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The rail industry is undergoing a transformation from diesel trains, to hybrid, to all-electric eventually. In this video clip from "The High Energy Show" on Motley Fool Live, recorded on April 5, Fool contributor Lou Whiteman discusses how Wabtec (WAB -1.33% ) is poised to be a big player in the hybrid locomotive business.

Lou Whiteman: So, what can happen? Well, I mean, a full recommendation and a really good company Wabtec. They have made a lot of progress, for one thing, let's remember that most locomotives out there are a form of hybrid. It is a combination of diesel plus a lot of battery and electric that it's basically just how they get efficient.

We are moving to an all-electric train and this is, you'll notice with General Motors (GM 2.53% ) there too, this is a really, cool thing. The flex drive is able to do about 75 miles per hour for 30-40 minutes. With regenerative braking, you can get a little more of that, the furthest they've gone is I think about a 350-mile trip, Barstow to Stockton, California. This is not going to replace the rails everywhere, but this is a step in the right direction.

Theoretically, those are the sorts of trips that you could maybe invest in electrifying the wires too. So, there's sort of a paradox, I think. But these are still huge energy grabbers. Wabtec estimates it's about an 11% average reduction in fuel consumption and greenhouse gas emissions with this generation. The engine is right now very expensive. I mean, 11% is great, but you are not talking about the biggest bang for your buck.

I think, for now, rail is going to be something where you're going to see hybrid continue to get better and more battery taking. But almost like a plug-in electric model for vehicles, where you are going to have all the batteries you can, all of the electric thrust you can, but with some backup that's probably contained onboard and not on the wires above just because we're not going to run power lines on 140,000 route miles.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool owns and recommends Westinghouse Air Brake Technologies. The Motley Fool has a disclosure policy.

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