Trucks are promising targets for electrification

You never know who the "early adopters" of an innovative technology might be. (GW)

When a Truck Absolutely, Positively Doesn't Use Fuel

By Rebecca Smith
Wall Street Journal
August 12, 2010

FedEx hopes to replace some of its traditional delivery trucks, left, with electric ones such as the model at right to cut fuel use and emissions.

Say "electric vehicle," and most people think of cars like the Nissan Leaf or Chevrolet Volt that will soon roll off assembly lines. But with a push from companies including FedEx Corp., attention is turning to commercial delivery trucks that may prove a surprisingly good fit for battery power.

The delivery giant is exploring supplementing its diesel trucks with electrics because its trucks typically drive fairly short routes that battery power, with its limited range, could handle. Trucks also end the work day at maintenance yards where they could be recharged with lower-priced off-peak electricity.

FedEx thinks electric vehicles could have lower operating costs and have the added benefit of being able to linger at delivery stops without producing noise or exhaust. That's important in places like California that have rules discouraging engine idling.

"If any technology has a bright future, this is it," said Keshav Sondhi, chief engineer of FedEx's electric vehicles program in Memphis, Tenn.

Others agree. "We think trucks are one of the most interesting and promising targets" for electrification, said Brian McBeth, manager of business strategy for car and truck maker Daimler AG in Stuttgart, Germany. Daimler's Freightliner unit makes some of FedEx's current trucks.

Ford Motor Co., meantime, plans to introduce a Transit Connect electric commercial van later this year with an 80-mile battery range.

But this isn't the first time electric trucks have been bandied about for commercial use. The U.S. mail service has a decades-long long history of trying, and then giving up, on electric delivery vehicles. Some lacked the power to take on hilly routes. Others were undercut by government electric-vehicle programs that later expired. And most suffered from much higher purchase prices than conventional vehicles, partly because they never achieved sufficient production volumes.

One reason for renewed interest in electric trucks is tough carbon dioxide reduction goals that take effect starting in 2015 in European Union nations. Coming new U.S. fuel-economy rules for trucks also play a role.

FedEx's push for electrification comes directly from Frederick Smith, its founder and chief executive, who sees oil use as a national security issue.

Mr. Smith said FedEx decided several years ago to get involved in public policies related to "imported petroleum from unstable and unfriendly parts of the world. In other words, to become more fuel efficient, not just as a company but as an economy."

The biggest obstacle is that electric trucks are too expensive to buy in large quantities. The 20-foot trucks FedEx is testing in Los Angeles cost nearly $150,000—more than twice that of an equivalent-size diesel truck. The trucks are built through a partnership of truck maker Navistar International Corp. of Warrenville, Ill., and Modec, a 2004 start-up in Coventry, England.

But as battery technology improves and production rises, the cost of electric trucks is expected to fall.

"If you start talking about a vehicle that is maybe 25% more [expensive] than the conventional thing, but 80% more efficient, now you've really got something," Mr. Smith said.

For the past year, FedEx has been delivering packages in central London with the help of 10 battery-powered trucks. It also is testing five electric trucks with a similar 60-mile driving range in Paris and four that go 100 miles between charges in sprawling Los Angeles.

The current best guess of FedEx and others is that electric trucks could appear in significant numbers in three to five years, mostly plying delivery routes in cities with mild climates. That's because heaters and air conditioners sap battery life.

Sanjay Shrestha, an analyst at Lazard Capital Markets LLC, thinks electric vehicles could claim a 30% share of the U.S. step-in delivery van market and a 20% share of the shuttle bus and school bus markets by 2015.

Electric trucks could be especially viable on stop-and-go delivery routes such as FedEx's because the "regenerative" braking systems they use put the energy created by braking into the batteries. Another likely target: cities such as London that are trying to discourage the use of exhaust-spewing vehicles in urban cores.

Since charging batteries costs less than diesel fuel, FedEx's Mr. Sondhi said he figures his company could run delivery routes with electric trucks for about one-third the cost of diesel trucks, excluding the upfront vehicle cost. Electrics also could help FedEx meet its goal to improve fleet fuel efficiency 20% by 2020.

Batteries make up nearly half the cost of many early electric vehicles and, not surprisingly, trucks require lots of batteries to power them. Mr. Sondhi is optimistic, though, that prices for batteries will tumble as production volumes rise.

In a recent study, the U.S. Department of Energy said it expects battery costs to fall from about $1,000 per kilowatt hour of capacity in 2009 to $500 by 2013 and $150 by 2030.

If the price falls in half, it will knock $30,000 or more off the cost of 20-foot trucks like the ones FedEx is testing.

The Obama administration is trying to accelerate the move to more-efficient trucks. It is working on fuel economy standards for trucks above 8,500 pounds gross weight that would take effect in 2014, the first such rules for these trucks.

In addition, it has pumped $5 billion worth of Recovery Act funds into electric transportation development, helping fund 30 U.S. plants to make vehicle batteries and other electric-drive-train components.

—Jennifer Levitz contributed to this article.

Write to Rebecca Smith at rebecca.smith@wsj.com