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Converting Gas-Guzzlers into Hybrids

Companies hope to turn aging trucks, vans, and taxis into more efficient hybrids.
August 13, 2010

A handful of companies hope to carve a new niche by converting fleets of gas- or diesel-powered trucks, vans, and cars into hybrids and plug-in hybrids–and they’re attracting millions of dollars of funding to do it. In some cases, they say, the conversions could pay for themselves in fuel and maintenance savings in just a few years.

Recent convert: The startup Alt-e replaced the V-8 in a Ford F-150 pickup truck with a small, 2.0-liter, four-cylinder engine and electric motor, the top of which is shown here.

XL Hybrids plans to convert taxis, delivery trucks and other fleet vehicles into hybrids, cutting the vehicles’ fuel consumption by 15 to 30 percent. Alt-E, a startup founded by former Tesla Motors engineers, is similarly targeting fleet vehicles, but it plans to make plug-in hybrids that can drive for roughly 40 miles on the energy stored in a battery that’s recharged by plugging in. Once that stored charge is used up, Alt-E’s vehicle will act like a conventional hybrid with fuel economy of 32 miles per hour–more than double that of the prototype vehicle it is working with–a Ford F150 pickup. Hybrid Electric Vehicle Technologies (HEVT) plans to offer both hybrid and plug-in hybrid conversions for a range of vehicles.

Next year, major automakers will start selling their own plug-in hybrids–vehicles that can be recharged from electrical outlets but also have gasoline engines to extend their range. The first one–the Chevy Volt–will go on sale at the end of the year, with other automakers following suit over the next couple of years.

At first, however, only a few plug-in hybrid models will be available, and these won’t fill the needs of many customers, such as companies with fleets of trucks and vans, especially those that have been customized for specific applications. This is also still the case with conventional hybrids, even though they were first on the market 10 years ago. There are some hybrid taxis on the roads today, but taxi drivers in cities such as Boston and New York have resisted mandates to switch entirely to the hybrid models now available, says Amy Fazen, vice president of business operations at XL Hybrid.

The conversions companies hope to fill this niche. While the scale of conversions will be limited, these companies could serve to prod major automakers to offer a greater variety of these vehicles, say some automotive analysts.

The startups are taking various approaches. Alt-E, based in Auburn Hills, MI, plans to gut conventional vehicles, replacing the engine with a combination of electric motor, battery packs, electronic controls, and a gasoline generator. So far the company has raised about $28 million from individual investors and in government funding.

The other two companies plan more modest conversions–tacking an electric motor, battery, and controls onto the existing engine and transmission via the drive shaft that emerges from the engine to drive the wheels or the rear differential, which translates the motion of the drive shaft to the rear axle. XL Hybrid, based in Somerville, MA, has raised $1.8 million from individual investors, and Chicago, IL-based HEVT has raised roughly $1 million.

The companies have all developed proprietary control systems to connect their equipment with the vehicles’ existing computers and coordinate between the gasoline engines and electric motors. Prices range from $26,500 for Alt-E’s F150 conversion (about the cost of new, low end F150) to under $10,000 for XL Hybrids’ conversion of delivery vans or taxis. All the companies are at an early stage of development and have so far only converted a one or two vehicles.

The startups say their conversions will make economic sense for fleet customers because they drive greater distances over a year than ordinary consumers, and see higher annual fuel and maintenance costs (roughly 30,000 to 100,000 miles a year, compared to about 15,000 on average). In addition to improving fuel economy by between 15 and 100 percent, these conversions will cut costs to fleet operators because the electric motors help with braking, reducing wear on brake pads. The conversions could be particularly attractive to cash-strapped states and cities that can’t afford new vehicles, but want to save fuel and reduce emissions, Fazen says.

Advocates say these businesses could help increase the impact of hybrids and plug-in hybrids by targeting vehicles that are already on the road–cars that otherwise could be in usefor over a decade before they’re replaced by more efficient models. Targeting fleet vehicles helps, since they’re driven farther.

Fleets are “a solid market to go after,” says Eric Fedewa, vice president of global powertrain forecasts for analyst firm IHS Automotive, in part because fleet managers are willing to pay extra up front to save on per mile expenses, the figure that ultimately matters most to them. Savings on maintenance is particularly important, he says, since the time a vehicle is off the road can cost a company potential revenue.

There are plenty of fleet customers, says John Thomas, CEO and founder of Alt-e. “We’re talking to 55 customers with a potential sales list that amounts to 802,000 vehicles.” He says the company hopes reach 90,000 conversions within three years, which would save over 100 million gallons of gas a year. That’s still a drop in the bucket, in terms of addressing total worldwide petroleum consumption, as there are now nearly a billion cars on the road.

If the conversion companies are successful, it could spur investments from major automakers in developing their own hybrid and plug-in hybrid fleets vehicles, says Oliver Hazimeh, a director at the consulting firm PRTM . “If they see some fleets converting, I think automakers will take notice,” he says.

There are already signs that major automakers are interested in producing advanced vehicles for fleet customers. Ford is planning to offer an electric version of its Transit Connect, which can serve as a small delivery van. Recently GM announced a partnership with Bright Automotive, which is developing a plug-in hybrid van designed specifically with fleet customers in mind. There are similar efforts by other automakers, such as Renault.

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