At press time, fuel costs were well above $3 a gallon, and some think it will climb toward $4 as the new year unfolds. If you can pass the higher costs on in surcharges, fine. If not, it's time to reduce fuel usage. And hybrid-drive trucks are capable of some serious savings.

This Kenworth T300 with its Eaton electric hybrid system uses a third less fuel than similar trucks in a fleet operated by a building supply retailer.

That makes this blue truck rather green, both in the cash it saves and the fewer pollutants it emits - even if it cost about a third more up front. Fuel savings alone won't pay back the hybrid system's upcharge for quite a while. What will speed the payback for some buyers are federal tax credits, but they won't apply to this truck.

"The return on investment was never a major consideration in the decision to purchase the Kenworth hybrid," says Mark Geyer, fleet manager at Seattle's Dunn Lumber Co., which acquired the truck late last summer. "The consideration tended more toward the environment and what we could do to move in a new direction with our vehicle choices."

Robert Dunn, the firm's chief executive officer, wants to foster an ecologically green image for the store chain, and was happy to pay an extra $20,000 to get the hybrid-drive system, which they call a "diesel electric."

The truck's diesel emits fewer pollutants because it doesn't have to work as hard with a hybrid electric assist. Electricity stored in the special batteries can propel the truck alone or can supplement diesel power. The truck will also run on diesel only, but fuel use and diesel emissions are cut whenever the electric motor - which is also the generator - comes into play. How much depends on the circumstances and which pollutant is being measured, but tests of the same hybrid system in walk-in vans operated by FedEx and United Parcel Service show that particulates are reduced by about 90 percent. Eaton cites other tests suggesting that carbon dioxide - something not now regulated but loudly blamed for global warming - is cut by 40 to 50 percent.

The particulate comparisons are with pre-EPA-'07 diesels. This KW has an '07-legal engine, a Cummins-made Paccar PX-6, complete with particulate filter and other refinements. It makes no smoke or odor, so Dunn and Geyer will help the clean air cause just by buying more trucks with '07-compliant engines (which they're doing). The hybrid saves 35 percent in fuel over comparable straight-diesel trucks in the fleet, which is impressive on its face, but falls well short in making a good business case - in part because it doesn't run a lot of miles (see story on page 80).

Dunn's Class 7 hybrid is a pre-production vehicle, and Kenworth says it's the first one it has sold. KW has split its midrange T series into several weight-based models, including a Class 6 T270 and Class 7 T370. Those will have hybrid drive as an option. They will use Eaton's electric propulsion system, which includes a 6-speed Fuller UltraShift AMT linked to a 60-horsepower electric motor-generator and two lithium-ion batteries operating at 340 volts.

Sophisticated electronic controls coordinate the workings of the hybrid components with a 240-horsepower Paccar PX-6 diesel, aka the Cummins ISB. The hybrid is Dunn's first Cummins-powered T300, and so far it's worked well, says Geyer, who previously had spec'd Caterpillar diesels. The "two-pedal" UltraShift is also a first. Another AMT in the fleet has a three-pedal AutoShift, while other trucks have either manuals or full automatics from Allison and Hydra-matic.

Geyer agreed to let me drive the hybrid, and suggested we motor into Seattle's hilly Queen Anne area, a neighborhood of million-dollar views and equally pricey old homes, some still under rehabilitation. Dunn delivers a lot of lumber and supplies to owners up there. Streets are narrow and access to some of the properties is somewhat cramped, so many runs there are made by smaller Isuzu low-cabovers that he inherited when he took this job. We had gone to Queen Anne about a year and a half earlier, when Geyer let me drive a then-new T3 equipped with a smooth-working Cat C7-Allison automatic powertrain. We made a real delivery on that run, but with the hybrid we just passed through, carting a 2,400-pound pallet of 2 by 4s for ballast.

While I like AMTs for their solid, no-mushiness feel, I observed that the self-shifting Eaton was occasionally a little awkward. It upshifted on one or two uphill gradients where it should have stayed in a lower gear, and caused the engine to bog a bit. We never stalled, because it recovered by quickly going down to the previous gear. If Allison people were along they'd laugh their tails off, I commented, because this is exactly what they're talking about when they preach about the advantages of "continuous power." Engine power flows through the driveline even as the fully automatic tranny is shifting up or down.

As with a full manual, the engine pauses as the Eaton AMT changes gears. It "float shifts" with the clutch engaged by carefully modulating throttle and the gear-changing mechanisms. Unlike medium-duty manual trannies, the UltraShift 6-speed has no synchronizers, so clutchless shifting doesn't hurt anything if done properly. Eaton engineers have gotten the software so finely tuned that it never misses.

Because an UltraShift has no clutch pedal, you just move your right foot from the brake pedal to the accelerator, and the rest is automatic. From a standstill, each of the UltraShift's automatic clutch engagements was flawless - smooth, sure and with absolutely no chatter, even when starting out on a hill in second or third gear. If you think you can operate the tranny better, you can punch Manual and control the up- and downshifting with the arrow keys. I did that a few times, but mostly left the selector alone and we went up, down and around all those Queen Anne Streets just fine.

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The UltraShift is the only transmission offered with Eaton's hybrid system. However, a couple of Kenworth T300s with Azure Dynamics hybrid systems are running with Allisons, delivering meat products in Brooklyn, N.Y. Azure retrofitted its components into the trucks and Kenworth was not involved in the project. Allison was, though, and I got to drive one of those trucks during a demonstration last summer in Speedway, Ind., near Indianapolis. The drive on Allison's testing complex was short and on level pavement, except for a steep test hill. But like Eaton's hybrid drive, the Azure system allowed the truck to move out on all-electric propulsion, then switch to diesel as road speed and the demand for horsepower rose.

Electric launch occurred a few times with the Dunn truck, and regeneration happened often because downhill sections required frequent braking. That's when the motor on the driveline becomes a generator, sending current to the lithium-ion batteries in a box along a frame rail. You can feel the drag when you take your foot off the accelerator and, if that's not enough braking force for a situation, touch the brake pedal. The engine also had a Jake Brake that provided more retarding power, and we used it while we drifted down a long hill toward the end of our jaunt.

A liquid crystal display hung on the dash showed what was happening in the system - engine power, hybrid power, or braking regeneration. It also showed the extent of charge in the batteries. The LCD was a little hard to read; production trucks will get a color display that's larger and brighter. Next to the LCD was a Garmin 7200 GPS navigation system, which Geyer has installed on most of the Dunn trucks. We didn't use it this day, but on regular runs it helps drivers find new addresses and saves "huge amounts of time," he said.

OK, back to business. Aside from purchasing cost, a hybrid-drive system adds complexity to a truck, and we all know that this inevitably leads to expense. How much is still unknown because only a few hundred diesel-electric hybrids are now at work. FedEx, which operates 94 vans with pretty much the same system, says problems twice grounded the entire hybrid fleet, but Eaton (which historically has been good at supporting its new products) fixed everything, and now the trucks are averaging 94 percent availability.

Geyer reports that after half a year of running, he's had no problems with the Kenworth hybrid. If he had, they'd be covered, at least in part, by Eaton's 3-year/150,000-mile warranty on the hybrid components. Those two lithium-ion batteries will eventually go sour, and will be much more expensive to replace than common lead-acid types (though they should cost less by the time that's necessary). But it's likely that he could buy a set with just one year's fuel savings. As component prices start falling, the truck's green sheen should get brighter.

Business Case Still Tough To Make

Dunn Lumber was focused on the environment when it bought the T300 hybrid with its $20K price premium, and didn't try to make a business case for it. There really isn't one, mostly because the truck doesn't run enough miles - only 12,000 a year - to capitalize on its fuel efficiency. Tax credits of $4,500 to $12,000 for a heavy hybrid (which in federal terms is a truck or bus weighing over 8,500 pounds) help some buyers, but not in this case.

Here's some math based on fuel savings alone: Geyer says the hybrid's been getting 6.85 mpg in its urban delivery duties, so it will consume 1,751.82 gallons over 12,000 miles. Other 32,000-pound-GVW trucks in the fleet get 5.03 mpg, so each burns 2,385.69 gallons a year. Multiply each of those gallon numbers by $3.25, which is about what Dunn has been paying for fuel, and we see that the bill to feed the hybrid will be $5,693.43 compared to $7,753.50 for a straight diesel truck.

Thus annual fuel savings are $2,060.06 - a nice piece of change, but at that rate it'll take 10 years to pay off the $20,000 upcharge for the hybrid system. If it ran 24,000 miles a year, the payback would come in five years, and at 50,000 miles annually its premium would be recovered in two and a half years. Rising fuel prices would also reduce the payback time.

Now let's factor in a $12,000 tax credit allowed by the Internal Revenue Service. That would cut the hybrid's extra cost to $8,000 and the payback time to four years. But Dunn can't get the credit because its Kenworth-Eaton hybrid is not on the IRS' list of certified vehicles. Certain walk-in vans assembled by Freightliner Custom Chassis, and utility and P&D trucks made by International, all using Eaton hybrid systems, as well as certain automobile hybrids and alternative-fuel cars and trucks, are on the list (at www.irs.gov/businesses/article/0,,id=175456,00.html). Kenworth says it's working to get its hybrid certified.

By the way, the $20,000 premium paid by Dunn is 37.5 percent of the T300's chassis price of about $75,000. That's not bad, as fleets running prototype and pre-production hybrids say they paid 50 to 100 percent more than for straight diesel trucks. Their components - especially the lithium-ion batteries - are expensive due to their low production volume, manufacturers explain.

However, Eaton has announced that it's putting its hybrid system into regular production, and will buy more components from its suppliers. Kenworth, Peterbilt, Freightliner and International say they will begin assembling hybrids as part of regular production in March. Regular production should lower prices, which in turn will tempt more orders, which will bring on more volume, and so on. Eventually the business case should begin to shine, with or without tax credits.