Clean machines: Enova Systems wants to bring hybrid engines to trucks, buses.

THE exploding popularity of gas-electric hybrid cars has created waiting lists for the Toyota Prius and gained worldwide attention.

Torrance-based Enova Systems Inc. wants to graft the same idea onto heavy-duty vehicles.

Enova designs and makes systems that transform pollution-belching tractors, buses and trucks into clean-burning, money-saving hybrid-electric workhorses.

It's here where Chief Executive Ed Riddell sees the most opportunity to clean up exhaust fumes--and make a buck.

"With buses and trucks, the margins are better for us, and the return on investment is faster for us and for our customers," said Riddell, who has worked at each of the Big Three automakers, including a stint as head of Ford Motor Co.'s racing team.

A hybrid bus or truck saves more fuel over its diesel-burning counterpart than a hybrid car does, so the dollars spent on convening can be regained as quickly as 20 months, just based on the cost of fuel.

If only it wasn't so hard to convince customers. Worldwide, there are fewer than 1,000 commercial hybrid vehicles on the road, a number that's expected to multiply 150-fold by 2010, according to ABI Research in New York.

Most of that growth is expected in Asia, where fuel prices are higher, the air is dirtier and cities are more crowded. Riddell is focusing on these regions with a goal of doubling Enova's sales every year through 2008.

To sell the systems, Enova often has to convince customers to tear apart perfectly good vehicles, said Chief Financial Officer Larry Lombard. "Until very recently, fuel prices weren't high enough for it to make a lot of economic sense," Lombard said.

"Gasoline in the U.K. is now about six bucks a gallon."

Enova provides two types of hybrid systems.

Its parallel hybrid system works like a hybrid on a passenger car. An electric engine is mounted along the transmission of a diesel truck and powered by banks of batteries. It helps out the combustion engine, taking over at low speeds. The diesel engine kicks in at cruising speed, making the system better suited for buses or trucks that have to drive longer distances between stops. The more radical "series" system uses a diesel generator to recharge banks of batteries powering the electric motor, making it all-electric.

Sales fell last year when Enova's sales director was promoted and it took six months to find a replacement. For the quarter ended June 30, sales rose 84.1 percent from a year ago to $1.3 million.

Enova has contracts to build hybrid systems for mass-transit buses for First Auto Works of China. The state-owned auto manufacturer may put up to 1,000 of them on the road for the 2008 Beijing Olympics, at a cost of $10,000 per vehicle. Enova also has contracts with Wrightbus, the U.K.-based unit of the Wright Group Ltd., to convert several buses into hybrids, and with EDO New York for New York's Department of Sanitation hybrid trash haulers.

Niche market 

There are fewer than a dozen companies worldwide competing in this market, and most of them are going after specific niches, said Layne Holley, editor of New York-based trade magazine Hybrid and Electric Vehicle Progress. "You can buy 200,000 Priuses, or you can put one hybrid bus on the road," she said. "It makes sense to use hybrids in public transit systems."

One of Enova's systems is being tested on an airfield in Warren, Mich. Air Force Capt. Jim Muldoon uses a diesel-electric hybrid tractor to tow fighter jets and cargo planes around the military airfield.

Enova turned the Entwhistle MB4 diesel tow tractor into a hybrid that uses a turbine generator to power the electric motor. The generator can bring electricity onto the airfield for tools and to start up the planes, too.

"It's quiet, so the tow operator and the wing walker can talk to each other without intercoms and hand gestures while they guide the planes into the hangar," Muldoon said. "And it keeps the ceiling of the hangar clean."

Enova started out in 1976 designing solar power systems, then developed components for converting conventional cars into electric cars. After the electric car market collapsed, Lombard came on in 1998. He started renegotiating and paying down $23 million in debt to clear the way for raising new capital.

Riddell was a director at Enova for 10 years before being named chief executive last year. The company is trying to corral larger orders. With volume, the out-the-door price for an Enova system drops in half. "This industry is growing by leaps and bounds," Riddell said. "We will have to keep on investing in research and development, or the rest of the world will pass us by. That's been what is hurting the U.S. auto industry."

ENOVA SYSTEMS INC.

Year Founded: 1976

Core Business: Manufacturing electric propulsion and other components to convert commercial vehicles into hybrids.

2003 Revenues: $4.3 million

2004 Revenues: $2.6 million

2004 Employees: 31

2005 Employees: 36

Goal: Capture global market niche for heavy and medium duty hybrid drive applications; double sales annually

Driving Forces: Rising fuel costs, growing demand for environmentally friendly public transportation and freight vehicles, and stricter emissions regulations