The Fuse

Vincentric’s Hybrid Vehicle Analysis Omits the Best Economic Opportunity: Commercial Trucks

September 21, 2016

Guest Post by Clay Siegert |

Clay Siegert is Founder and COO of XLHybrids.

If you have read Vincentric’s recent lifecycle cost analysis, which shows only seven of 29 hybrid vehicles offered in the 2016 model year had a lower total cost of ownership than their gasoline counterparts, you are now armed with some valuable information when you purchase your next vehicle. However, you may not have the whole story on hybrids.

While the Vincentric research accurately finds that in most cases today, purchasing a hybrid car or hybrid SUV simply doesn’t pencil out, this picture of hybrids changes dramatically when you look at hybrid-electric commercial vehicles like trucks and vans, which have much lower base MPG ratings than cars and SUVs, are driven more miles per year than typical consumer usage, and have longer life cycles on the road where all financial benefits to operators can be accrued over a longer period of time.

Let’s look at a sample case that is very typical of commercial vehicle duty and life cycles. Say a fleet shuttle bus or work truck drives 100 miles per day for 250 work days per year in urban and suburban stop-and-go driving, and gets 8 MPG over a 10-year lifespan. This vehicle will use $70,000 worth of fuel over its 10-year life, assuming the current $2.25-per-gallon price holds over that time.

Now, let’s look at this same shuttle bus or work truck upfitted with a hybrid-electric system that yields a 25 percent MPG improvement over its gasoline counterpart—like XL Hybrids’ technology. In the same conditions as its gas counterpart, this vehicle, which now achieves 10 MPG, will use $56,000 worth of fuel over its 10-year life. That’s $14,000 of fuel savings for the hybrid; and there are even more financial benefits beyond fuel savings with hybrid commercial trucks.

Combined together all of these savings can exceed $20,000 over the life of a commercial vehicle, all from a hybrid upfit that can cost $10,000 with volume.

First, the increase in MPG from the hybrid system effectively extends the driving range of that commercial vehicle, making fleet drivers more productive. This means hybrid drivers spend less time fueling up and more time performing service calls, product deliveries, or transporting passengers than drivers of conventional vehicles. Second, the regenerative braking from hybrids can reduce brake maintenance costs, yielding operating costs savings that can total $1,000s over the life of a commercial vehicle. And finally, the extra power and torque from electrified powertrains can allow fleets to downsize from their typical commercial truck engine, saving thousands of dollars. For example, downsizing from a 6.0L engine to a 4.8L engine on GM vans and trucks amounts to about $1,000 in savings.

Combined together all of these savings can exceed $20,000 over the life of a commercial vehicle, all from a hybrid upfit that can cost $10,000 with volume. Whether measuring financial return by IRR (20%), ROI (100+%), or time to payback (~5 years), hybrid commercial vehicles can be a big win for fleets. And if the price of gasoline increases over time, the results get even better.

The Vincentric report on hybrids is certainly a helpful tool for consumers who want to make the right vehicle purchasing decisions, and for fleets that operate lots of cars and SUVs. However, while Vincentric has found that hybrid versions of consumer cars and SUVs currently lag their gasoline counterparts in terms of total cost of ownership, especially in a world of low gasoline prices, it is important for fleet operators to also look at hybrid commercial vehicles, which can present a significant opportunity for total cost of ownership savings.