Ford (NYSE:F) stole the headlines at The 2014 North American International Auto Show in January with the public debut of its new aluminum body F-150. The 2015 lineup will drop 500 to 700 pounds in curb weight and, when coupled with a variety of engine options, could save drivers a substantial amount in fuel costs compared with previous models. Although investors and gearheads won't know the exact efficiency ratings until Ford provides updates, I took a stab at estimating the fuel economy for each new model.
The results were impressive, sure, but they don't come close to matching the 20% increase in engine efficiency and 70% increase in freight efficiency made since 2010 of a new truck built and tested by Cummins (NYSE:CMI) and Peterbilt. Oh, yeah -- the new truck also sports an over 84% increase in fuel economy compared with other trucks in its class. Are you ready for it?
OK, so the SuperTruck won't actually compete with the Ford F-150, but it's certainly more important to America's energy future than Ford's innovation. That's not an attempt to marginalize the new F-150 -- it's just difficult to say otherwise after analyzing the numbers.
SuperTruck = SuperSavings
The new Class 8 tractor-trailer can get a whopping 10.7 mpg in real-world driving conditions. That may seem laughably inefficient, but it marks quite an improvement over the average Class 8 fuel economy of just 5.8 mpg. It was built as part of the Department of Energy's SuperTruck initiative, which aims to create tractor-trailers that are 50% more efficient than current models. For those of you keeping score at home, Cummins and Peterbilt have already beaten that watermark.
No wonder the SuperTruck was in attendance when President Obama unveiled the new fuel economy guidelines for heavy-duty vehicles last week -- part of the across-the-board improvements he's made in efficiency standards since taking office. Better yet, rather than establishing a one-size-fits-all threshold, the heavy-duty category is broken down into three sub-categories. The next-generation SuperTruck resides in the top category.
Why make an effort to improve the efficiency of the heavy-duty vehicles traversing American highways, especially Class 8 vehicles, which account for just 4% of the nation's total vehicle fleet? Well, it's all pretty simple. Consider that Class 8 vehicles transport nearly 80% of the country's goods and consume nearly 20% of the country's fuel. Do the words "ridiculously disproportionate" come to mind?
Replacing America's entire Class 8 fleet with SuperTrucks could reduce national fuel consumption by 10%, equivalent to saving 300 million barrels of oil, and $30 billion per year based on current diesel prices (also equivalent to one and a half WhatsApps in annual fuel costs). To further put those savings in perspective, consider the following. The first wave of fuel economy standards rolled out in 2011 for medium- and heavy-duty vehicles covered model years 2014 to 2018. According to the White House:
Over the lifetimes of the vehicles covered, trucks and buses will reduce oil consumption by a projected 530 million barrels and greenhouse gas pollution by approximately 270 million metric tons, saving vehicle owners and operators an estimated $50 billion in fuel costs.
So, rolling out an entire fleet of SuperTrucks could save more money in two years than the entire fleet of medium- and heavy-duty vehicles spanning a five-year model period could save over their lifetime of operation. Please check your pulse if that isn't one of the most amazing vehicle facts you've ever heard.
What does it all mean for Cummins and Peterbilt? Big things, perhaps. Because it represents such an amazing improvement over incumbent technology, truck operators may not have much of a choice when purchasing new vehicles. When you consider that one SuperTruck could save an operator $20,000 in annual fuel costs, the rationale for purchasing one becomes clear.
Foolish bottom line
New F-150 models mark a major improvement in consumer vehicle efficiency -- and effectively squash any concerns about meeting the new aggressive Corporate Average Fuel Economy standards. But while shedding up to 700 pounds in weight is impressive, the overall fuel savings and efficiency gains made by the new SuperTruck from Cummins and Peterbilt will have a greater impact on the nation's fuel consumption. Nonetheless, both next-generation vehicles will be a critical piece of America's energy future -- it's just difficult to beat the SuperTruck.