Hybrid Diesel Companies
The Big Rig Hybrid Diesel Revolution
An article today on Forbes.com hit the nail square on the head when it said: "People usually do not associate the word ‘green' with diesel trucks."
Of course they don't. Most people, in fact, aren't very fond of the Big Rigs at all. Despite youngsters trying to get them to blow their horns, we're usually trying to get out from behind them on the highway or watching in disgust as their exhaust pipe bellows plumes of smoke.
But for all the negativity associated with the 18-wheeled monsters, they are critical to our economy. Power from diesel engines is responsible for moving 94% of all freight in the U.S.
And it's not just tractor trailers that are critical to our country's operations. Every day, diesel power transports 14 million children to school and another 14 million workers to work via school and commuter buses.
Yes, diesel engines do a lot for us. But they cost a lot as well.
In fact, diesel represents about 20% of all U.S. transportation fuel consumption, or about 56 billion gallons per year. And burning all that fuel pours tons of sulfur and nitrogen emissions and particulate matter into the air.
So, in addition to the roughly $220 billion we'll spend this year on diesel fuel in the U.S., we'll see high costs linked to diesel-related emissions.
That has led to ever more stringent emission standards for diesel engines on Federal, state and local levels. These tougher emission standards have resulted in an increased interest in hybrid diesel trucks by companies employing large fleets.
Diesel Standards: Getting Tougher As Companies Turn to Hybrids
Starting in 2007, all new heavy-duty diesel engines sold in the U.S. must have technologies that either filter almost all the black soot particles and much of the nitrogen oxides that cause acid rain or inherently prevent them. In 2010, the standards get even stricter.
As expected, the diesel engine industry has responded to these more stringent standards. And that has led to the creation of serious opportunities for investors.
You see, some original equipment manufacturers (OEMs) have gone the route of installing devices that harness the emissions from diesel-burning engines. But this has a serious drawback: cleaner diesels burn more fuel.
But with diesel prices rising 44% in the last year, some companies are looking to go in an entirely different direction with an engine that uses different fuel or by pairing a diesel engine with an electric propulsion system (batteries, capacitors) to form a diesel electric hybrid.
Of course, the appeal is massive: a heavy-duty hybrid truck can deliver fuel savings of 5% to 60%, depending on how it's used. Some technologies could even increase fuel efficiency to levels that would save trucks more than 1,000 gallons of fuel annually.
Trucks with those credentials will be (and to some extent are already) in high demand. And that has led nearly all major truck and engine manufacturers to take a crack at producing them.
Hybrid Diesel Companies
Here are a few companies with publicly-traded stock that are succeeding:
Mack Trucks, a member of AB Volvo (OTC: VOLVY), has developed a hybrid dump truck for initial use by the U.S. Army. That truck uses no diesel at all when starting and stopping. In fact, the diesel engine doesn't switch on until the truck has been moving for a few hundred feet. And when stopped, the engine is killed, but all the truck's systems remain on and powered.
But the most obviously play--at least right now--is engine maker Eaton Corporation (NYSE: ETN), which has supplied 220 test engines to its customers over the last four years. They include such blue chips as UPS, FedEx and Coca-Cola.
Folks, we're on the verge of a ramp-up right now. Daimler AG (NYSE: DAI), owner of Freightliner, has announced plans to build 1,500 hybrid trucks and manufacture a hybrid bus--an edition of the classic Thomas-Built school bus. Both of those endeavors will use technology developed by Eaton.
In addition to Daimler, Eaton is also supplying hybrid systems to Kenworth, Peterbilt and International. That means they've locked up nearly all the Big Rig players. Plus, Eaton estimates hybrids could make up 10% of the new diesel market in the very near future.
There are, however, other ways to stock plays in this market as well. The Green Chip Stocks portfolio includes a company that's doing very exciting things with electric propulsion systems for diesel delivery trucks.
And the recently released Alternative Energy Speculator has a play that is eliminating 90% of the diesel burned in engines altogether.
Make sure to keep both of those services on your radar.
Until next time,
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