Japan leads in hybrid heavyweights

Posted: 25 June 2008
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Bulldozers, front-end loaders and excavators used in building and mining projects are going hybrid amid surging fuel costs, and Japan again seems to be in the lead.

Komatsu Ltd, the world's second-biggest maker of earth-moving machines, launched this month what it called the world's first hybrid hydraulic excavator, twinning a traditional diesel engine with a capacitor, a battery-like electronic device.

The 20-tonne excavator – the mid-sized shovel most commonly seen in building sites in cities across Asia – consumes about 25% less fuel than other models.

But that efficiency comes at a price – 27 million yen (US$260,000), 50% more than its conventional cousins.

Big global and local rivals Caterpillar Inc, Volvo AB, Hitachi Construction Machinery Co and Sumitomo Heavy Industries Ltd are also pushing into the hybrid space with plans to begin production this year or next.

But the companies, and their investors, will have to wait some time before they see a steady flow of orders as buyers steel themselves to pay higher prices, analysts said.

Toyota Motor Corp's premium-priced Prius hybrid car business took seven to eight years before the new car started generating any profit, analysts said, but now dealers are having a hard time keeping up with the orders.

The race to move into more fuel-efficient machines comes as makers of industrial vehicles are struggling with tougher emissions control standards to be adopted in the United States and Europe after 2011.

Among other things, the new standards would call for a 90% cut in exhaust emissions from non-road diesel engines. Analysts expect the rules will force companies to invent totally new engines using cutting-edge technology.

Global sales of earth-moving equipment, including machines used for construction and mining projects, already amount to about US$120 billion a year.

Komatsu is closer to large volume production of its hybrid model than other rivals. It plans to initially sell 30 hybrid excavators in its home market in the year to March 2009 to collect data and feedback from actual users.

Komatsu Chief Executive Kunio Noji said he aimed to replace 20% of its excavator market in Asia with the new hybrid machines, but declined to give a timeframe.

High prices are not the only hurdle.

Market watchers say Komatsu may find it hard at first to sell the new model in China , its market target, because its current service and maintenance networks will not be able to handle more complex machines.

Sales could also suffer in its home market as the economy slows. The Japanese market for construction machinery is already shrinking after cuts in public spending.

Some analysts say the future of the technology is also unclear, adding hybrids are only an interim solution for the ultimate goal of developing zero-emission fuel cell vehicles or fully-electric, plug-in machines.

That could make big machinery makers more reluctant to invest heavily in hybrid research and development.