Newsletter Archive Index

~~~ Hybrid Cars Newsletter: Issue No. 0014 ~~~
Moderator: Bradley Berman [brad@hybridcars.com]

In This Issue:

Updates
What’s Selling? – Price Pulse Tool – New Ads Say Cars Don’t Pollute

Newsletter Feedback
"I love Rush Limbaugh. I support George Bush. And I drive a Prius."

Lexus GS 450h Hybrid: The End of the Hybrid As We Know It
The Lexus GS 450h was unveiled at the New York International Auto Show in March. We were there to witness the birth of the self-indulgent hybrid sedan.

The Long, Long, Long View of Gas Prices
By Walter McManus
In the beginning, dinosaurs walked the earth. They died and — conveniently, for us — turned into crude oil. It’s all been downhill since then.

Your Responses to the HybridCars.com Survey
We asked the question: "What would you like hybrid manufacturers, legislators, and hybrid owners to know?" 681 people answered. What did they say?

GM and DaimlerChrysler Team Up on Hybrids
By Maria McLean
Are these two hybrid naysayers making a real effort to change their direction on hybrids? Or are they just rubbing together only to create a little static electricity?

Greetings, Hybrid Car Enthusiasts,
The big story of the past couple weeks—besides GM facing a $2 billion loss this year from its car-making operations—is rising gas prices. You may have noticed that HybridCars.com’s home page now includes our "Gas Pump Scorecard," which lists average pump prices for regions throughout the United States, as well as a breakdown by gallon of where your money goes.

HybridCars.com blogger Walter McManus has been wrapping his brain around the rising prices. Congratulations to Walter for his recent appointment as Director of the Office for the Study of Automotive Transportation (OSAT), a division of the University of Michigan’s Transportation Research Institute. Given Walter’s ability to take the long, long view of all things automotive, OSAT—and HybridCars.com—is lucky to have him.

I attended the unveiling of the Lexus GS 450h at New York International Auto Show in March. (More about the 300-plus horsepower luxury sedan hybrid later.) At the show, I managed to get three minutes of face time with Chrysler Group President and CEO Dieter Zetsche. I asked him about the razzle-dazzle of auto shows, which to me seem to be a grotesque marketing frenzy. We wrap this issue with his response and a look at how DaimlerChrysler is partnering with GM to produce their vision of hybrids.

UPDATES
What’s Selling?
We’re days away from the first Lexus Rx400h SUV hybrids hitting showrooms. With 12,000 sold before the first is delivered, they won’t stay in showrooms for long. The Rx400h becomes hybrid number six on American roads, joining the Toyota Prius, Honda Accord Hybrid, Honda Civic Hybrid, Honda Insight, and the Ford Escape Hybrid. By summer, the Toyota Highlander Hybrid will join the Rx400h and Escape Hybrid in the hybrid SUV category.

The HybidCars.com Price Pulse
We are pleased to announced the release of the Hybrid Cars Price Pulse on hybridcars.com. Finally, there’s a tool for hybrid shoppers to compare prices, waiting lists, deposit info, and the level of car dealers’ hybrid knowledge. As we’ve mentioned in previous newsletter, high demand and low supply have given some dealers free reign to price gouge–while other dealers pledge to charge only the MSRP. If you’ve been shopping, stop right now, go to the Price Pulse, and share your experiences with our community of hybrid car fans.
http://www.hybridcars.com/pricepulse

Ad Campaign Says Cars Don’t Pollute
Toyota, Ford, BMW and several other automakers are financing an advertising campaign that asserts that automobiles are "virtually emission-free." The campaign is part of an effort by a broad coalition of automakers to present their vehicles as environmentally benign when, at the same time, the coalition is suing California to block a new regulation to curb global warming emissions and lobbying in Washington, D.C., against tougher fuel-economy regulations.

Sponsored Content

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flat tire assistance; free gas coupons and maps; discounts on eco-travel services; and insurance in some states. They are the only auto club that donates 1 percent of revenues to environmental cleanup and advocacy.

Better World Club is out to change more than just tires!

Check them out at www.betterworldclub.com or call toll free 1.866.238.1137
(Mention hybridcars.com for a special discount.)

FEEDBACK ON POLITICIZING HYBRID CARS
In our last issue of this newsletter, we published links to three articles, by Bill Moyers, Thomas L. Friedman, and Slate Magazine, to show how hybrid cars, the environment, religion, and politics have become a tangled web on the World Wide Web. We received several responses warning us about our assumptions concerning who drives hybrids and why–and about taking sides in a political battle.

Greg:
"I am aware of many Christian groups–liberal and conservative–who view environmental stewardship as a high calling. There is no need to stoop to debasing and misrepresenting the beliefs of many as part of a "democratic debate." I noted as well, that Moyers’ article does not mention hybrids at all, thus failing to meet your "if it involves hybrids, we’re gonna post ‘em" criterion.

"An intelligent debate of environmental issues should be encouraged, but I think we can ‘avoid’ politicizing the discussion by focusing on the issues rather than the vitriol of one ‘wing’ or the other. Please consider linking to opinion articles that are well-argued on facts, rather than simply featuring extreme partisan polemics."

Monica:
"Be careful with your political leanings. I am a tried and true Prius owner, and my next vehicle will be another hybrid. I’ll never go back to a full gasoline engine. I am a conservative, church-attending Christian. I love Rush Limbaugh and support George Bush. Responsibility neither begins nor ends with the environment. We are here for a short while and then move on. What matters in this life is our salvation, not the rights of the Spotted Owl or same-sex couples.

"Please don’t lump me with the tree huggers. I purchased a Prius because I was spending too much money at the gas pump. I didn’t choose a hybrid to protest the war in Iraq or curse those who are unfortunate enough to live on barren, oil-rich soil. I really don’t care how much money the oil moguls have. But I do smile, knowing the rising gas prices don’t bother me any more even at the current $2.20/gallon. My joy in itself is empowering."

THE END OF THE HYBRID AS WE KNOW IT
The goal of the Lexus GS 450h luxury sedan hybrid is not to sell more hybrids—although every unit counts toward Toyota President Fujio Cho’s target of selling one million hybrids per year. The goal is to sell more Lexuses.

"We have a corporate agenda for Lexus," said John Hanson, national manager for product communication for Lexus and Toyota, speaking to HybridCars.com at the unveiling of the Lexus GS 450h at the New York International Auto Show, March 23. "We want to ramp up our image for style, and we want to ramp up for performance." Hybrid technology, well known for its ability to boost fuel efficiency and reduce emissions, is being redefined and redeployed. Hanson explained, "We’re looking at the performance aspects of hybrid technology for Lexus to raise the bar on our performance image." Lexus is planning to position the hybrid version of all Lexus models as the premium vehicle in the lineup.

For longtime hybrid enthusiasts, the Lexus GS 450h will be horsepower of an entirely different breed. Toyota made its hybrid reputation with the Toyota Prius, a vehicle characterized by 50+ mpg, adequate performance of 110 horsepower, and a purchase price of $25,000 fully loaded. The Lexus GS 450h will use a 3.5-liter V6 engine and a high-output electric motor–all driving the rear wheels–to pack horsepower at the level of a V8 engine. Lexus won’t commit to a definite number of horsepower for the 450h, which will launch in Spring 2006. "We’re seeing substantially more than 300 horsepower," said Hanson. "Substantially is a good word. It’s way above." Zero-to-60 acceleration will be below six seconds.

The Honda Accord Hybrid, the fastest family sedan on the market, led the way with its "saves gas and hauls ass" message. Any remaining doubt that hybrids are sluggish will be obliterated by the Lexus GS 450h. The question left in its place is if the speed and refinement of luxury hybrids will undermine the best of what hybrids have to offer: fuel conservation.

Abandoning the Hybrid Base?
Buyers of the GS 450h probably won’t be motivated by saving the earth, saving gas, or saving money at the pumps. The only saving that might motivate this segment of the market is saving time. Hanson explained, "Time is a very important commodity for this buyer, and to fill up the vehicle maybe once a week, instead of twice a week, is a big deal."

Most hybrid early adopters will not recognize themselves in this "bottom-line, time is money, zero – 60" mentality. They are much more likely to emphasize the importance of slowing down, maximizing efficiency, appreciating nature, or fighting oil dependency. "There’s a segment of the market that, despite how good the Prius is, doesn’t want a four-door midsize sedan," said Dave Hermance, executive engineer for Environmental Engineering at Toyota. "The Lexus GS 450h is for the serious ‘I want to go fast’ guys."

Money talks, and you-know-what walks. If hybrid purists want Toyota-Lexus to reach their million-per-year mark, and if they want hybrid technology to get beyond its current half-percent of the total new car market, they will accept that hybrids can and will be used to attract buyers who like power. "Some customers of the GS 450h might buy this vehicle strictly for performance," said Hermance. "Some of us might disagree with that as a philosophy, but as long as that’s a reality in the market, having a vehicle that uses less fuel to get the level of performance is not a bad thing."

The Lexus 450h will be the most fuel-efficient vehicle in its class. Its fuel economy will be in the high-20s, similar to the average 2.0-liter, 4-cylinder compact sedan.

THE LONG, LONG, LONG VIEW OF GAS PRICES
by Walter McManus

Before you freak out about higher oil prices, consider the situation from the longest view possible.

Highlights of High Real Oil Prices:
All figures are shown in today’s dollars.

1864: Pennsylvania Oil Boom (Black-Gold Rush?), $102, still the highest price for a barrel of crude oil ever recorded.

1890s: Internal combustion engine automobile introduced, price bumps over $25.

1990:Price to $36. Iraq invasion of Kuwait and the First Gulf War.

2000: Price to $33.

2004: Price to $38.

2005: My forecast for the year is $45. This would be highest price in 20 years.
Some observers (not the U.S. Department of Energy and not I) expect the price to reach $80 within two to three years.

YOUR RESPONSES TO THE HYBRIDCARS.COM SURVEY
We received more than 1,500 responses to the 2005 Hybridcars.com Owners and Shopper Survey. Thanks to all who participated. We are currently crunching the numbers, and will make a white paper available on the site in May. In the meantime, we can share a few highlights of the qualitative portion of the survey.

We asked: "What else would you like hybrid manufacturers, legislators, and current or potential hybrid owners to know?" 681 of the participants responded with comments and suggestions. We grouped those comments into 11 major categories and tracked how many times each topic was mentioned. Here is the list of each of the top five topics, sequenced by the frequency that the topic was mentioned.

1. Fuel Economy (including Alternative Fuels) — 12 percent of all "mentions"
Example: "We need to do a better job of MPG ratings for all cars, not just hybrids. It’s a turn-off to someone who expects to get EPA mileage ratings, only to find that real-world driving is not the same."

2. Carmakers (usually criticism of OEMs) — 11 percent
Example: "I have made a pledge to myself to not buy another vehicle unless it is a hybrid (full not fake). Those manufacturers who will not build them or who fake building them will not be considered."

3. Government (including incentives and taxes) — 11 percent
Example: "I would like to ask legislators who they are being paid to serve, the people of their legislative districts, or the oil industry leaders? Who, to them, comes first?"

4. Choice of Models — 11 percent
Example: "A hybrid minivan is the perfect scenario for this technology. Lots of stop and go driving. Many moms like me are very conscious of the environment but we need more room than the current models provide. I would have already bought a hybrid minivan if one were available in the U.S.."

5. Politics (including reducing oil dependency) — 10 percent
Example: "Getting better fuel economy will reduce foreign oil dependence from those who are destroying our economy. Telling them we don’t need so much of their oil will send them a message that they can longer hold the U.S. economy hostage to their whims or arbitrary production cuts to raise oil prices."

GM AND DAIMLERCHRYSLER TEAM UP ON HYBRIDS
by Maria McLean

Playing Nice Together
GM and DaimlerChrysler, reformed hybrid naysayers, signed a memorandum of understanding last December to jointly develop hybrid gasoline-electric engines. Financial details, promised early in 2005, have not yet been disclosed. Since GM owns most of the patents for the hybrid system the two companies are set to work on, it’s unclear exactly what DaimlerChrysler will bring to the deal-beyond the cachet of an executive named Dieter (pronounced "Deet-ahh," not "Diet-er") and the Mercedes brand.

Apparently, the idea occurred to company honchos at an industry conference in October; however, this is not the first time they’ve worked together on developing new technologies, nor will it be the last.

The Dieter Speaks
President and CEO of the Chrysler Group Dieter Zetsche, in an interview with HybridCars.com’s Brad Berman at the New York International Auto Show, explained that the car business is "about selling dreams, aspirations, and emotion."

Urged by Berman to explain how "the razzle-dazzle that’s going to appeal to the mass market" relates to the dreams of those who hope to solve environmental and geopolitical problems related to fuel efficiency, The Dieter hedged. He tried to sell Berman a Chrysler 300.

It has "the Hemi engine, the most powerful out there," The Dieter said of the 300C, which gets 17/25 mpg, according to the EPA. "With cylinder deactivation, so when you don’t need it, you go on four cylinders. When you push the gas…you get the eight cylinders." Inclining his head toward a couple nearby models, he added, "You can have both." It is rumored that, despite this persuasive speech, Berman left the show without actually purchasing a Chrysler 300C.

The Dieter aside, DaimlerChrysler’s most likely contribution to the hybrid project will consist of a hefty transfusion of cash to anemic GM. But at the announcement of the joint development venture, both companies’ representatives were careful to emphasize that it does not mean DaimlerChrysler will be purchasing licenses to GM technology.

Grandmother, What Big Vehicles You Have!
The first hybrids to come of the joint venture will certainly be sizable. GM will pop hybrid drivetrains, based on the two-mode technology already used in GM hybrid buses, into its Chevy Tahoe and GMC Yukon SUVs. For its part, DaimlerChrysler will offer a Dodge Durango SUV hybrid option. Both companies plan to begin selling their hybrid SUVs by 2007.

With possible fuel-economy savings up to 25 percent, this means that the Durango, with its current EPA-estimated 14/18 mpg, will improve as a hybrid to a whopping 17.5 city, 22.5 highway. The GM SUVs already wring one or two more miles out of a gallon than the Durango, but you can see where this is going. EPA estimates are notoriously high, even for hybrids. It seems that these two corporate cronies are just coasting, rather than making a real effort to change their direction. Covering their bets, just in case hybrids do take off to become 15 percent of auto sales over the next 10 years.

Wolf: At the Door, or Already in Bed?
Cars are like shoes, or Little Red Riding Hood’s transportation necessities first, fashion statements second. Or is it the other way around? The trick for automakers is to find a vehicle in which the driver feels properly dressed, whether butcher, baker, or candlestick maker. Feeling a little green? Don’t worry, the Chrysler 300C’s got cylinder deactivation, and you can have the GMC Yukon with Displacement on Demand. That’s what the automakers want us to believe, especially when it comes to hybridizing the big boys.

But how many consumers will be fooled into paying $4,000 extra for a vehicle whose fuel consumption and emissions are still far worse than most regular cars? Particularly when some analysts are suggesting that crude oil may soon top $100 a barrel? The Dieter and his GM buddies must hope that the Simple Simons and Little Red Riding Hoods of the world have access to a decent trust fund (or a good credit counselor), while remaining blissfully ignorant of those thorny geopolitical and environmental problems that bother some people.

WRAP-UP

I hope you enjoyed our 14th issue, the first to feature sponsored content. We would like to thank the Better World Club for helping to make this newsletter possible. We encourage you to visit their website and learn more about why you should drop AAA today and join the Better World Club.

If you or your business would like to reach thousands of hybrid car owners and shoppers, please contact us about sponsorship of the site and/or newsletter.

In the next issue, I’ll provide a report from the 11th annual Clean Cities Conference in Palm Springs, Calif. See you then.

Happy Driving,
Brad Berman
brad@hybridcars.com

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