Newsletter Archive Index

~~~ Hybrid Cars Newsletter: Issue No. 0009 ~~~
Moderator: Bradley Berman [brad@hybridcars.com]

~~~ Hybrid Cars Newsletter: Issue No. 0009 ~~~
Moderator: Bradley Berman [brad@hybridcars.com]
Technical Advisor: Dave Reuter [dave@hybridcars.com]

In This Issue:

– ANNOUNCEMENTS
We’re looking for a few good hybrid car bloggers. If you have a way with words, and a head full of thoughts about the hybrid car revolution, here’s your chance. Also announcing: a vanity plate contest.

– THOUGHTS ABOUT 2005: BURNING RUBBER IN A HYBRID
The November issue’s single article focuses on a look at the 2005 hybrid car offerings. The major trend? Hybrid cars will become a cool option in everyday cars, rather than a separate and unusual model.

Greetings Hybrid Car Enthusiasts,

As we approach the end of the year, the automotive and mainstream press are starting to release their previews of the 2005 models. I thought the hybridcars.com team should jump into the fray, and try to put our finger on the pulse of the hybrid car “state of the union.” What’s coming out in 2005? Who might be buying and why? And what does it say about the future of the technology? I hope these ruminations can help our readers make a decision about their potential hybrid purchases in the coming year.

– ANNOUNCEMENTS

Hybrid Car Bloggers Wanted

In our tireless pursuit of world-class content about hybrid cars, we will soon be adding a bloggers section to hybridcars.com. To get this initiative off the ground, we will be selecting only six hybrid drivers to participate—and essentially form our first Hybrid Drivers Council. We are looking for owners that represent the full spectrum of car ownership (from Insight to Escape and everything in between), as well as a diversity of backgrounds, experiences, and political leanings. More than anything, we are hoping to find six great writers, who are passionate about their cars and the technology, and everything it could mean to the world. The blog publishing tools will be provided absolutely free to the Council of Six.

If you are interested, please send me an email explaining why hundred of thousands of site visitors should hear what you have to say.

Vanity Plate Contest

Some visitors to our discussion board have offered up their ideas for hybrid car vanity plates:

HIGH MPG
GRNMCHN
QIK FIL

Can you do better? What do you think would make the funniest or most meaningul vanity plate? Go right now to the hybridcars.com discussion forum and submit your ideas.

On December 15, the ten most creative and funniest entries will be selected. Hybridcars.com will offer a free download copy of "An Insiders Look at Hybrid Cars" (101 pages, $10 value) for the winners.

THOUGHTS ABOUT 2005: BURNING RUBBER IN A HYBRID

A Hybrid Option in Everyday Cars

Toyota knocked the ball out of the park on the 2004 Toyota Prius. The Prius dominated headlines for most of this year, racked up award after award, and became nearly synonymous with the word “hybrid.” By the end of the year, the Toyota Prius will emerge as the clear leader of the pack in terms of hybrid sales with 50,000 new cars in the road. The waiting lists are still getting burned off, and the strong appeal of the now quintessential green machine is likely to keep its momentum. Toyota is anticipating a doubling of Prius sales to 100,000 in 2005.

But to understand the major trend in 2005 and beyond, you’ll need to look in the Prius’s shadow at the Honda Civic Hybrid:

Hybrid cars will become a cool option in everyday cars, rather than a separate and unusual model.

The Honda Civic Hybrid, introduced in 2003, became the first commercially available model that, for all intents and purposes, looks, drives, and feels just like its conventional gasoline sibling. In other words, buyers on the showroom floor can order the hybrid drivetrain as one of many options (albeit an expensive one) available with the Civic.

According to a recent study by Booz Allen Hamilton, a global strategy and technology-consulting firm, buyers will commonly demand hybrid technology in the same way that they ask for other options, like air bags or antilock brakes. And if they ask for the hybrid option at the same pace as some of the other recently emerging technologies, then hybrid cars could make up 20% of the overall car market by 2010 and 80% by 2015, according to Booz Allen Hamilton. This “option-izing” of hybrids may reverse the perception that hybrids are “inferior to gasoline vehicles” when it comes to acceleration, power (torque) and reliability.

“The Survey Says…”

In a separate study just released in September by Kenneth Kurani and Thomas Turrentine of UC Davis’s Institute of Transportation Studies, the professors conducted 2-hour interviews with 57 households about fuel economy and their car buying decisions. The study found that “good fuel economy is widely considered an attribute of cheap cars.” While interviewees didn’t think much of fuel economy, they had a much higher regard for fuel efficiency. Are we arguing semantics? The findings consistently showed that the term “efficiency” was “free of a cheap image and more closely associated to ideas of resource conservation, advanced engineering, and high technology and quality.”

This shines light on another aspect of the trend:

Carmakers are hoping consumers will pay more for a hybrid if the hybridization offers something more than just better fuel economy.

As the UC Davis study indicates, fuel economy is “only one feature of an expensive, complex good which has many implications for lifestyle and image goals.” Kurani and Turrentine add that consumers might value fuel economy more highly if it were “more like shiny paint or a bold body style—an attribute with some emotional punch.”

What’s the Hybrid Punchline?

The lineup of new 2005 hybrids shows what carmakers think will pack the emotional punch that greater fuel economy apparently lacks—for those not already on the hybrid bandwagon.

Ford Escape (Sept. ’04) – the utility of an SUV at a relatively modest price

Honda Accord Hybrid (Dec. ’04) – family sedan with power

Lexus SUV Hybrid (By March ‘05) – luxury and power in an SUV

Toyota Highlander Hybrid (Summer ’05) – a blend of utility and power with a slightly reduced price tag from the Lexus

Sierra and Silverado Hybrid Pickups (Summer ’05) – power outlets to run auxiliary devices

You see? No mention of savings at the pump or savings for the environment—although all of these cars will show some degree of improvement in fuel economy. This doesn’t mean that the carmakers are completely ignoring increased consumer awareness of environmental or global security issues related to our dreadful dependence on oil. It just means that they are not relying on it in their strategy to manufacture and market hybrids. Bill Reinert, national manager of the advance technology group at Toyota, says “We are certainly going from somewhere when fuel economy wasn’t at the top of the table to where it is certainly one of the major issues, but performance trumps economy right now. And it probably always will.”

While we may be disappointed that at least one new hybrid isn’t trying to max out on fuel efficiency, it does reflect a maturing of the hybrid movement (although somewhat compromising it along the way). We are moving beyond the environmentalists and the geeks, to a much broader segment. Ford’s research on the market for the Ford Escape campaign identified a segment of potential buyers who are “supermainstream, not the stereotype.” What’s in store for the mainstream?

Burning Rubber with the Honda Accord Hybrid

You don’t get any more mainstream that the Honda Accord. It’s the second best-selling car in the country, behind the Toyota Camry. Here’s the formula: take this very popular car, offer it with as many luxury features as possible, and soup it up to make it faster than any other family sedan on the market.

Early reviews indicate that Honda has succeeded on performance. David Welch of Business Week, writes about his test drive of the Accord Hybrid:

“I look left to watch for oncoming traffic. Seeing a clear lane, I punch the accelerator of Honda’s new Accord gasoline-electric hybrid sedan. The front tires respond with an obtrusive squeal, and the car bursts out onto the main road. Yea, this car—an environmentally friend and fuel-efficient hybrid—really did burn a little rubber.”

Ward’s Auto World calls the Accord a “power sell.” Other reviewers, such as Mark Phelan of the Detroit Free Press, question if the strategy will work. Phelan says, “It remains to be seen how many buyers will think excellent fuel economy and a small increase in power from a conventional V6 Accord’s 240 horsepower justify a price tag likely to be more than $30,000.” The electric motor-gas engine combo adds up to 255 horsepower while promising 30 mpg in the city and 37 mpg on the highway.

Whether or not consumers go for it (and I think they will), the main point is that “hybrid” will be an option for Accord shoppers. As Frank Giovinazzi, the web editor for American International Automobile Dealers Association wrote in a recent email to hybridcars.com after he took the Accord Hybrid for a test drive:

"As someone who writes about all kinds of things in the auto realm, I don’t have as much technical knowledge of the hybrid system as many aficionados – which is why I write about the car simply as an Accord with a hybrid option. Let’s face it – that’s how 99% of the people who buy this Accord are going to think of it. As an Accord with an engine that gives them better performance and better gas mileage than one of their standard V-6s.”

Accord versus Prius?

Honda spokeswoman Sara Pines says the Accord Hybrid will not compete with buyers looking at the Prius or the Escape. “That’s a three-distinct-buyer kind of market,” she said. But I think many buyers will be tempted to at least do a cursory comparison of the Accord and Prius. In a nutshell, the Accord offers a 3L V6 engine that moves from 0 – 60 in 6.5 seconds; while the Prius has a 1.5L 4 cylinder that takes 10 seconds to go the distance. The difference is in the fuel economy: 30 highway mpg’s for the Accord and a whopping 60 mpg’s with the Prius. The price tags are roughly comparable, with the Prius coming in a couple of thousand dollars less.

Compared to the conventional Accord, the hybrid version will be 400 pounds heavier, 14 inches longer, and offer a 15 horsepower boost. And how about the standard leather seats and sunroof? The greenies in the crowd won’t care too much. We won’t get past the discrepancy in fuel efficiency: sixty is a lot higher than thirty mpg. The Hybrid Accord does offer a 9 city mpg gain over the gas engine version. If Honda succeeds in reaching their goal of selling 20,000 of the Accord Hybrids, it would represent a major help to the environment and our collective gas bill.

Another very cool thing about the Accord Hybrid is the use of “cylinder deactivation.” What the heck does that mean? Well, it’s not a reincarnation of the disastrous V-8-6-4 GM from the 1980s—but it’s essentially the same idea improved upon by modern electronic controls and computer systems. The Accord doesn’t use all six cylinders unless they are needed. The driver never knows how many cylinders are firing. Honda will also offer cylinder deactivation on high-end models of its 2005 V6-powered Odyssey minivan, improving fuel economy by 1 mpg in city driving and 3 mpg on the highway. Cylinder deactivation could become one more arrow in the hybrid quiver.

Pondering Prius Production Possibilities

The 2005 Toyota Prius is the same as the 2004 Prius. That’s cool. It’s a dynamite car in big demand. The key question in 2005 is the same as it was in 2004: How will Toyota keep up with the demand? According to Automotive News, Toyota has doubled the number of Priuses to be shipped to North America next year to 100,000.

I’m seeing on various Prius discussion boards that shoppers who are willing to go one or two towns out of their way, and are willing to compromise on color, can get the car within weeks. Certainly, some are still on waiting lists of six months or more.

In addition to shipping more to the U.S., Toyota is apparently considering production of the Prius in America. Perhaps they are being strong-armed by California governor Arnold Schwarzenegger, who is seeking political capital by bidding for Prius production in California. Toyota Motor Sales spokesman Xavier Dominicis offered, “We like to build our vehicles where we sell them.” James Press, Executive VP of Toyota Motor Sales USA, added that a Toyota factory in the U.S. “makes sense.” According to company insiders, plants in Kentucky and Indiana (where the cost of living and labor is cheaper) would be more likely than the Northern California plant, which is operating at capacity with production of the Corolla and Tacoma pickup, among other vehicles.

Waiting to Escape

Toyota is not alone with supply and demand problems. The 2005 Ford Escape SUV Hybrid is now being sold at select dealers around the country. Therese Langer, of the American Council for an Energy Efficient Economy, told us earlier this year “The success of the Escape Hybrid will have very significant consequences for the view that American manufacturers take of the hybrid market.” Can we call the Escape a success yet? The Chicago Tribune is reporting that the Escape waiting list has 10,000 names on it nationally, includes Hollywood hybrid fans such as Leonardo DiCaprio, Cameron Diaz and Julia Louis-Dreyfus. That’s half the number of vehicles they plan to manufacture for the whole year. That’s not a bad start.

(One explanation for the Escape’s limited production is that Sanyo, the battery supplier for the vehicle, is either not tooled or licensed to deliver more than 20,000 batteries a year.)

Once again, fuel economy is not selling the Escape. It’s a little boost in fuel economy, plus the ability to hold something, haul something, and tow something in a hybrid. The long waiting lists are evidence that consumers are willing to pay the $3,500 cost difference between the conventional Ford Escape XLT and the Escape hybrid.

Beware that some greedy dealers are using the short supply to gouge buyers. The discussion forum on hybridcars.com includes these two entries:

"At South Bay Ford (CA), I was 2nd on the list. The dealer was first. They asked $7000 over MSRP. I almost choked. I waited 6 months put money down thinking it was MSRP and then bam! I felt so mad I decided not to get the Escape and I am going to go with the Prius."

" Nemer Ford in Quensbury, NY is asking $8000 over suggested retail that they call a "market adjustment". That is the biggest rip-off I have ever witnessed. I will wait until the production goes up and buy it from a different dealer. This guy is a joke!"

In the SJ Mercury news, it was reported that a Los Gatos dealer sold two Escape Hybrids, each with a $5,000 markup on top of the sticker price. The dealer Steve Swanson says, “We pre-sell them before the vehicle arrives. The anticipation for the vehicle far exceeds what the availability is.”

The Automotive Equivalent of the iPod

Why are people so eager to buy a hybrid from Ford, which is essentially unproven as a provider of hybrid vehicles? Because it’s cool. At least according to Brian Moody of Edmunds.com, who calls the Escape “the automotive equivalent of the iPod.” He adds, “You can show it off, but it’s also practical.” David Miller, who picked up his Ford Escape Hybrid a few weeks ago in San Francisco—and may be the first one in the Bay Area to be driving an Escape Hybrid, also compares his new hybrid to other electronic devices that have changed they way we live:

"I view my 2005 Ford Escape Hybrid the same way I view my Tivo and my Blackberry, new pieces of technology that allow me to live more efficiently and give me greater control and influence in a world where those things sometimes seem to be slipping away."

> Read more about David’s experience with his 2005 Ford Escape Hybrid.

Maybe there’s something to the “coolness” factor. Ford is saying that the Escape can be driven up to 25 miles per hours in all-electric mode. I would be tempted to buy one to play with how far I could keep the Escape SUV in this “no gas – no emission” mode. The 70KW (equivalent 94 hp) permanent magnet traction motor is matched with the Ford Duratec 2.3L 4-cylinder gasoline engine to produce decent performance and a towing capacity of 1,000 pounds. Power gets to the wheels via an electronically controlled CVT transmission (also known as power-split transmission). The battery pack is located under the rear storage area and doesn’t occupy any of the available storage space. Apart from the hybrid drive, the rest of the car is a conventional XLT, with either front wheel drive or four-wheel drive.

The release of the Lexus 2006 RX 400h is months behind the Escape, and yet the pre-sales are about the same. Toyota has pre-sold 9,000 Lexus 2006 RX 400h hybrid SUVs, more pre-launch orders than any vehicle in the company’s 15 year history. Toyota may have held back on the release, previously scheduled for Fall 2004, so they can stock pile vehicles, and thus be fully ready for the demand. The new release date around March 2005 will also allow the vehicle to be called a 2005 model.

The secret to the early success may be the downplaying of the hybrid credentials. Same old story. “Early hybrids carried the misnomer of lacking power,” a Lexus official said. Where the first generation of hybrid looked novel and unique, “our affluent customers do not want to stand out and be different,” the official said. Lexus buyers are used to paying more for performance and luxury, and they’ll get that in spades from the Lexus hybrid.

The New York Times’ October 27 article about the Lexus SUV said that “the hybrid is about to enter the latte generation’s comfort zone.” Its features include heated leather seats, a navigation system, and a camera in the back, outside the car, which displays a rear view on the dashboard monitor that is used for the navigation system. The hybrid system will create what the company calls an ”electric supercharger,” with 270 horsepower, about 20 percent more than the conventional Lexus RX330. Oh, and by the way, it’ll be more fuel-efficient reaching somewhere around 30 mpg.

Toyota has not said how much the RX400h will cost, but the RX330 starts around $37,000, and the 400h is expected to be at least $3,000 to $4,000 more expensive. By the time you drive off the lot, especially if the law of supply and demand kicks in, the RX400h could exceed $50,000, and could go as high as $60,000.

The Highlander will share many of the components of the 400h, but not all the deluxe features. So it will be less expensive. It will also be lighter than the Lexus, and as a result, is being considered the high performance vehicle of all the hybrid power-split designs.

Hybrid Pickups: Sierra and Silverado

While the selling point for many of the new 2005 hybrid vehicles is power and comfort to the yuppies, the two hybrid pickups are pitching a cool feature to the working guys:

A generator that you don’t have to lug around.

It’s essentially the same marketing equation. Will consumers pay a couple of thousand more bucks, in the case of the pickups about $2,500 more, for only a slight gain in mpg’s and an added cool feature? Do three-pronged outlets in the GM pickups offer an “emotional punch?”

> Read more about the Silverado and Sierra Pickup Hybrids

Conclusion: The Other Honda Hybrids

With the buzz still strong on the Prius, and all these exciting hybrid gizmos and gadgets, what will happen to “the little engine that could” who started it all: the Honda Insight? And what about the Civic Hybrid which first signaled the mainstreaming of the hybrid?

Honda’s expects to sell over 50,000 hybrids in 2005. Only 20,000 will come from the Accord. 30,000 more are anticipated from the unassuming Civic Hybrid, with the Insight offering somewhere below 2,000. With all the hoopla going to the expensive, luxurious, and powerful new hybrids, the Honda Insight is looking mighty sweet. (Hmm. Maybe a used one?)

The Insight and its 1.0 liter, 3 cylinder gas engine with a thin, lightweight electric motor, might not be around forever. Honda Spokesman Chuck Schifsky told the Chicago Tribune, “We’re not dropping the Insight yet. We’ll still build it in ’05 and then decide to continue it, replace it or drop it from the lineup.” After all, the two-door Honda Insight is still the EPA’s long-standing undisputed champion when comes to fuel economy: somewhere around 70 miles to the gallon. Wasn’t this supposed to be the point, after all?

That’s all, folks. Don’t forget to tell your friends about the newsletter and website. Thanks for your interest. Until the next time…

Happy Driving,
Brad Berman
brad@hybridcars.com

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