Navigant Research Blog

Natural Gas Vehicles Dampen Hybrid Truck Market

Dave Hurst — October 8, 2013

The market for natural gas powered trucks is growing rapidly, and hardly a day that goes by without another story about natural gas vehicles of some type.  For several years, the interest in natural gas fueled medium and heavy duty (MD/HD) trucks was thought to come at the expense of diesel as opposed to competitive green drivetrains.  Last week, though, Andrew Douglas, national sales manager of Kenworth Trucks, told an audience at the Green Fleet Conference that Kenworth was finding that sales are “very small” for hybrid trucks as natural gas continues to grow rapidly.  Kris Hus, powertrain product strategy manager of Freightliner, confirmed that his company is seeing the same thing.

The implication is that natural gas is displacing demand for hybrids.  The current stock of hybrids are almost all parallel hybrids – in other words, the electric drive is connected to the driveline in parallel to the internal combustion engine (ICE).  However, series hybrids, with the ICE and electric motor decoupled, may provide greater improvement in fuel economy.  Hino representatives indicated in informal conversations that they are pleased with the growth in sales of their hybrid, which features a parallel hybrid system.  Still, it is telling to that the Cummins Westport joint venture, which manufactures most of the natural gas engines in the MD/HD original equipment manufacturer market, reports increasing sales (Q2 revenue up 12% from 2012), while the truck market overall is down 4% from 2012 according to Ward’s Auto.

Prolonged Payback

A look at cost data would seemingly confirm the challenge facing hybrid trucks from compressed natural gas (CNG).  Without considering maintenance savings, the cost recovery for hybrids stretches well past the 2 to 4 years that fleet managers often look for in new technology, while both CNG and propane can remain in the desired timeframe.

Average Truck Cost Comparisons, United States: 2013

CNG table - blog

(Sources: Navigant Research, Alternative Fuel Data Center)

*Private station prices according to the Alternative Fuel Data Center, July 2013

If fleets are shifting from diesel to CNG in greater numbers and CNG is absorbing the green truck budget from fleets in greater numbers, what does that mean for the hybrid truck makers?  That’s an issue likely to be on the minds of those attending the Hybrid Truck Users Forum (HTUF), which convenes next week in Chicago.  The Forum has sessions that are dedicated to national hybrid truck incentive programs, deployment of high efficiency technologies, and EPA 2014 greenhouse gas compliance issues for hybrids.  These sessions will likely help the industry chart a course for increased adoption.

One of the later sessions of the forum looks at how natural gas can serve as a range extender for HD applications.  CNG is proving to have a significant impact on discussions of the future of the truck market, and while in the past I’ve been skeptical that CNG is pushing other options out, it now appears that hybrids may not offer a fast enough payback to avoid being overshadowed by CNG or plug-in trucks.

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