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2 Executive Summary

2.1 The hybrid era: evolution toward electrification

For many people, hybrid electric vehicles (HEVs) are conceived as a transitional

stage between traditional internal combustion vehicles (ICVs) and the fuel cell vehicles

(FCVs) that are presumed to be in our future. Although the reality is not quite so simple,

this is a useful framework when considering whether hybrid electric (HE) drivetrains will

emerge as viable commercial products.

An important concept to consider is that there will be no discrete break between the

era of ICVs and HEVs. In fact, it is most accurate to view the new HEV era in

transportation as a continuum of the incremental and ever-increasing electrification

of the ICV. At some point perhaps, the internal combustion engine (ICE) will be

replaced in the HEV by a fuel cell, and the evolution toward electrification will be

advanced even further. It is important to remember, however, that most fuel cell vehicles

will also be HEVs, as they will have onboard energy storage.1

This continuum can already be seen in the range of products on the market and in

development right now. To potential users of HEVs, the greatest value of this continuum

is to help them understand the type of HE product that might best serve their needs.

On the very lightest end of the HE continuum, outside the range of true hybrid

products, are products like the Delphi Automotive Systems EnergenTM 5, a 12v

alternator/starter and start-stop control module for light vehicles. It stops the engine while

at idle and quickly starts it via an accessory belt and pulley. On the far end of the scale,

on the heavy-duty (HD) HEV side, are Allison, BAE, Oshkosh, and other drivetrains

capable of powering full-size buses, Class-8 trucks, and light armored military vehicles.

Even now, there is a great diversity of product types in the planning stage that fits

along this continuum. The era of HE proliferation is under way. After a number of years,

product successes will emerge at certain discrete points on the continuum after it

becomes evident which user needs are best served by specific HE products. Next, a

shakeout and consolidation will follow, with the most successful solutions remaining and

some products or companies dropping out of the market. This could then be followed by

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new entries into the field, chasing the most successful niches. This is a typical cycle for a

new technology that begins to mature,

Figure 2-1 Products from light hybrids through HD HEVs are part of acontinuum of electrification of all classes of vehicles

For example, after a period of time, some urban Class 4 or 5 truck operators may

find that light hybrids rather than a full hybrid drivetrain offer the best solution, or vice

versa, because of work demand, acquisition cost, performance, emissions reduction,

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operation and support costs, etc. Transit operators may start to favor a dual parallel drive

over series, or vice versa. The point is that some HD HE products will start to succeed

commercially in perhaps 2004–2010, especially after the 2007 ultra-clean U.S.

Environmental Protection Agency (EPA) heavy-duty diesel standards take effect. Others

will not find enough buyers to continue. A shakeout and appearance of second- and third-

generation products should follow.

2.2 The HD HEVs market today

The maximum capability of the HD industry to absorb HE products can be estimated

based on total relevant sales and market percentages (see Table 4-2 on page38). For

instance, if hybrids were able to capture 15% of the Class 6 truck market (one of the

likely HD HE “sweet spots”), sales would amount to 31,000 units over four years, or

7,750 units per year, based on year 2000 sales levels.

It’s hard to predict the degree to which hybrid electric drivetrains will actually

capture market share in the next 2–15 years. Certainly at present, we are at the very

beginning of the market. A substantial portion of this paper is devoted to what the key

players are doing in products and technology. In addition, anecdotal comments from

some of them are reported in paragraph on 4.4.1 on page 52

Many products are in development. Buses have arrived on the market first. Some

production bus products are available from medium-size integrators such as AVS, ISE,

Wright Bus, E-bus, and others, often using Capstone microturbine generators as the

power source. TransTeq has built more than 30 HE transit buses using commercial

natural gas engines. Hino, in Japan, has had a light hybrid truck and bus line on the

market for more than 10 years. Some HD HE trucks will follow from a number of

companies. Two major industrial corporations—General Motors and BAE—have

drivetrain products that have been used in demonstrations and early-stage commercial

bus models by Orion, New Flyer, Thor, MCI, Gillig, and other bus makers.

However, the commercial user base is largely unfamiliar with hybrid electrics. It is

safe to characterize the present as the start of the period in which HD HEV products will

have to be proven in extended real-world use before commercial users will feel

comfortable in acquiring them in numbers.

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The Catch-22, of course, is that the high cost of acquisition of HD HEVs will

initially limit their sales, and prices will go down only after volume sales occur. This is

where government comes in. To help meet national environmental and energy-

independence priorities, the U.S. government subsidizes HE purchases by a variety of

means. This occurs primarily through public transit subsidies that apply to all transit

buses, as well as some grants and monies that are available to help mitigate the

incremental (higher) cost of purchasing an HE bus compared with a standard diesel bus.

Tax incentives for buyers of HD HEVs are contained in the U.S. House of

Representatives bill H.R.4, the Securing America’s Future Energy (SAFE) Act of 2001,

now in committee. This kind of demand-side support will help jumpstart the industry.

Government also supports preserving the environment and public health by

establishing EPA standards that require HD engines to meet established levels of

particulate matter (PM) and oxides of nitrogen (NOx) emissions levels. HE products

generally benefit competitively from this development, in that HE drivetrains can reduce

emissions up to 50% or more compared with standard diesel engines. However, by 2007,

EPA standards will require that HD diesel engines lower their PM by 99% and NOx by

95% below mid-2002 levels.2 This means that by 2007, HEVs will not have as great an

emissions advantage compared with diesel as they do today. However, it is very possible

that both HE technology and diesel exhaust aftertreatment will be used in the same HD

HE trucks to meet 2007 standards. If so, the distinction between HD “advanced” cleaner

diesel and HD HE drivetrains could begin to blur.

In an act of synchronicity that is fortunate for the cause of HD HEVs, the unique

traits of HE drivetrains happen to perfectly match the projected future needs of the

Army’s transportation command. Hybrids combine low fuel consumption, flexibility in

physical configuration, and onboard power generating capacity in one drivetrain package.

These attributes have created considerable demand for certain HD HEVs by many Army

planners. The Army is embarking on a major re-engineering effort through 2020 called

Objective Force, and HEVs’ capabilities fit well within that vision. Demonstrations and

testing are going forward today.

As part of the Army’s Tank Automotive Research and Development Center

(TARDEC), the National Automotive Center (NAC) works closely with vehicle and

drivetrain manufacturers to create Army HEVs having as much commonality as possible

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with commercial products. This will help the manufacturers’ commercial business by

subsidizing research and development costs. It also lowers the Army’s cost by providing

vehicles or systems that share economies of scale with commercial products, and lower

the Army’s Operations and Support (O&S). In addition to HE fuel economy, the off-grid

power generating capability of HEVs is of great interest to the military. The Army is the

single most important demand-side player pushing the HD HEV market and technology

forward, and will probably be so for the next 3–5 years, and possibly far beyond that.

2.3 The cost issue

After asking, “What will it do for me?” the second question a prospective buyer of a

HD HEV will ask is “What will it cost?” The answer involves a number of factors. The

incremental purchase cost over that of the closest comparable natural gas or diesel

vehicle needs to be established. Then the projected savings on fuel (probably 10–50%)

and brake linings need to be factored in (HEVs wear out brakes more slowly because of

the energy absorbed in regenerative braking). Periodic replacement of batteries has to be

considered. Training and support, repairs on HE components, downtime, and other O&S

expenses are also in the equation. The final analysis determines the “breakeven” point at

which the incremental investment in HE technology would be paid back. This is the

number of years or miles that must pass before the higher initial cost and operating costs

will be neutralized by lower fuel and brake costs or by a valuation of the emissions

eliminated by using HEVs.

Ideally, an HEV buyer today would have such a “lifecycle cost analysis” based on

real-world data on his or her desk before making the decision to purchase. Such a

document would probably be of great value to propel the HD HEV industry forward.

Unfortunately, it does not yet exist. No single fleet has had a sufficient number of

production diesel-powered HE heavy-duty vehicles (HDVs) to produce the needed study.

The survey of HD HEV manufacturers and users conducted for this paper revealed that

nearly all manufacturers had conducted their own studies, but they were proprietary and

not available for review.

Simulation programs have filled in some of the gap, although they tend to be more

for engineering purposes than for end-user lifecycle cost analysis. Examples are the

Partnership for a New Generation of Vehicles System Analysis Toolkit (PSAT),

developed jointly by Argonne National Laboratory, Ford, GM, and DaimlerChrysler,

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Opal-RT Technologies’ HEVism application, and the National Renewable Energy

Laboratory’s (NREL) ADVISOR (ADvanced VehIcle SimulatOR) application. In

contrast, BAE Systems offers its “Lifecycle Tool” to help prospective buyers calculate

costs of vehicle acquisition and operation, plus emission benefits.

Some information is available, however. The most comprehensive published review

is a report by NREL on the New York City Transit (NYCT) experience with 10 Orion

HD HE buses over 12 months and 174,465 miles of revenue-paying service.3 It presents

data on the costs of operating the HE buses and diesel buses on the same revenue-

generating routes for a year. Results are summarized in paragraph 4.3.2.4 on page 48.

The most telling results in the NREL report are that the incremental savings on fuel

per bus per year averaged $680, and the savings on brakes averaged between $340 and

$850. These savings in themselves will in no way begin to offset the incremental

purchase cost of an HE bus, let alone the higher average annual incremental maintenance

costs ($9,350 for the newer HE buses). The Orion VI buses were pre-production models;

presumably maintenance costs will go down over time, as they did between the older and

newer buses that NYCT acquired. Nonetheless, the payback for NYCT in using HE buses

obviously lies in emissions reduction. The important question to consider is whether the

incremental cost of the HE buses is a good value for the amount of emissions the HE

buses save from being released into the environment.

One reason the NYCT buses accrued low levels of total actual fuel savings is that

they were operated on slow-moving routes, traveling an average of only 51 miles per day.

A challenge for the HD HE industry is to introduce solutions for commercial fleets that

offer substantial fuel savings on routes that include steady-state operation over longer

distances. Such routes will allow HD HEVs to accrue more substantial savings on fuel.

2.4 Opportunities and Challenges

Heavy-duty HEVs are unique in combining these attributes: lower emissions, higher

miles per gallon, and onboard generating capacity. Both manufacturers and users can

indulge in some creative “blue-sky thinking” to arrive at solutions that could apply all

three traits. These could be fire trucks, emergency vehicles, high-value tactical Army

vehicles, construction work trucks, electric and phone utility trucks, catering trucks,

recreational vehicles, forestry trucks, mobile command centers, film and video

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production trucks, and more. Other HD vehicle types will benefit from the regenerative

braking characteristics, e.g., delivery trucks, urban transit buses, and waste haulers.

Another opportunity for the HD HEV industry exists in the electrification of light-

duty vehicles. As companies such as General Motors, Toyota, Ford, Honda,

DaimlerChrysler, and others start to release more and more hybrid and hybrid-like light

vehicles per their announced intentions, key technologies will be developed broadly and

on a greater scale. The industry’s commitment to fuel cells will have a parallel effect, as

virtually all fuel cell drivetrains will be HE drivetrains. This fact will benefit the HD

manufacturers. As progress is made in light-duty HE technology, it will advance the state

of the art. The HE technologies that will most readily transfer to the HD side are energy

storage and management and HE control algorithms.

However, challenges lie in the path of blue-sky concepts, including the higher cost

of HE components; the cost of batteries and/or their less-than-hoped-for performance and

reliability; high research and development costs; compromises in selecting the right

balance of components for the application; the difficulty of optimizing power controls

and algorithms; and competition from advanced diesel and natural gas vehicles.

The industry is trying to proceed in the best direction, taking these factors, market

analysis, and risk management into consideration. Some products on the market or close

to commercial release have the chance to become viable in the commercial HD

marketplace.

1 A working definition of a HEV is a vehicle that has onboard power generation, energy storagecapacity, and an electric motor. The power generation can come from either an internalcombustion engine or a fuel cell.2 Mid-2002 levels first took effect in 1998.3 Battelle company for National Renewable Energy Laboratory, (NREL) “New York City TransitDiesel Hybrid-Electric Bus Site Final Data Report, Orion VI Hybrid Fleet,” February 2002.