The Fuse

Targeting Commercial Fleets for Electrification

January 21, 2016

Guest Post by Tod Hynes |

Tod Hynes is President and Founder of XL Hybrids.

Electric vehicle technology has been around for over 100 years, but it wasn’t until the introduction of the Prius that an electrified vehicle (hybrid, plug-in hybrid, or battery electric vehicle) was able to break through with significant sales. Toyota has sold over 6 million hybrids worldwide, yet electrified vehicles still only account for some 3 percent of automobiles sold in the US, and that needle hasn’t moved dramatically in 10 years. That’s right, over the last decade we’ve seen the number of consumer electrified vehicle options increase from about 5 to over 70 different makes and models, yet the uptake has stayed at around 3 percent of new vehicles sold.

There’s one major reason hybrid and electric vehicles have remained a niche market—cost. Because they cost more than conventional vehicles, it takes time to achieve a good financial return on the up front premium. The genius behind the Prius is that there isn’t a non-hybrid version, so buyers don’t perceive a cost premium (based on other Toyota vehicles it’s estimated at approximately $4,000) and they don’t realize it can take up to 10 years for the average driver to “break even” on the purchase price. In this case, consumers are willing to pay for a “green” vehicle that gets a high MPG. The genius behind Tesla is that people are willing to pay more for luxury cars that can go from 0 to 60 mph in three seconds. Both Toyota and Tesla are pushing the industry forward and are investing billions to get truly mainstream solutions to market, but the world still waits, and lower oil prices make the challenge even more difficult.

We started by finding the customers who already use a lot of fuel per vehicle, and could save the most fuel and money with electric drive technology.

We took a vastly different approach at XL Hybrids. We started by finding the customers who already use a lot of fuel per vehicle, and could save the most fuel and money with electric drive technology. This quickly pointed us towards customers with large, low-MPG vehicles that drive a lot of non-highway miles—primarily commercial fleets. We focused on their needs and developed a low-cost and easy to implement hybrid solution that can rapidly scale within a fleet, and which makes financial sense even with battery prices where they are today. As battery prices come down, we can also add plug-in options and further electrify their fleets, reducing their fuel consumption and costs even more. It’s a highly scalable approach that doesn’t require billions of dollars to implement.

XLHybrids_System

XL Hybrids makes a low-cost electric powertrain that is paired with advanced software and cloud-based analytics. Our wireless link and analytics system can provide an electrification guide to large fleets, enabling them to see where they will get the best returns on their investments, and track real world performance. This system also enables best-in-class vehicle uptime, which is critical for fleet operations.  Vehicle downtime is a return-on-investment killer and has been a challenge for many new fleet vehicle technologies.

Our electric powertrain is added to new and existing vehicles, turning them into hybrids in less than a day, and reducing fuel use by approximately 20 percent on urban drive cycles. The electric motor acts like a generator during braking events and captures energy that is normally wasted as heat in the brakes. That energy is stored in the battery pack and used to provide additional torque during acceleration to reduce the load on the engine. This is called regenerative braking, and XL Hybrids’ system can easily add this capability to a range of commercial vehicles regardless of the fuel source. That helps fleets meet sustainability goals.

So even with low oil and fuel prices, XL Hybrids can provide a system that costs less than $10,000 yet creates more than $20,000 in value and provide a solid return on investment.

Many of our fleet customers use over 3,000 gallons of fuel per year, so a 20 percent reduction in fuel use translates to 600 gallons of fuel saved. That’s equivalent to taking an average consumer vehicle off of the road. Even with gasoline at $2.00 per gallon, our customers can save $1,200 per year and $12,000 or more over the life of the vehicle. Our hybrid-electric powertrain adds a significant amount of additional torque (up to 80 percent more), so customers purchasing new vehicles can downsize their engine and save $800-$2,500 in the upfront cost of the vehicle. The regenerative brakes can also reduce brake wear and maintenance costs by 50 percent, which can translate to another $3,000 in savings over the vehicle’s life. Finally, drivers do not have to refuel as often, which can save more than a man-week and $2,000 over the life of the vehicle. So even with low oil and fuel prices, XL Hybrids can provide a system that costs less than $10,000 yet creates more than $20,000 in value and provide a solid return on investment. With many customers saving money because of lower fuel prices, now is the time to invest in cost effective ways to reduce fuel use to keep the fuel bill low even when fuel prices inevitably go back up.

In order to reach the 97 percent of the market not currently buying hybrid or plug-in vehicles, the solutions need to be better and lower cost. Increased corporate fuel economy standards are already increasing the efficiency of cars and trucks in the United States without relying on electrification technology, and oil prices are expected to stay below $70 per barrel for a long time, so the challenge of vehicle electrification remains high. That said, the long term trends are clearly in favor of electrification, as electric motors are more efficient, can last longer, and require less maintenance than internal combustion engines. Lower battery prices will fully unleash the potential of electric drive technology, and the time is now. There are plenty of opportunities to scale even with battery prices where they are today, you just have to look in the right places.

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