Hybrids on a roll

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The climate issue and increasing fuel prices make energy use and energy efficiency some of the most important societal issues of our time.” -Leif Johansson, CEO of Swedish truck maker Volvo Group.


There is no doubt that with diesel fuel nearing a $5 per gallon average in the U.S. and roughly $10 equivalent per gallon in Europe, just about any technology designed to improve vehicle fuel efficiency is getting vetted like never before.


Topping the list is hybrid technology - the by now familiar system wherein a gasoline or diesel motor exists side-by-side with an electric motor and battery pack, working as a compete unit to improve fuel economy by operating the vehicle part of the time (usually in urban stop-and-go environments) on electricity alone. Hybrid cars and light trucks are now legion across the landscape, with hybrids making steady inroads into the medium-duty arena along with prototypes now being tested for heavy trucks.


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(An early version of Volvo's medium-duty hybrid truck, the 'I-Sam.')


Just this week, the U.S. Department of Energy (DOE) and the Swedish Energy Agency agreed to jointly expand financial cooperation with Volvo to fund research and development of advanced drivelines for commercial trucks, for both hybrid systems and alternative fuels.


The DOE and the Swedish Energy Agency are providing a three-year grant to the Volvo Group worth a combined $18 million for the development hybrid technology and drivelines for alternative fuels - extending a one-year research and cooperation agreement signed between the Volvo Group and the Swedish and U.S. governments back in June 2007. Volvo is chipping in $18 million of its own money into the project, pushing funding up to $36 million total.


“This cooperation is aimed at reducing the use of fossil fuels by heavy vehicles through research and development projects in the areas of energy efficiency,” said Leif Johansson, CEO of the Volvo Group, in a press statement. “The transportation industry has a special responsibility and this research and development co-operation with the U.S. Government is crucial in our efforts to develop the drivetrains and technology required by both our customers and society as a whole.”


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However, there‘s still a big question to be answered in all this: can hybrids provide cost-effective fuel efficiency for the long term, with no adverse environmental impact? For while the fuel savings are definitely there, the extra cost of the electric motor, driveline, and batteries coupled to the eventual disposal issue of the batteries themselves raises several thorny problems that still need to be worked out.


New York based consulting firm ABI Research took a look at this issue and found that while hybrid technology has the ability to deliver efficiency, fleet managers and operators need to evaluate in careful detail the costs and benefits of hybrids.


“The main fuel economy benefit from hybrid technology comes from the capture and reuse of kinetic energy,” says ABI Research principal analyst David Alexander. “Two central forms of storage under development and available at present are hydraulic and electrical. Both require significant investment in additional systems, so realistic evaluations and estimations must be made as regards fuel savings in order to calculate the benefits.”


As the cost of oil and related fuel products - especially diesel fuel - continues to rise, owners and drivers are looking for new technology to get more miles per gallon, period, Alexander notes. With daily media coverage over oil prices and global warming, together with the marketing messages from the largest consumer vehicle manufacturers, it is easy to assume hybrids are the solution. The facts, however, suggest something else, he warns: that the return on investment can vary dramatically depending on factors such as the type of hybrid, cost of fuel, and the typical usage cycle.


For example, full hybrid powertrain systems for commercial vehicles are not normally designed to be retrofitted to existing vehicles, though there are some that can be installed as a complete replacement for an existing engine and transmission. Conversely, depending on the technology, the cost of parts and installation can be close to purchasing a new vehicle - so this approach generally is only used to produce low numbers of vehicles for evaluation. New options becoming available include mild hybrid idle-stop systems that can be retrofitted to particular vehicles, Alexander says


“Fleet managers should beware of the hype and stick to cautious testing to ensure that fuel economy improvements occur for their typical drive cycles,” he continues. “Drivers with the most to gain will be operating on a frequent stop-start cycle, and, depending on the existing powertrain, may benefit from a mild hybrid retrofit. Otherwise, the better option may be simply to factor-in the purchase of some hybrid vehicles for specific applications as the fleet ages over time.”


(More of his thoughts are available in ABI‘s Commercial Hybrid Electric Vehicle report.)


Yet fleets should also take heart that other issues related to the cost of hybrids - especially insurance - are now being addressed.


Fireman‘s Fund Insurance Co. for example, recently introduced new vehicle replacement coverage for commercial fleets - insuring the full replacement cost of vehicles that are total losses for up to their first three model years - with a key additional “hybrid upgrade” endorsement as well.


The hybrid endorsement enables policyholders to upgrade to a hybrid model (or its equivalent) during the first three model-years in the event of a total loss. This is an attractive choice for those businesses that want to protect the value of their assets, reduce their energy costs, and protect the environment, says Bob Steele, product director-commercial business for Fireman‘s Fund, with both of these coverage enhancements applying without a deductible.


“If a policyholder‘s two-year-old pickup truck is stolen from his delivery fleet, or crushed by a fallen tree, he can replace the truck with a new one. If he chooses the hybrid option he can upgrade to a more environmentally friendly hybrid model,” Steele noted. “Many fleets are opting for hybrids and alternative fuel vehicles to reduce fuel costs and pollution. This helps them keep doing that.”


More information is available from Fireman‘s Fund on their website.


So while a lot of questions still need to be answered about hybrids, the technology is gaining rapid acceptance among vehicle operators of all shapes and sizes - and may indeed prove to be a vital piece of the fuel efficiency puzzle in the long term if the cost and battery-disposal issues get worked out. We‘ll see how this all plays out in the coming year.

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