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Do Hybrid Vehicles make sense ?

Updated: Jun 21, 2020


Introduction

In the past couple of years, there has been an increase trend towards electrification of powertrains in the automobile sector. Since Tesla pushed the envelope with its fully electric car lineup, car manufacturers have been falling over each other to release new versions of their existing cars, either with hybrid powertrains or with fully electric powertrains. However, people often “go with the market flow” and do not stop to think if their vehicle actually makes sense from a practical perspective. In this article, we will do a basic analysis as to whether you should consider buying a hybrid vehicle or go with the trends and purchase a fully electric vehicle.


Classes of Vehicles

A common person often classifies vehicles around him into one of the following categories, hatchback, sedan, SUV, truck and special vehicles (like garbage trucks, fork-lifts etc.). However, we’ll do a more technical classification as per the guidelines followed by the European Commission.

Factors under consideration

While a good analysis of the powertrain requires an exhaustive comparison between the complex and often incompatible variables like the fuel injection timings, battery pack dimensionality, vehicle driving cycles and so on, we will be focusing on more general and user-based factors. In addition, there are also some generic factors like carbon footprint, reliability etc. However, to maintain a technical discussion, we’ll have selected a more concise set of factors which we believe should provide a better and practical analysis. These are listed below:

  • · Average Operating distance/time

  • · Investment Costs

  • · Turnover Period

Use Vehicles

Before we start our analysis, let’s first get a good picture about the vehicles in question. For this comparison, we’ll be taking the use cases of 3 vehicles, a Toyota Prius Plug-in Hybrid, a Volvo truck and a fork-lift. This choice of vehicles ensures a good variance in terms of usage patterns, initial costs involved, economics of usage and so on.

Case Study Analysis

Now that we have a good understanding of the vehicles, let’s proceed to the analysis. We’ll be firstly discussing the issue for each factor under consideration. At the end of each discussion, we’ll be giving a rating and then compiling the results in a table.


1) Average Operating Distance/Time:

While this may seem at first glance to be a very ordinary term, in reality this has huge implications not only for the customer but also for the manufacturer. You see, the manufacturer (e.g. Mercedes, Toyota, Audi etc.) has to market their product and sell their products against the weight of their similarly resourced and financially stable competitors. Assuming an intelligent customer, the company has to convince him that their product is indeed the right choice. For determining this, the customer will try to calculate how much does he actually use this vehicle. His calculations for our vehicles are summarized in the table below.


Note the presence of the third column, Operating Area. This refers to the geographical area where the vehicle is being driven. To understand its importance, let us have a look at the figures below. Fig. 1 shows the driving cycle for ‘City Driving’ while Fig. 2 shows the driving cycle for ‘Highway Driving’. As it can be seen, there are lots of ‘oscillations’ in the city driving case as compared to the highway profile. This means that there’s a lot more scope for regenerative braking operation in the city case, which has a direct implication on the battery dimensioning. How you ask, let me explain. You see, companies do first a good analysis on the future use of this product in the R&D phase. Hence, this typical usage pattern helps them to derive the daily energy consumption of the battery which is operated in conjunction with the combustion engine. This has a direct effect on the initial cost of the vehicle.



In addition, the customer can also make an estimation as to whether the particular product is indeed possible to operate economically given his own operating hours. For example, the fork-lift will only be operated during the work hours (say 8.00h to 18.00h). The rest of the day, it will stay inactive, whereas the same is not true for the other two. The car can be assumed to be operated to and fro work, meaning an average of 1-2h with lots of standing time in between. The truck on the other hand does not have such fixed time slots. The truck can be driven at any point of day for long hours. (In EU, it should be noted, there is a mandatory driver rest period, 45 min for a driving period of 6h).

Keeping in mind the above points, we have the following labels for the vehicles: Prius Plug-in Hybrid: Thumbs Down, Volvo: Thumbs Up, Fork-lift: Maybe. This rating is because, for a city driving with an average range of around 60-70 km per day, this is more than suitable for a fully electric car than a hybrid car. Also, the capability for a hybrid fork-lift depends on the economic planning for such machines. While it would make perfect sense to operate a hybrid for a continuously for the entire day, it would also be possible to operate a fully electric with charging done during the lunch break shifts.


2) Investment Costs:

The average income for a German family in January 2020 was 4,305 Euros [7] while the starting cost of a hybrid Prius Plug-in Hybrid is 32,280 Euros [2]. Hence, if a family does desire to buy a hybrid Prius Plug-in Hybrid, they will definitely give it some good thought as it has to worth the extra money. A similar case exists for the Volvo and the fork-lift as well. People generally think that because companies have such huge budgets, a difference of a thousand Euros is not that important. What they do not realize is that the company’s competitors also have a similar machinery at their disposal. So, if the company does wish to stand above its competitors on the fiscal side, it better make every penny count.

This analogy becomes especially important in the field of logistics, whether it is air-transport or trucking. Every cent counts! The profit margins among the companies are also very narrow in the inventory department of the company where the forklifts are generally operated. This means that the executives and planners will make a well-thought one decision whether to buy a hybrid, fully electric or a conventional model. The prices for these 3 categories can be seen in the table below.

As the manufacturers do not openly reveal the actual prices, it can be difficult to get the actual values. However, we can obviously make an assumption that the prices for the fully electric version will be highest: this is because of the huge battery size needed to operate the vehicle on a regular basis. Hence, our ratings for this category: Thumbs Up for Forklift, Maybe for Prius Plug-in Hybrid and Maybe for Volvo FH13.


3) Turnover Period:

This term essentially means the average lifetime of the vehicle. Although most middle-class families think of their car as a lifelong investment, it usually means one or two decades. On the other hand, the turnover period for the trucking industry is even less, only a couple of years. Why? Because, as we discussed before, these vehicles need to be operated as efficiently as possible in order to save costs. It is a well-known concept among most analysts and product designers that the value of a product depreciates over its lifetime. This concept, when applied to the reality of the competitive logistics sector means that the turnover period is quite small.

This factor can also be related to the potential swiftness with which the customer accepts the market trend. This can be explained as follows: as the turnover period of the trucks is quite small, they will be the ones who can implement the market trends first. This implies that the progresses made in the research of hybrid and fully electric trucks stands to be most beneficial from a practical perspective.

Keeping in mind the above arguments, we have the following ratings: Thumbs Up for Volvo, Maybe for Forklift, Thumbs Down for Prius Plug-in Hybrid.


Conclusions

Let’s now bring all the above arguments into one crisp table for making a comparison.

As is plainly evident, the trucking industry is the primary target for the hybrid market. While, there will be a good amount of variations as to the actual application of the truck, the fact that the long highways and hence the staggered charging times will definitely be beneficial for the customer. Forklifts are a more ambiguous case because of the innate user-based operations. While a smaller plant may not be able to afford multiple units/a single costly electrical machine and hence going for a more carbon-neutral hybrid one, there are also possibilities of large plants operating fully electrical machines. Lastly, as discussed, a general family will be advised to prefer an electrical version of the car instead of going for a hybrid. Not only is it more environmentally favorable, the moving trends of using the car battery in order to stabilize the grid and act as a back-up power source should keep in a good stead.


References

[1]: Vehicle Categories, European Commission, https://ec.europa.eu/growth/sectors/automotive/vehicle-categories_en

[2]: Toyota Deutschland, https://www.toyota.de/automobile/prius/

[3]: https://autoline.info/-/sale/chassis-trucks/VOLVO-FH13-480HP-6x2-XL-Manual-gearboks-Full-steel-2017--20032405352736820800

[4]: Toyota Forklifts, https://www.toyotaforklift.com/resource-library/material-handling-solutions/finance/forklift-pricing-101-what-you-should-know

[5]: New European Driving Cycle, https://en.wikipedia.org/wiki/New_European_Driving_Cycle

[6]: US EPA HFET, https://dieselnet.com/standards//cycles/hwfet.php

[7]: https://tradingeconomics.com/germany/wages

[8]: https://www.tmhnc.com/blog/how-long-will-a-forklift-last-and-forklift-average-use

[9]:https://setis.ec.europa.eu/system/files/Driving_and_parking_patterns_of_European_car_drivers-a_mobility_survey.pdf

[10]: http://www.jobs.net/Article/CB-110-Talent-Network-Transpt-Logistics-8-Facts-About-the-Truck-Driver-Way-of-Life/

[11]: https://en.wikipedia.org/wiki/Toyota_Prius

[12]: https://en.wikipedia.org/wiki/Volvo_FH


Author : Nikhil Anand

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