Market Watch: Hybrid Update

Good times create bad policies… a cynical, yet interesting adage that is finding validation in the heavy-truck industry. The North American heavy-truck industry became accustomed to the good times as cheap diesel enabled it to compete and win the freight movement battle against rail transportation. The concept of cheap diesel was so ingrained in the DNA of this industry that the need to develop fuel-efficient trucks ranked pretty far down the product planning strategies of most truck makers.

However, impending environmental regulations and changes in the fuel supply-demand landscape led truck makers and their powertrain system suppliers to look for alternative powertrain solutions. Hybrid powertrain technology seems to be the most compelling of many such alternatives, and is set to attain considerable market penetration.

Class 6-7 hybrids are already in production and have been adopted and promoted by logistics majors such as Coca-Cola, Wal-Mart, and UPS. In fact, heavy-duty hybrid trucks now offer the adopters federal tax credits and incentives that are as high as $12,000 per vehicle. With diesel prices surpassing the $4/gallon mark and showing every indication of a northward climb for the short-medium term, it is the most opportune moment for truck makers to introduce hybrids.

Until recently, the lower price of diesel resulted in a longer payback and a moderately attractive ROI gain calculation for potential adopters. All that has changed quickly and now hybrid trucks are on the radar for any fleet that has a long-term strategic outlook and a purchase plan. Even a tiny increase in fuel economy now goes far in justifying an investment in a hybrid.

The upfront and lifecycle costs still present adoption barriers for many fleets and vocations. However, that said, many vocational fleets whose trucks operate in frequent stop-and-go conditions can generate a very attractive return on investment and payback by investing in hybrid trucks. The burning question still remains, though; what is in it for line-hauls? Put simply, the doubling of diesel prices, urgency in creating anti-idling solutions, strengthening of emission and noise regulations, and most importantly environmental stewardship are all coalescing to enhance the attractiveness of hybrids for line-haul applications. All of these underline the new mantra in the industry: Green is good for business.

Hybrid trucks present both challenges and solutions to fleet maintenance professionals. The integration of advanced energy storage systems, power electronics, advanced transmissions and PTOs, and electric rotating machines will necessitate training in handling service and maintenance issues. However, it will reduce brake, engine and anti-idling system service and maintenance. Given the current energy scenario and the short-medium term outlook, it becomes imperative for fleets to incorporate specific powertrain solutions that are best suited for given applications.

This will compound the challenge for fleet maintenance managers and will require fleets to invest in training their maintenance professionals to adapt to hybrid powertrain technologies. Fleet operators and maintenance professionals must develop congruent service, maintenance and operation strategies that enable fleets to reduce their exposure to rising operating costs while reducing their environmental footprint.

The two broad categories of hybrid powertrain systems are classified as either parallel or series hybrids. Of these, parallel hybrid technology has emerged as the technology of choice for most truck makers for the short-medium term. Series hybrid propulsion technology is expected to gain a major boost from the development and maturity of fuel-cell technology.

Truck makers are increasingly considering hybrid trucks as an integral component of their product lines and growth strategies. Hybrids offer truck makers a new revenue stream and enable them to offer a comprehensive solution to fleets and owner-operators by countering several challenges created by current operating environments.

While high oil prices and emission regulations are helping to diminish the affordability barrier, more needs to be done. If these technologies can deliver savings and offer comprehensive solutions for several operating challenges faced by truck operators, then stakeholders will undoubtedly achieve impressive growth rates. The real question is, is the maintenance market ready for this new and potentially lucrative technology?