When I got into this business 40 years ago, my first manager told me something that I am often reminded of. He was convinced that whatever the automotive industry was doing today, would be repeated by the forklift industry, 10-15 years later. He always said: “Ignore the car business, and miss your opportunities”. He could not have been more accurate.
From sales strategies to financial merchandising, to aftermarket options, we have continued to follow the example and the path forged by our automotive counterparts. The reasons are simple. Like us, the auto industry is competitive. It is also dependent on the same functional mechanisms. Sales, Parts, and Service departments, as well as financing, leasing, and equipment demonstration (test drives), are all component parts of their operational model. We also both sell and service vehicles powered by both internal combustion engines as well as electric motive power sources.
The differences between our business models come down to marketplace and capitalization. The consumer marketplace is wide and vast, and the demand for automobiles is voracious. The underlying financial stake is enormous. We, fortunately, have the long-term benefit of watching what they do, and if it works, we find a way to scale it for the marketplace, and naturally adopt what appears to be an effective and profitable practice. My point here is to try to illuminate the pathway to the next trend and attempt to pre-determine what investments will be needed to prepare for our future.
Motive Power’s Slow Evolution
Since the first electrically powered platform trucks were manufactured in 1913, the lead/acid (LA) battery has been the mainstay of motive power in our industry. Stable direct current, stored in a rechargeable steel tray provides emission-free power for use in enclosed environments. Through the decades, even as technology evolved on other parts of the machinery, the LA battery was really the only option that provided the power, torque, and long-term service life required of a forklift truck. Over the years, the materials and manufacturing methods involved in creating LA batteries improved, but the basic method of creating electrical current still relied on lead, lead dioxide, lead sulfate, and sulfuric acid.
Meanwhile, over in the automotive industry, the use of the lead-acid battery was limited to the 12 volts of power needed to start an internal combustion engine. This was one area where our industries diverged. One natural feature of the LA battery is that it has a very high weight-to-energy density ratio. This weight serves as a benefit for our industry, as it provides the primary counterweight on an electric forklift. On a passenger vehicle, however, the weight to energy ratio eliminated using LA batteries as an acceptable motive power source.
This is not to say that the automotive engineers abandoned motive power altogether. Throughout the ’70s ’80s and 90s, many attempts were made at powering vehicles with lighter battery materials made of nickel-cadmium, nickel-metal hydride, zinc-air, and sodium nickel chloride. None of these experiments however could provide the speed, range, temperature sensitivity, and recharge flexibility needed to convince the general public to switch over from their ultimately user-friendly internal combustion alternative.
Technology however keeps evolving. In 1996, Toyota improved the nickel-metal hydride battery and introduced the Prius, as the first widely accepted mass-produced hybrid automobile. In 2000 they improved both range and recharging capability in their GEN-2 Prius.
The Holy Grail – Li-ion
Here is where the paths once so distant, finally cross once again. In the late 2000’s engineers finally found the holy grail of electric motive power: Lithium-Ion (Li-ion) technology. This battery uses a positive electrode made of lithium/cobalt oxide and a graphite-based negative electrode. Significant electrical power is produced and stored in a lightweight package. Quickly charged, half the weight of the nickel-metal alternative, with high resistance to the elements, this technology checked all of the boxes. The range, charging speed, service life, and power delivery made Li-ion the comprehensive answer to the automobile conundrum.
So, we watched and we waited and (lo and behold) starting about 2-3 years ago (10 years after the auto industry perfected the method), the forklift industry is now awash in Li-ion technology. Everything this battery does for the car business is ultimately applicable to our customers and their applications.
- No longer will customers need to buy multiple batteries, with charging rooms, gantry cranes, and watering equipment.
- Charged in as little as an hour, the Li-ion battery stores three times the power of an LA battery.
- Low heat, means no cooling cycle is required for use in high cycle operations
- A flat discharge curve provides consistent power and performance
What happens from here?
My old manager’s axioms once again ring true. So, what can we infer from these developments? What will the future hold? I think it pays to consider the following:
Is this a fad? Is it the long-term solution? Let’s look at the auto industry’s commitment to electric vehicles (EV). I used to believe that the car manufacturers only invested in electric vehicles because the government constrained them to do so. Not to say that these mandates are not in place, but I now see a trend toward investments based on MARKET FORCES, instead of investments based on MANDATE.
- In the next four years, GM will invest $27B to launch 30 EV’s (over 20 in the USA).
- By 2035 the entire Chevrolet product line will be EV.
- In 2021 GM will introduce EV trucks and SUVs.
- Within the next year, Ford will introduce EV versions of an F-150 truck, a Mustang, as well as “all-electric” versions of their Transit cargo van. (Yes, your next service van could be electric!).
- GM has partnered with LG Chem to further improve Li-ion technology, replacing a majority of the cobalt in the battery with aluminum, thereby lowering costs, improving recyclability, and enhancing performance.
No. This is not going away.
The impact of these technologies is changing electric power from what you CAN do, to what you SHOULD do in order to be profitable and efficient. For the dealership, the benefits and latent demand will REQUIRE you to position yourself for this major shift in customer needs, and expectations.
What do I mean by “position yourself”?
- Has your dealership EMBRACED this technology?
- Are you SELLING it, or simply offering it as an OPTION?
- Are you INVESTING in this technology for your rental fleet?
- Are you DEMONSTRATING this technology at the customer’s place of business?
- Are your salespeople equipped and trained to calculate the ROI of investing in Li-ion?
- Have your technicians been trained on proper Li-ion installation and maintenance?
- Are you TARGETING existing LA battery customers with a replacement strategy?
Every major lift truck OEM has either already introduced, or is in the process of introducing Li-ion versions of their electric product line. This change is already here. Li-ion will only get more affordable as time goes on. Some are expecting that because of Li-ion functionality, up to HALF of ITA class 4 and 5 annual sales will shift to class 1 over the next 5 years.
Get ready…. your electric future awaits.
Dave Baiocchi is the president of Resonant Dealer Services LLC. He has spent 39 years in the equipment business as a sales manager, aftermarket director, and dealer principal. Dave now consults with dealerships nationwide to establish and enhance best practices, especially in the area of aftermarket development and performance. E-mail editorial@mhwmag.com to contact Dave.
