What are possible economical effects for Volvo of a changed durability of driveline components?
Future research that is needed to be able to evaluate these potential effects is presented in section 5.4 Suggestions for future research.
A simplified model of how we have come to view the issue of driveline durability is shown in Figure. What we mean with the different boxes and connectors is presented in the following quite extensive section. While the issue is very complex, it is not possible to describe it briefly without missing the point.
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Figure 40: Driveline durability and some possibly affected attributes from a manufacturer’s perspective.
Saleh discusses implications of changing the intended lifetime of a spacecraft, and in his article all the conclusions are based on the assumption that the actual durability is as intended.
We can discuss strategic aspects of setting the durability targets of different components or entire products, but we must be aware that what really matters is how the product really performs on the market. Thinking about real durability rather than just targets has the implication that we do not have all facts. We do not fully know the durability of the entire trucks and neither do we know the durability of the driveline components, even though there are some estimates. Would increased driveline durability substantially increase the durability of the entire truck? This question is very important in order to judge the end implications of a
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changed durability for the driveline and depends of course of the current relation between the durability of the driveline and the durability of the rest of the truck. Even if we had all the facts about all failures on all trucks that presently are or have been on the market, there would be no simple answer. Sometimes the driveline fails at a point in time so that it is judged unprofitable to replace it and instead the truck might be sold as it is (example B in Figure).
Sometimes a major part of the driveline fails, but does so when the rest of the truck is in such a condition that it is considered worth investing in for instance a new engine (example A in Figure). On the other hand, sometimes it might be so that the durability of the cab and chassis is so low that the complete truck is considered as worn out even though the driveline components are still in good shape (example D in Figure 41).
Figure 41: Principle examples of driveline lifetimes in relation to lifetime of chassis and cab
The ideal case from a customer perspective is probably that all components have their unrepairable breakdown at the same time (example C in Figure). What we mean by that is that the driveline components last equally long as the cab and the chassis, so that it is never the case that you have recently invested in an expensive repair, when some other major part breaks down and you are forced to take the truck out of use. The examples of Figure are to be seen as principle examples that represent a range of driveline lifetimes that are such that they share the same properties in terms of their relation to the lifetime of cab and chassis lifetimes.
Shorter lifetimes than A are of course possible, but definitely not desirable. Around A is not optimal for the customer, but the decision to replace or renovate the engine or whatever it is
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that has failed is probably easier at this point than later. For the manufacturer, a major driveline failure might be good, if accepted by customers, while it generates after market revenues. If competitors offer trucks with considerably more durable drivelines however, this level of driveline durability might be detrimental to satisfaction and image. Having the driveline failing around the beginning of the last quarter of the cab and chassis lifetime is probably undesirable for the customer. The main alternatives are then selling the entire trucks and get quite a low price or spend a considerable amount on buying a replacement engine. If replacing the engine, this is done with the background that the complete truck might be getting “worn out” and a main issue is that the owner can never know when the next major problem will occur. This alternative is detrimental to the after market business of the manufacturer, while they miss out on a large revenue, that might have been realised if the problem occurred slightly earlier. On the other hand, if the truck is sold due to the failure, this will increase the potential of new truck sales. The relation between the lifetimes of driveline and the complete vehicle will be different in each market and for each model, making it hard to say what design lifetime for the driveline that is optimal. Clearly an important conclusion is that for the driveline durability, the relation to the durability of the rest of the vehicle is at least as important as the durability of the driveline itself.
Our interviews with owners and managers of Swedish truck fleets provided some input on this issue, even if it was not a planned part of the interviews. Durability was discussed in a general sense rather than through questions that were meant to provide quantitative results. Still, we obtained some input about the durability of their Volvo trucks that is worth mentioning. If we try to see some common features among the answers it seems that for the distribution vehicles, most interviewees did not feel that there was any substantial value in improving the durability of the driveline. The drivelines served them well until the trucks became too old and were replaced for other reasons. For long haul vehicles there was more value in an improved durability than for the distribution vehicles. Several mentioned that what limited the durability of the driveline was not the engine but rather the things that are mounted on the engine, such as compressors, turbo chargers, sensors and actuators. Some said that an improved engine durability could extend the vehicle lifetime a bit, but it was clear that in general interviewees were satisfied with the durability of the driveline and the complete vehicle, so it did not seem like they would be willing to pay a lot extra to get it improved further, if that would be found to be a necessity. We do not have enough information to draw any conclusions about how
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improved driveline durability would affect the durability of the complete vehicle; Rather we must keep this as an issue to investigate in the future.
Let us remember that we do not yet have enough data to say whether improved driveline durability would improve the durability of the truck substantially. If the case would be that the driveline already today is not a substantial limitation to complete truck durability, then there is no business case for improving the durability of the driveline. While the durability always varies between individual trucks, we can be sure that there are cases where the driveline is the limitation of the complete truck lifetime. Therefore, We will continue this analysis based on the assumption that improved driveline durability improves the overall truck durability.
A major limitation to the value of an improved durability for vehicles that travel through cities are environment zones and road tolls. Therefore, the business case for improved truck durability from a customer perspective is depending on the development of such regulations.
To get a picture of the regulatory environment that today applies to trucks that are already in use, an investigation has been done, which is available in Appendix 4. A short summary follows here. Currently there are several sources of potential extra costs for users of relatively old trucks. There are road tolls that discriminate between technologies making it expensive to use old trucks. In countries like Germany and the Czech Republic there can be increased toll costs of about 20% already when the truck is a few years old and while they charge by the kilometre it can become costly for fleets driving long distances. Furthermore there are regulations for access to many European city centers as well as cities in Japan, demanding owners to perform costly retrofits with particle filters or catalysts, sometimes as soon as 4 yrs after the truck was registered. Looking at the development over time in the number of cities that create so called low emission zones, it seems reasonable to believe that they will increase further and discussions are ongoing in cities like London and New York. To forecast how the emission related regulations will look in the future is of course difficult, but it is clear that the debate over human impacts on the environment is growing ever larger, making me believe that the incentives for using low emission technology will increase as will the costs of using old technology. This will clearly have an impact on the economic life of trucks. How large the effect will be depends largely on the development of the regulatory environment.
Regulations that are supposed to limit the environmental impact are not very likely to be taken out of use once they have proved their efficiency. However, they are based on emission
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standards and sooner or later there might be a point where the emissions are so low that there is no need for introducing yet another emission standard. Then that could mean that after that point, the drawback of the ageing of the truck would be less than today. It is expected by many though, that when the emissions contain so small amounts of NOx and particulates that it is getting really difficult to measure, the authorities will turn to CO2 in line with the trend in society at large.
Emission regulations are not the only issue based on technological advances that might restrain the benefits of improved durability. There are also other factors that might make usage of old trucks less attractive. For instance, if the fuel efficiency would improve dramatically, then it might be more profitable to buy replace an old truck than to keep it in service, while the savings thanks to lower fuel consumption outweighs the potentially increased purchase cost. However, it is not clear that this is the case right now and what is important is of course the future.
For slightly more than a decade, there have been demanding regulations on trucks, especially regarding nitrogen oxides (NOx) and particulates. The efficiency of the engine is increased with higher combustion temperatures, but higher temperatures create higher concentrations of NOx (Andersson, 2005). Therefore, there has been a conflict between fuel efficiency and environmental standards for emissions. Furthermore, the time and effort spent on keeping emissions down has reduced the focus on fuel efficiency. Major improvements in the area of fuel consumption could create an incentive to replace trucks before their technical life is over, thereby reducing the benefit of increased durability. We can not know for sure, whether there will be any substantial improvements in the area of fuel efficiency in the relatively close future, but there are several areas of potential improvements that seem very promising.
In a report for the American National Commission on Energy Policy, Therese Langer of the American Council for an Energy-Efficient Economy presents an interesting analysis of previous research on the future of fuel efficiency for trucks (Langer, 2004). She provides estimates of fuel efficiency increases and lifetime cost-savings for tractor-trucks and short-haul trucks respectively. Langer claims that there is general agreement on the categories of technologies that can contribute substantially to raising truck fuel economy, but that estimates of the potential for increases vary widely.
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In her analysis, she starts with defining reasonable pay-back periods, after which the additional cost of the technology should have been paid back through fuel savings. For tractor-trucks, she refers to a list of potential sources of fuel efficiency improvements compiled by Vyas, Saricks and Stodolsky (2002). Estimated introduction dates, costs and potential fuel economy gains are listed and used to rank different means of fuel economy gains. The length of the payback period decides which technologies that are profitable enough to applied and this in turn defines the total fuel economy savings for that payback period.
Assuming for instance a 3 year payback time, an average fuel price of $1.60 and a 8%
discount rate for the fuel savings, Langer predicts a 35% increase in fuel efficiency, an increased purchase cost of $8,000 and fuel savings of almost $19,000, yielding net savings of almost $11,00022.
Table 19: Some technological advances with potential effect on fuel efficiency Source: Vyas, Saricks and Stodolsky (2002)
Fuel economy gain Year of introduction Cost Aerodynamics
22 Assuming that all the listed technologies are available.
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To promote the development and use of technologies improving fuel efficiency, standards for fuel efficiency could be adapted by authorities. That would however be challenging due to the need of testing fuel efficiency, which largely would depend on aerodynamics and therefore testing the engine alone would not be enough (Langer, 2004).
The potential for fuel efficiency improvements is largely dependent on the duty cycles that the trucks are used in. For duty cycles with a lot of braking, hybridisation has a potential, while the concept is based on brake energy being stored and used for propulsion. For long-haul trucks this technology does not have a great potential, making fuel efficiency savings harder in that segment.
Langer (2004) estimates that over half of all trucks in classes 3-623 and straight trucks in Classes 7-824 could through hybrid technologies experience lifetime savings; Modest in the near future, but substantial (several thousand dollars) for vehicles purchased after 2015.
An important issue to bear in mind that makes any predictions even more complex is that the fact that a technology would have a short payback period does not necessarily mean that it will reach the market and the customers.
“Manufacturer risk, low fuel prices, lack of fuel economy information on individual models, and undervaluation of fuel economy all limit the introduction of better technologies.“
Langer (2004)
By this final remark we wish to clarify that we can not expect any predictions like these to be anything but predictions. Also, a few years have already passed making the conclusions less reliable than necessary, taking into consideration that some part of development that was unknown at the time that the article was written is now known. We dare not draw any final conclusion regarding the development of fuel efficiency other than saying that many of the mentioned technological advances seem promising and it does not seem unlikely that we will
23 Class 3-6 =from SUV’s up to three-axle single unit, short-haul delivery truck.
Source: US Department of Transportation. FHWA Vehicle Classes (Electronic).
Available: <http://tmip.fhwa.dot.gov/clearinghouse/docs/accounting/appendix_e.stm> (2007-11-18)
24 Class 7: Four-axle single unit, short-haul delivery truck, concrete truck. Class 8: Less than five-axle tractor/single trailer, medium-haul delivery. Same source as above. Straight truck = Rigid truck. Refer to appendices 1 and 3 for more information if needed.
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see future increases in fuel efficiency that are rapid enough to affect the replacement behaviour of at least some truck owners.
Another issue that affects the use of an improved durability is reliability. If the reliability is constant and one just improve the durability, then probably one will experience poor reliability in the end of the lifetime. On the other hand, it does seem likely that improved durability will increase the reliability, at least in the early part of the life time, which could be a great benefit. If we define durability as the amount of use that we get from the truck before we end up in a situation where the truck is taken out of use while it is not considered worth repairing it, then we can say that in most cases, durability is limited by components that are expensive to repair. It could of course happen that an owner feels that there are so many small problems that the downtime and accumulated repair costs get too expensive. However, if it is just small problems, there is often someone who is interested in buying the truck and we consider the life of the truck to continue. If we accept this reasoning, then the question of how durability is connected to reliability boils down to how big problems are related to small problems, although simplified a bit. In order to answer this question, we need to know what problems that are the main limitations to durability and reliability for different models. Some things that could limit durability might be closely connected to many small problems, whereas some other main problems are relatively isolated from other issues. We can not give a clear answer in this issue, but it seems reasonable to believe that in general durability and reliability have a connection in the sense that products with a good reliability generally have a better durability than products with a poor reliability. There are many exceptions though. Without a proper investigation we would expect that an improved durability would improve reliability and thereby also lower the costs of maintenance and repairs. Maybe it is so that an improved durability requires an improved reliability rather than gives it.
How would the sales of new trucks be affected by improved truck durability?
The answer is quite obvious if there is only one owner for the entire lifetime. A longer durability would allow the owner to buy new trucks less frequently, as is argued by Saleh (2006). This assumes though that the economic life is extended as a consequence of improved durability, meaning that there are no aspects such as emission tolls, fuel efficiency, poor reliability etc. that causes the owner to replace the truck even though it does not have a major breakdown. In the case of heavy duty trucks, my impression is that it is not very common with just one owner for a truck, which makes it necessary to look at the consequences of an
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improved durability for several different owners. We have found it necessary to look at three principal kinds of owners, defined by the order in which they own the truck: the first owner, the intermediary owner and the last owner.
First owner
If the first owner sells the truck well before its lifetime is over, he will not necessarily have very large benefits of extended durability. Possibly, he will have economic gains through increased second hand value. It is possible that the first owner will keep the trucks for a longer period when the durability is better, but this would, as would an increase in second
If the first owner sells the truck well before its lifetime is over, he will not necessarily have very large benefits of extended durability. Possibly, he will have economic gains through increased second hand value. It is possible that the first owner will keep the trucks for a longer period when the durability is better, but this would, as would an increase in second