XL Hybrids landed a big contract from Verizon to convert 234 gas-powered cargo vans to run on electricity in New York City.

The deal, worth about $2.3 million, will be heavily subsidized by the state of New York. The incentive is part of the state’s effort to improve air quality in heavily congested regions.

It will be one of the most significant hybrid fleet deployments in the city.

Boston-based XL Hybrids specializes in add-on hybrid systems, which can be installed on vehicles in less than a day to quickly bring hybrid technologies to fleets.

Clay Siegert

Clay Siegert

The design of XL Hybrids’ add-on system puts components under the vehicle and leaves the manufacturer's powertrain, engine and transmission intact, said Clay Siegert, the company’s co-founder and chief operating officer.

“It's a self-contained system,” Siegert said. “It's seamless to the driver, operations and reliable with near-100 percent uptime.”

Verizon’s new electrified vehicles are Chevrolet Express 2500 vans outfitted with XL Hybrids’ XL3 drivetrains. Including the new conversions, the communications company will have deployed nearly 300 XL Hybrids since 2015.

XL Hybrids also has installed the XL3 on fleets for FedEx, PepsiCo and Coca-Cola Co.

Hybrid technology has been available in the U.S. vehicle market for two decades, but it’s only now starting to reach commercial adoption. Although hybrids offer improved fuel economy and reduced carbon emissions compared with conventional vehicles, fleet managers have to develop a certain level of trust in such systems before they'll move to deploy, Siegert said.

The company’s strategy is to start with small deployments to prove value for fleet managers. Between 2013 and 2015, Coca-Cola outfitted 280 Chevy Express service vans with the XL3 powertrain. They use approximately 20 percent less fuel compared with conventional vans.

In the XL3, an electric motor behind the transmission assists acceleration and collects power through regenerative braking. When the driver steps off the gas to coast, the electric motor slows the vehicle and acts as a generator. This charges the onboard two-kilowatt-hour battery pack.

The XL3 is marketed as a “fleet-ready” electrification system and includes an inverter and hybrid controller.

This is especially useful in the stop-and-go traffic of New York City. The system can boost miles driven per gallon by 25 percent and also reduces carbon dioxide emissions, Siegert said.

Verizons Chevrolet Express cargo van outfitted with XL Hybrids add on system back

Verizon’s Chevrolet Express cargo van outfitted with XL Hybrids’ add-on system. (Photo: XL Hybrids)

“We're using a lot of the same components across all those different vehicles, and we're using a similar integration strategy, so that makes it a reputable process and seamless in terms of the install,” he said.

The company said it has thousands of hybrids in operation but declined to provide more details.

XL Hybrids is focused on Class 2 through 6 vehicles, Siegert said. The XL3 went into production in 2013. It can be installed on the Chevy Express, GMC Savanna, Ford E-Series, GM Cutaway, Ford Transit and Ford-150.

A plug-in hybrid electric vehicle system —  the XLP — is also available for half-ton pickups.

XL Hybrids said in September that it will be offering the hybrid package for Ford F-250 trucks in 2018 to meet the need for improved efficiencies while maintaining power, torque and towing capacity.

There has been strong interest from utilities, municipalities and fleets that use different versions of the truck, Siegert said.

Hybrids are slowly penetrating delivery vans and buses, but the cost of the technology and slow turnover of fleets has contributed to a “steady but slow introduction,” said Michael Ramsey, an analyst at Gartner Inc.

There will need to be increased efficiencies, lower costs and a better range of options to foster more adoption, Ramsey said. In the meantime, add-on hybrid systems could be a way to address the reluctance of truck and van manufacturers to offer hybrids in their product ranges.

“The return on investment is there for companies that choose to add the systems, while the manufacturers of trucks may not see a market large enough to justify changing the architecture of their vehicles,” he said.

Verizons Chevrolet Express cargo van outfitted with XL Hybrids add on system side

Verizon’s Chevrolet Express cargo vans outfitted with XL Hybrids’ add-on system. (Photo: XL Hybrids)

Hybrid commercial trucks are expected to gain appeal in the coming years as technology improves, battery prices fall and companies have to contend with more regulations. By 2026, roughly one-fifth of new medium-sized commercial vehicles will be powered by hybrid systems, according to the Deloitte 2016 Global Truck Study.

Yet many companies still seek financial assistance to adopt the technology.

The Verizon deal was partly enabled by New York's Truck Voucher Incentive Program, which offers point-of-sale rebates for businesses and municipalities that want to acquire new clean vehicles or retrofit older ones.

The program has provided more than 600 rebates since 2013 and can reduce the purchase price by up to 80 percent, according to the New York State Energy Research and Development Authority.

The XL3 system can be installed in less than six hours and starts at $10,000, Siegert says.

XL Hybrids also installed wireless data connectivity systems in the vans, including the XL Link cloud-based big data analytics system. It can report fuel-economy performance and also track key performance indicators such as vehicle uptime, idling, carbon dioxide emissions and vehicle duty cycle.

The link systems enable XL Hybrids to monitor the health of the drivetrain and track performance metrics such as miles driven, gallons of fuel used and idling.

“It has proved to be invaluable on the service front so we can be proactive in diagnosing a problem in the field,” Siegert said. “It helps us paint the picture for the fleet around how the vehicle and technology is performing in the field.”

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About The Author

Craig Guillot

Craig Guillot is a freelance business journalist from Louisiana. He is a contributing editor at STORES Magazine, and his work has appeared in The Wall Street Journal, Entrepreneur, CNBC.com, CNNMoney.com, and Global Trade. You can find him on Twitter: @cguillot.

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