Fleet Management News & Business Info | Commercial Carrier Journal
Issue link: http://read.uberflip.com/i/815349
54 commercial carrier journal | april 2017 EQUIPMENT: ALTERNATIVE FUELS Non-diesel price hurdles e biggest issues with wide adoption of natural gas equipment, diesel prices aside, are the upfront cost and range limitation. "You're looking at an upcharge these days of a minimum of $40,000 to $50,000 between a natural gas-powered truck and a comparably spec'd diesel-powered truck," Tam says. Sudhakar says increased government incentives across many states will give rise to a fueling infrastructure. But high upfront costs, low oil prices and the launch of hybrid-electric powertrains present hurdles to fleet adoption rates. "Incentives are important, because you don't have to get over the hurdle of asking yourself 'What are the financial im- plications of doing this?' " Tam says. "But the cost arbitrage between diesel and natural gas is what brought some people into the market, and when diesel fell below $3, it became 'advantage diesel.' " Expensive emissions equipment that diesel engines need for compliance isn't necessarily part of a natural gas-fueling setup in a heavy-duty truck, and Tam suggests that rolling those cost sav- ings into additional credits for fleets willing to burn the cleaner fuel would pay dividends. "It doesn't make a lot of sense to me that when you take all that equipment off, that you can't apply that as a credit or reduce the costs [of the engine]," he says. Natural gas-powered units also pose challenges on the second- ary market. Sales volume of used natural gas trucks to-date is extremely low, making values wildly inconsistent, says Chris Visser, J.D. Power commercial vehicle senior analyst and product manager. "I have seen a few groups of identical trucks sell with pricing all over the place," Visser says. "I think there are a few dealers with a customer or two in the local delivery and construction industries who buy and sell the trucks. Most dealers will tell you they don't have a market for them." Political opportunity While hope for a wide adoption of natural gas in trucking isn't lost, Tam says some of the fuel's fate lies in the settling of political upheaval. Last month, the Trump administration announced plans to roll back Corporate Average Fuel Economy standards that called for passenger car and truck manufacturers to build units that average 54.5 mpg by 2025. at doesn't affect greenhouse gas Phase 2 regulations for trucking — yet. "Phase 2 GHG is significant because it's the most stringent regulation in the world," Douville says. "But vehicle makers are always hesitant to make changes with new administrations." at's le many would-be buyers in the market watching from the sidelines. "With this new [presidential] administration, everyone is waiting to see what is going to happen with emissions regula- tions," Tam says. "Potentially pulling out EPA requirements, that's going to make a tough environment for natural gas adop- tion. But if it does happen, does the next administration go back and put it back in place?" About 60 percent of the cost of diesel is tied to raw materials. With natural gas, that falls about 25 percent, making it far less susceptible to international political volatility and wild pricing swings. "I think we, as a nation, are going to continue to strive for cleaner air," Tam says. "We have an ample supply of natural gas, and we cannot say the same thing about oil." Options, options, options In heavy-duty transportation, natural gas is pretty much a two- horse race between the compressed and liquefied varieties, with CNG starting to pull away. Last year, Nikola Motor Co. promised the launch of a hydrogen fuel cell-powered Class 8 tractor.