Few municipal fleets would add a luxury sport utility vehicle (SUV), such as a Lexus, to their operations. Yet the Lexus RX SUV product family is at the heart of one of the few studies examining whether the fuel savings are worth the extra investment in hybrid propulsion.
In November 2005, Rochester, Wis.-based Runzheimer International released a study comparing a 2006 Lexus RX400 hybrid SUV priced at $48,410 to a non-hybrid RX330, costing $37,770. The gasoline-electric engine combination powertrain of the RX400 is based on the same system powering the Toyota Prius.
Without the luxury upgrades, the Lexus’ hybrid cost $8,370 more than the non-hybrid, says Brett Remington, director of corporate development for Runzheimer’s business vehicle services division. However, the Lexus hybrid SUV got more miles per gallon (mpg) on average than the non-hybrid, with 30 mpg in the city and 26 mpg on the highway, versus the 18/24 split of the non-hybrid model.
Remington says driving 15,000 miles per year would take at least 15 years to save $8,370 solely on gasoline costing $3.10 per gallon, 17 years at $2.65 per gallon, and more than 20 years at $2.29 per gallon. “Given the simplistic nature of the assumptions, it’s likely these costs are understated,” he says. “The typical fleet driver is usually moving goods or tools around, so I’d expect the fuel efficiency to taper off.” He also says hybrids are more technologically complicated. “We don’t [know the] maintenance costs to keep it in service.”
There are other financial issues as well, says Bob Stanton, director of fleet management for Polk County, Fla. In his fleet of 2,000 vehicles, he operates six hybrid Toyota Prius sedans. Although the hybrids get nine mpg more than comparable models, Stanton is concerned that the batteries may complicate maintenance costs and resale values as the hybrids age.
“Will landfills accept the thousands of exhausted battery packs in five to eight years? It’s likely our waste stream won’t be able or willing to accommodate them,” he says. “Also, how popular will a used hybrid with one to three years of battery life remaining be on the resale market? A purchaser, facing a high battery pack replacement expense may decide to look elsewhere.”
Stanton hopes battery replacement packages can be developed for under $1,000, so the county can keep its hybrids rolling long enough to recover its investment. “We’ll retain our [hybrids] until the battery packs are exhausted, which we hope will be in eight years. Perhaps by then the price of a replacement pack will be more reasonable, and we hope the condition of the vehicle will be good enough to offer on the resale market.”
Hybrid sales are not slowing, nor are they expected to decline. U.S. hybrid-electric vehicle purchases are anticipated to increase by 268 percent — from about 212,000 vehicles in 2005 to 780,000 by 2012, according to Westlake Village, Calif.-based J.D. Power & Associates. Despite the large increase in sales volume, hybrid-electric vehicles will remain only a small portion of the market, growing from 1.3 percent of U.S. light-vehicle sales in 2005 to 4.2 percent market share by 2012, says Anthony Pratt, senior manager of global powertrain forecasting for J.D. Power.
“Future growth will be the result of more vehicle manufacturers entering the hybrid-electric market and a greater number of hybrid models,” he says. “There are currently only 11 hybrid models available in the U.S. market, and by 2012 that number could increase to 52 models.”
Some of those models might only be a variation of an existing gasoline powered vehicle. “With [the new models being introduced this year], as well as the Ford Escape and the Honda Accord, we’re starting to see hybrid versions of mainstream vehicles,” says Dan Benjamin, principal transportation analyst at Oyster Bay, N.Y.-based ABI Research. “Automakers are giving customers a choice to opt for hybrid technology on a given model. Will they pay the premium for the hybrid technology when everything else about the vehicle is the same?” Depending on the model, Benjamin says, choosing a hybrid in the near future may cost between $2,000 and $4,000 more than the same traditional gasoline model.
More funding also is becoming available to help fleets defray the cost of acquiring hybrids, which helps speed up the cost-recovery cycle. The Pennsylvania Department of Environmental Protection (DEP) offers rebates to hybrid buyers that plan to use the vehicles exclusively in the state. The commonwealth already has awarded more than $1.3 million in rebates from the $1.5 million allotted for the program in 2005-2006, according to DEP Secretary Kathleen McGinty. Another $1 million will become available for the next fiscal year beginning July 1.
Drawbacks and benefits
The higher price for hybrid vehicles — especially for medium- and heavy-duty hybrid trucks and buses — is a drawback to the technology, says Craig Allen, director of maintenance for Lansing, Mich.-based Capital Area Transportation Authority. Yet the continuing rise in diesel fuel prices is lessening the payback period significantly, making the return on investment (ROI) calculation for hybrids much more attractive.
“We have three New Flyer buses with Allison Transmission’s new hybrid drive that will be delivered in July, with all our future bus purchases to be hybrids. We have funding for an additional six to 10 vehicle orders this year as well,” Allen says. “The only downside [to hybrids] is the added cost, but there is a defined ROI and with fuel costs escalating, the ROI is further enhanced.”
Allen sees several benefits to hybrids that include gains in fuel economy, potential gains in operational efficiency because the hybrids will perform better stop to stop, increased brake life, reduced emissions, and less ambient noise levels. Los Angeles’ Metropolitan Transit Authority (MTA) also is buying six gasoline-hybrid buses. “We have three strategic goals when using hybrid technology,” says Richard Hunt, MTA’s new technology manager. “First, we see it as a way to continue [using] technology that’s going to be part of our solution to reduce vehicle emissions in 2010 and beyond. The second is to see if the hybrid can play a role in giving us better fuel economy. Finally, we see hybrids as a way to reduce noise.”
Bigger may be better
While achieving payback from hybrid investments may take some time, cities and counties already are seeing the savings for heavy-duty vehicles more quickly, especially for delivery trucks and transit buses. The National Renewable Energy Laboratory (NREL) recently compared technologies used to power New York City transit buses — a fleet of more than 4,000 buses, including diesel, natural gas and hybrid electrics — finding that hybrids cut fuel consumption more that light-truck hybrids, and maintenance intervals could be extended as well. The study tracked Orion VII buses from Stuttgart, Germany-based Daimler-Chrysler and powered by Rockville, Md.-based-BAE System’s HybriDrive series propulsion system linked to a diesel engine and those powered only by diesel and by compressed natural gas (CNG).
The hybrid buses achieved up to 45 percent better fuel economy than diesel buses and 100 percent improvement compared to natural gas. The report also said bus drivers liked the increased power output of the hybrid buses, partly because of the electric drive motor, which can boost torque to help with acceleration and hill climbing.
NREL added that New York’s hybrid fleet operated with an average of 7,000 miles between road calls, compared to 5,000 miles for natural gas and 4,000 miles for diesel. The HybriDrive system alone also performed better than the other propulsion systems, with 10,000 miles between calls, compared to 8,000 miles for CNG and 5,000 miles for diesel, according to NREL.
Two truck companies, Hagerstown, Ind.-based refuse truck maker Autocar, and Greensboro, N.C.-based Volvo, recently have unveiled new hybrid trucks. Autocar’s E3 hybrid-drive Class 8 refuse unit is designed in conjunction with the RunWise series hybrid drivetrain developed by Cleveland-based Parker Hannifin. Autocar says it can cut fuel consumption in high start-and-stop applications by 30 to 50 percent, according to Tom Vatter, Autocar’s sales and marketing vice president. He also says the truck lowers operating costs by lessening the need to use its mechanical brakes.
“Upon braking, the RunWise controller commands the hydrostatic motors to become pumps and brakes the vehicle by converting vehicle inertia into stored, high-pressure energy in the accumulators,” Vatter says. “That energy is stored until the next time the vehicle launches, when it’s discharged to accelerate the vehicle instead of using power from the diesel engine.”
Volvo also announced production of a heavier duty truck hybrid called the I-SAM, designed to increase the fuel economy on routes with frequent braking and accelerations, such as refuse collection and construction work. The hybrid combines a start motor, a drive engine and generator with an automatic, converted mechanical transmission. The system also uses an electronic control unit as well as conventional diesel engine and batteries that are charged by braking energy, according to Leif Johansson, Volvo’s CEO. The company claims fuel savings can amount to 35 percent, before adding in maintenance cost savings through reduced wear on the braking system.
New, longer lasting and less expensive batteries also are being developed. Volvo entries will be a lead-acid battery, Effpower, and a nickel-metal-hydride version for hybrid-electric vehicles (HEVs) and electric vehicles (EVs). Paris-based Saft and Milwaukee-based Johnson Controls are jointly developing a lithium-ion battery.
Will battery changes, then, be enough to substantially improve the return on investment for hybrid owners? Maybe, according to Cleveland-based Freedonia Group, but a significant gap will remain between hybrid costs and its fuel savings versus conventionally powered vehicles.
“The fuel price spike that occurred in 2005 created new interest in fuel-efficient powertrain technologies, which has boosted demand for hybrid-electric vehicles and, to an extent, for diesel engines,” the firm said in a study released in March this year. “As a result, diesels and hybrid-electric technologies are forecast to power a much larger percentage of all new light vehicles in 2014.”
Despite gains in alternative powerplant types, the conventional spark ignition internal combustion or gasoline-powered engine is going to remain the dominant technology for smaller vehicles because they meet emissions standards, provide high levels of power and are cost-effective.
“The market for hybrid-electric [vehicles] should expand significantly from a relatively small base in 2004 as demand is being driven both by increased concerns regarding fuel prices and the additional performance HEVs can offer in acceleration,” Freedonia says in its study. “But hybrid cost is still going to be a limiting factor.”
Sean Kilcarr is senior editor at American City & County’s sister publication, Fleet Owner.