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August 05, 2010

Incentives and Federal Grants Will Boost Adoption of Hybrid Commercial Vehicles in North America

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Incentives and federal grants are expected to propel the adoption of hybrid commercial vehicles in North America and Europe, according to a study by Frost & Sullivan. Better fuel efficiency, lower emissions and fewer maintenance costs are also all highly desirable features, especially in sprawling mega cities and increasingly congested urban clusters.

Frost & Sullivan's study, "Strategic Analysis of North American and European Hybrid Truck, Bus and Van Market," finds that the hybrid truck, bus and van market is expected to grow from 4,100 units in 2009 to 222,000 units by 2016. The vehicles covered in this study include: light commercial vehicles, medium commercial vehicles, heavy commercial vehicles and buses.

"Amongst alternative powertrain technologies and fuels, hybrid commercial vehicles exert the least pressure on the existing energy and transportation infrastructure and require only minimal modification to the current fuelling infrastructure," says Frost & Sullivan Global Programme Manager, Sandeep Kar. "This aspect of hybrid commercial vehicles is acting as one of the strongest market drivers in North America and Europe, attracting governments, commercial vehicle manufacturers, and potential consumers alike towards supporting and accepting hybrid commercial vehicles."

In the commercial vehicle industry, the return-on-investment potential is a key determinant for adoption of new technologies. Fuel price volatility, government incentives and low lifecycle costs associated with hybrid trucks are all in favor of hybrid commercial vehicles, according to Frost & Sullivan.

However, hybrid trucks feature energy storage systems, control and power electronics and rotating machines, which are expensive technologies creating considerable cost barriers to potential adopters. Furthermore, storage systems such as batteries must be replaced every four to five years based on the vocational application.

"Currently, the high upfront cost associated with hybrids is countered with federal grants, incentives and tax rebates," explains Kar. "Although such incentives offer relief in the short term, for hybrids to be commercially viable in the long term, the upfront cost difference should reduce considerably."

Private fleets in North America and Europe have emerged as early adopters of hybrid commercial vehicles. However, robust volume growth can be attained through the penetration of for-hire fleets.

"Standardization of key enabling technologies will not only reduce R&D expenses and complexity but also create a foundation for launching aggressive price reduction strategies that are necessary for stoking market growth," concludes Kar.

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