LISLE, Ill. — Navistar International Corp. now says it would rather switch than fight.
After several years of touting its “customer-friendly” solution for stringent U.S. clean air standards, the maker of International-brand trucks and MaxxForce diesel engines said Friday it would adopt a urea-based aftertreatment system to meet 2010 Environmental Protection Agency emissions regulations and position the company to meet coming greenhouse gas rules in advance of 2014 and 2017 requirements.
Navistar stood alone in opting to stick with an exhaust gas recirculation (EGR) emissions solution for EPA10. Selective catalytic reduction (SCR), adopted by all other North American heavy-duty truck and engine makers, additionally treats the exhaust with urea, or diesel exhaust fluid (DEF), a system that requires an on-board storage tank for the treatment liquid and regular refills by the operator.
The new solution, dubbed “In-Cylinder Technology Plus” (ICT+), will add Navistar's version of an aftertreatment system to the current line of MaxxForce 11-, 13- and 15-liter diesel engines.
“The engine stays the same,” emphasized Dan Ustian, Navistar chairman, president and CEO, on a conference call to explain the change. “The engines that our customers have been buying will be identical. What we will get when we launch the new aftertreatment solution will be fuel economy, and we’ll add more fuel economy as we further develop in-cylinder air, fuel and controls. The obvious other benefit is that it's capable not only of meeting the emissions standards, but exceeding those standards.”
The company intends to continue to build and ship current model trucks in all vehicle classes using combinations of earned emissions credits and/or non-compliance penalties (NCPs) during the transition to ICT+. Navistar lost $172 million for the quarter ended April 30, including $104 million in warranty charges related to 2010 emission standard engines.
“We’ve shared our new technology path with the EPA and California Air Resources Board (CARB), and both agencies are encouraged by our plans,” Ustian said. “We will continue to work with the agencies to ensure that our customers receive uninterrupted deliveries in all 50 states during this transition.”
Recently promoted Truck and Engine President Troy Clarke called ICT+ “the best of both worlds,” and said the company has “a high degree of confidence in the certainty of [EPA] certification.”
The 13-liter engine is scheduled to go into production in early 2013 with the 15-liter “to follow.”
The company’s investment in in-cylinder treatment technology was “sincere,” despite what some press coverage said about the strategy, Clarke added.
“It was an effort to pioneer, to take some risk and continue our leadership in this important area,” Clarke said. “Today’s announcement is not about backing up; it’s about going forward.”
The announcement comes less than a month after a federal appeals court tossed out an EPA ruling to allow Navistar to continue to produce and sell engines that don’t meet the federal standard.
Determining Navistar to be a “technological laggard” and thus eligible for regulatory relief, EPA in January issued an interim final rule allowing manufacturers to sell non-compliant heavy-duty diesel engines in model years 2012 and 2013 as long as they pay a penalty of $1,919 per engine, with an upper limit set at 0.5 grams of nitrogen oxide per horsepower-hour — permitting emissions of up to two-and-a-half times the 0.2 grams alllowed under the 2010 NOx standard with which Navistar’s competitors already comply, the court noted.
So those competitors protested, objecting to both the methods used by EPA and to the substance of the rule, arguing the agency “grossly underestimates the true cost of compliance,” and the low penalty could tempt other manufacturers to pay the penalty and sell non-compliant engines at a premium.
Indeed, throughout the often heated debate over meeting the 2010 standard, representatives of those competing manufacturers have insisted that if EGR could have been engineered to meet 0.2 NOx Navistar wouldn’t have been alone in utilizing the technology.
The shift in direction, then, is no surprise to many in the industry.
“The only surprise is how long it took them to acknowledge the inevitable,” said Volvo Group spokesman John Mies, in reaction to the Navistar announcement. “Now they obviously have a lot of catching up to do.”
David Hames, general manager, marketing and strategy, for Daimler Trucks North America, points out that his company has already announced a truck and engine line-up that meets the 2014 GHG standard.
“Our technologies are fully compliant now — and into the future — without need for credits or penalties,” Hames said. “DTNA leads the industry in emissions compliance and fuel efficiency, and early submission for GHG14 engine compliance — as well as achievement of GHG14 compliance for all DTNA vehicles — is tangible evidence of this strategy.”
The Navistar announcement follows by just days reports that a change of engine strategy was coming.
The Wall Street Journal on July 2 called the plan “a bold shift” by Clarke, and credited him for “trying to repair relations” with the EPA and the CARB.
Wolfe Trahan analyst Tim Denoyer, following up on a CNBC report, wrote July 3 that he had spoken with two fleet executives who said Navistar notified them the company would offer the Cummins ISX 15-liter engines in addition to the MaxxForce 13.
Navistar officials did not discuss Cummins in the conference call, and did not take questions.
“I’m sure there are many questions that, quite frankly, will take more time and details before we can adequately and thoroughly respond,” said Chief Financial Officer A. J. Cederoth.
Kevin Jones of The Trucker staff can be reached for comment at firstname.lastname@example.org.
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