Atlanta-based Coca-Cola will use technology made by XL Hybrids Inc., a Boston startup with ties to MIT, to retrofit 100 of the soft drink giant's service vans to run on electric power.
The hybrid powertrain systems generally help cut fuel use by roughly 20 percent, said Tod Hynes, president of XL Hybrids. The technology works by capturing the energy generated by braking, converting it into usable power, then storing it in a lithium-ion battery pack until that power is needed to accelerate.
Bruce Karas, Coca-Cola's vice president of environment and sustainability, said the company was attracted by the convenience of XL Hybrids' technology — it can be dropped into a vehicle the company's drivers already know how to handle — and its price, about $8,000 per unit when ordered in bulk.
The powertrains will be used in the company's service van fleet, and will help Coca-Cola meet its goal of reducing its carbon footprint by 25 percent by the end of the decade.
"This seems to be, for this sector, a pretty solid technology," said Karas, adding that Coca-Cola could add more XL Hybrids' powertrains to its vehicles in the near future.
Founded by MIT graduates, XL Hybrids has until now mainly tested its technology on a small scale: Canadian Linen, a uniform rental and supply subsidiary of AmeriPride Services in Minnesota, has been using the technology in several of its Chevy Express vans since August; XL Hybrids has also retrofitted 10 FedEx vans.
"Our company's goal is to accelerate fuel and emissions reductions at a large scale," said Justin Ashton, vice president of business development at XL Hybrids. Payback on the investment generally takes just a few years.
Still the advanced battery market has been a tough business, with some companies suffering setbacks; for example, Boston-Power and A123 Systems have had to turn to China to remain competitive. Moreover public demand for electric vehicles has not been as high as many in the industry had expected, especially as gasoline prices remain well below the $4-a-gallon peak of 2008.
And while big fleet owners such as Coca-Cola and FedEx have been testing different hybrid and electric vehicles, no company has yet committed in a big way to any one technology. Karas did say the company is happy to act as an early adopter, helping to spotlight clean technology advancements.
"We hope to inspire others to consider some of the things that we're doing," Karas said.
Lisa Jerram, a senior consultant at Navigant Research, said XL Hybrids has so far done a good job of addressing the two major challenges it faces in the market — cost and integration — and Coca-Cola's interest in the company is a welcome endorsement of its technology.
Still, she said, XL Hybrids and its peers will need to show they can bring in large orders over time.
"It's a challenging market," Jerram said. "No one is going to survive on orders of a couple of batteries."
But Theodore O'Neill, a technology analyst with Litchfield Hills Research LLC in Connecticut, was not optimistic about XL Hybrids' long-term prospects, predicting the company will run into the same roadblocks as others before it.
"I wish them luck, but it's another A123," O'Neill said, referring to the Waltham battery maker that filed for bankruptcy in 2012 and was bought by a Chinese conglomerate. "I expect it all to end the same way."
Hynes, however, is upbeat about his company's technology, particularly given the partnerships and funding it has landed in recent months.
Last year, the company began using Johnson Controls Inc. of Milwaukee as a battery supplier. Now he expects XL Hybrids to expand its annual production capacity from 1,000 powertrains to more than 10,000.
"If we were working with a smaller supplier, that would be a major risk; but it's not because we are working with a company like Johnson Controls," Hynes said. "We see our market growing very rapidly in the next few years."
The company this week also received another endorsement — a $3 million investment from WindSail Capital Group, which is comanaged by former Massachusetts Energy and Environmental Affairs secretary Ian A. Bowles. Bowles said the WindSail investment will help XL Hybrids grow from a 15-person startup to a commercial producer.