More than 50 Class 4 through Class 8 hybrids — including this medium-duty Peterbilt Model 335H boom truck — are eligible for tax credits ranging from $3,000 to $12,000. Photo: Peterbilt Motors Co.
No technology-evaluation project is worth starting unless there's a reasonable expectation of a significant positive payback. But when evaluating hybrid vehicles, managers too often focus on fuel economy, completely overlooking other potential savings inherent in the technology.
Take a Class 6 truck that costs $100,000 and delivers 5 miles per gallon (mpg). At 20,000 miles a year, it'll burn 4,000 gallons annually.
As a hybrid, it costs $140,000. With a 40% fuel economy increase to 7.0 mpg, it will use 2,857 gallons annually: a savings of 1,143 gallons. At $3/gallon, fuel savings are $3,429/year. Using simple payback analysis, it will take 11 years and eight months to pay back the initial price differential.
At first glance, it isn't even worth considering, especially with a 10-year expected service life.
But that's just one factor in the cost-versus-benefits equation. You can use tax credits to negotiate the price.
While the credit itself is meaningless to tax-exempt agencies, the dealer can take it instead. The dealer can deduct the value of the tax credit from the selling price. More than 50 vehicles in all classes have been identified by the IRS as being eligible for credits ranging from $3,000 to $12,000 for Class 4 through Class 8 trucks.
The dealer's tax credit immediately reduces the purchase price differential to $28,000. Projected resale value after an estimated 10-year initial service life could increase by as much as $5,000. And because hybrids recharge the battery pack during braking, reducing the load on service brakes, brake maintenance is greatly reduced. Oil change intervals can be extended.
Savings from fewer brake and oil changes alone can add up to $1,000/year.
Calculating annual savings of $3,400 in fuel, $1,000 in maintenance, and $500 prorated residual value against the net cost differential of $28,000, payback becomes five to six years — well within the vehicle's projected service life. And with less stress on mechanical components, service life might be extended one or two more years.
These are average costs and savings based on various operations. They're examples designed to provide insight into the evaluation process.
Your evaluation should also consider power take-off (PTO) time, provided your hybrid is equipped to operate the PTO for sufficient time under your loads. In some hydraulics operations, for example, batteries can provide sufficient operating time and require only five or fewer minutes of recharge time per hour.
If needed, adding more battery capacity significantly increases the amount of operating time in electric mode. But it'll also increase the vehicle's cost. Savings in fuel by operating equipment electrically with the engine off may make up for the added cost.
If your department has been considering buying a hybrid vehicle, now's the time to take action: This is the final year of tax credits for putting new hybrid vehicles into service.
If you bring any hybrids into your fleet, whether an SUV, a snowplow/dump truck, a hydraulic boom truck, or anything in between, have your public relations people promote the fact with local news outlets. It'll help build goodwill for your operation within your community.
— Abelson is a former director of the Technology and Maintenance Council of the American Trucking Association, a board member of Truck Writers of North America, and active in the Society of Automotive Engineers. He is a regular co contributor to PUBLIC WORKS.
For help in analyzing your options, visit the nonprofit Hybrid Truck Users' Forum at www.htuf.org.