPS, has a handful. Coca Cola has a few. A few city utilities have a hybrid or two. The U.S. military is doing some experimentation.

Heavy hybrids are much more scarce than the light- and medium-duty vehicles, and are likely to remain so for a while yet.

It’s not that hybrids don’t work; they do. But for most users, the price is just too steep, the pay-back time just too long, and after crunching numbers, people are opting to stay with conventional technology.

Widespread adoption of hybrid truck technologies thus will have to await some sort of incentive programs from governments, and, given the current economic uncertainty, it’s tough to see that happening anytime soon.

In the meantime, research goes on, driven by the certain need to reduce environmental damage. That’s what’s behind everything done at places like the U.S. National Renewable Energy Laboratory.

There, scientists are paying a lot of attention to ways to improve both diesel engines and diesel fuel — working to improve upon existing technologies.

More stringent emissions standards have already led to improvements, and that work will continue in the expectation that emissions will be even more tightly regulated in the future. The ultimate objective is near-zero-emission engines burning sophisticated liquid fuels.

If that can be done at a price the market considers reasonable, it will be an important step.

In the meantime, the lab is working on advanced heavy hybrid systems, along with most heavy truck manufacturers. The research is moving into the marketplace, but slowly, so no one is even close to high-volume production.

So while it seems likely that the price premium for hybrids will come down, it will be a slow process. And until it does, making a solid business case for hybrids will be difficult for most companies.

Most business people I know would like to embrace environmentally friendly technologies, but there must be a way do so without crippling their businesses.

Korky Koroluk is an Ottawa-based freelance writer. Send comments to editor@dailycommercialnews.com

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