Hybrid Electric Vehicles – Squarely In The Mainstream
ByToday’s gas-electric hybrid cars have been called the most significant innovation in the auto industry since the automatic transmission—some even say since the gasoline engine replaced the Stanley Steamer. Hybrid sales in the United States exceeded 350,000 in 2007, a fivefold increase from 70,000 just 3 years earlier. Families driving a 50-mpg Toyota Prius today get legroom and cargo space comparable to that of a Camry sedan, Toyota’s worldwide best seller (which has a hybrid version of its own, launched in 2006—the first Toyota hybrid built in the United States, in Georgetown, Kentucky). Or they can choose a hybrid full-sized sedan (the Camry or a Nissan Altima), small SUV (Ford Escape or GM Saturn VUE), large SUV (Toyota Highlander, Mercury Mariner), full-sized luxury SUV (Lexus RX 400h), or pickup truck (Chevy Silverado).
That’s just a sampling, and there’ll be many more hybrid models in the next few years. Nissan, after lagging fellow Japanese competitors Toyota and Honda, finally released a hybrid Altima in 2007 with technology licensed from Toyota and will develop its own HEV technology for vehicles aimed at the 2010 model year. But bear in mind that not all hybrids are created equal. Many, notably the Lexus models, use the electric motor more for its power boost to the gasoline engine than to run as often as possible in emissions-free electric mode. That can mean very little improvement in gas mileage or emissions compared with the nonhybrid counterpart model; you’re paying the hybrid premium for extra power (and perhaps pride of HEV ownership). Hybrid-electric is a flexible technology adaptable to many different market segments, but not all HEVs are as clean as others. Regardless, it’s a huge potential market. Alliance-Bernstein, one of the world’s largest publicly traded asset management firms with some $750 billion in assets, is particularly bullish on the sector. The firm predicts that hybrids (including plug-ins) will comprise 50% of global new car sales by 2015 and a stunning 85% by 2030.
Sometimes the financial advantage of a HEV goes beyond savings on fuel expense. Hybrid buyers in the United States get a federal tax credit of up to $3,150, depending on the HEV model. And people working at a growing number of high-tech firms and other companies, including Google, HP, Timberland, and Yahoo!, receive up to $5,000 from their employer toward the purchase of the highest-mileage hybrids.
The appeal of hybrids, and their breakneck sales growth, has extended far beyond the green-minded and has proven there needn’t be a trade-off between fuel efficiency and performance. Motor Trend magazine, Detroit’s bible of speed and style since 1949, bestowed its coveted Car of the Year honor on Toyota’s Prius in 2003, Honda’s lineup of Civics (including the hybrid) 2 years later, and the Toyota Camry, including its hybrid version, in 2007. These honors didn’t come just because the hybrids save gas. “The Prius is a capable, comfortable, fun-to-drive car that just happens to get spectacular fuel economy,” wrote then editor-in-chief Kevin Smith. “It also provides a promising look at a future where extreme fuel-efficiency, ultra-low emissions, and exceptional performance will happily coexist.” No trade-off at all—it’s just a better car. It’s helped Toyota make its historic leap past GM as the world’s largest automaker; the company expects to sell 1 million hybrids annually worldwide by 2010.
“When we launched the Prius in the U.S. in July 2000, the star of the Detroit Auto Show earlier that year was the Hummer H2,” says Celeste Migliore, national marketing manager of advanced technology vehicles for Toyota USA in Torrance, California. “Hybrids were an unknown quantity. Now the Prius has become our ‘halo’ for the Toyota brand, and we’re branding our Hybrid Synergy Drive technology across all models.” Toyota, which initially eschewed traditional advertising for the Prius, clearly caught a wave of market forces that place it in an enviable position moving forward as HEVs, PHEVs, and EVs evolve. “Our feeling is that we don’t create demand, we facilitate it,” says Migliore. “It’s really hard to make a product cool. You can’t do it—your customers have to do it.”
Hybrid car production is also booming in China (along with overall’ auto manufacturing there), with Toyota, Hyundai, and Volkswagen all producing hybrids in partnership with local Chinese carmakers. They have plenty of competition from China’s own manufacturers. At least five—Dongfeng, Chery, Geely, Chang’an, and China FAW—planned to start manufacturing and selling hybrids in China by the end of 2008.
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