Newsletter Archive Index

~~~ Hybrid Cars Newsletter: Issue No. 0016 ~~~
Moderator: Bradley Berman [brad@hybridcars.com]

In This Issue:

Updates
What’s Selling? – Hybrids In The Works – Scientific Study Of Hybrid Mileage – Price Pulse

Brouhaha Over Prius Highway Stalls
The National Highway Traffic Safety Administration is investigating 33 incidents of the Toyota Prius stalling out. Are we ready to write off the reliability of all hybrid technology?

Toyota’s Green Fog, According To Autoexremist
According to Peter DeLorenzo of autoextremist.com, hybrid consumers have been brainwashed by Toyota, whose real goal is to conquer the world.

Resale Values And Payback Periods
Are hybrids worth the extra cost? With hybrid resale values exceeding the price of brand-new hybrid vehicles, perhaps this question finally can be put to rest.

Recoup This!
Steve Lancaster of Atmore, Alabama, says there is no such thing as recouping cost for any car. Americans will buy whatever they are willing to work for. Story done.

Pickup Trucks In The Eye Of The Hybrid Storm
The impact of increasing the fuel efficiency of pickup trucks could make the hybrid sedans seem like child’s play.

Greetings, Hybrid Car Enthusiasts,
There’s been a flurry of news and activities in the hybrid world in the past few weeks. It seems like a good time to pause for a moment and try to make a sense of these stories, both good news and bad: More automakers have announced their planned entry into the hybrid marketplace, more motorists have reported technical problems with their Priuses, and environmentalists continue to push for more and faster policy changes. Every time it looks like hybrids are getting a stronger foothold into the American consciousness, the niggling naysayers roll out the same argument about hybrids not being worth the price. We’ll examine the “payback” issue, and share some news about a new HybridCars.com project to more scientifically document actual hybrid mileage. (Your help is required!) Thanks for tuning in.

UPDATES
What’s Selling?
Toyota Highlander Hybrids are now arriving at showrooms around the country. The first two are expected anytime at my local dealership in northern New Jersey. (I made my color and trim package choices a couple of weeks ago, and should see my vehicle sometime this summer.) The arrival of the Highlander this month, along with the Lexus RX 400h–which began shipping several weeks–brings the number of hybrid offerings to seven, including the Toyota Prius, Honda’s Accord, Civic, and Insight, and the Ford Escape.

Hybrids in the Works
On May 18, Toyota announced that a hybrid version of America’s best selling car model, the Camry, will be built on America soil. The Camry will put Toyota closer to its goal of selling 300,000 hybrids globally, the bulk of them in the United States, in 2006. Spokesman John Hanson said Toyota’s not done: "I can’t tell you which hybrid model will be next, but I assure you there will be more." Toyota will begin making as many as 48,000 Camry Hybrids in Georgetown, Kentucky, starting in late 2006.

Following quickly on the heels of that announcement, came two notices from Germany. First, a Volkswagen spokesman told Automotive News it is considering a "mild hybrid" version of the Jetta. Then, Porsche released details about their plans to offer a Cayenne Hybrid when it comes time for a redesign next year. Perhaps Porsche is hoping to bolster sales of the luxury SUV, which dropped by more than a quarter in the first four months of this year.

Nissan is stepping more boldly to the hybrid plate by setting a goal of selling 50,000 units of its 2007 Altima Hybrid. Tadao Takahashi, Nissan’s executive vice president in charge of global manufacturing, said, "We’d like to catch up" with other automakers. According to AutoNews, the Altima Hybrid is very likely to be built in the United States, sending the prospective number of hybrids “made in the U.S.A.” even higher.

Finally, Lexus announced that, starting late next year, it will introduce the LS 600hL, a long-wheelbase luxury V8 hybrid sedan. The “600” in the name refers to Lexus’s claim that, when the V-8 gasoline engine is mated to an electric motor, it will have the equivalent power of a 6.0-liter engine.

Scientific Study of Hybrid Mileage – Drivers Wanted!
HybridCars.com, in cooperation with the Office for the Study of Automotive Transportation (OSAT) at the University of Michigan, is recruiting hybrid drivers to keep meticulous records of their fuel economy. We’re looking for at least 50 owners of each hybrid model to serve as volunteer “mileage trackers.”

> Sign up today by emailing us with your name, city and state, and hybrid model.

Participants will be provided simple instructions on how to log and report their mileage.

Our hope is to apply a high level of scientific rigor to documenting real-world hybrid mileage. This is your chance to help get to the bottom of the hybrid mileage question. The data input from participants will be analyzed, and prepared into a report for distribution to the carmakers, the U.S. Environmental Protection Agency, other government entities, and the media.

It’s an important project—and should be fun. Sign up today.

HybridCars.com Price Pulse
If you haven’t checked out our self-service pricing reporting tool, click over now: http://www.hybridcars.com/pricepulse.

In May, hybrid shoppers told us how much they are paying, and how long they are waiting for their desired hybrids:

Ford Escape Hybrid
Average Price: $27,750
Average Waiting Period: 0 weeks

Honda Accord Hybrid
Average Price: $30,625
Average Waiting Period: 3.5 weeks
Average Deposit: $750

Honda Civic Hybrid
Average Price: $19,850
Average Waiting Period: 0 weeks

Lexus RX400h
Average Price: $50,150
Average Waiting Period: 37 weeks
Average Deposit: $500 norm

Toyota Highlander Hybrid
Average Price: $37,625
Average Waiting Period: 6 weeks
Average Deposit: $625

Toyota Prius
Average Price: $25,650
Average Waiting Period: 12 weeks
Average Deposit: $500

BROUHAHA OVER PRIUS HIGHWAY STALLS
If you follow hybrid news, you probably saw that the National Highway Traffic Safety Administration (NHTSA) is investigating an apparent glitch in the Toyota Prius. NHTSA has received 33 reports of stalled engines in 2004 and 2005 model-year Prius cars. Most, but not all, of the complaints involved cars stalling at highway speeds. Toyota says it is too early to reach any conclusions about the complaints, but the media know a good story when they see one. They bill the investigation as a probe into the reliability of hybrid technology itself.

The story, as you might expect, has set off a firestorm of web postings from hybrid fans and foes alike. The HybridCars.com discussion forum thread on the subject includes apologies for the glitch, pointing out similar complaints in other non-hybrid vehicles. Craig Van Batenburg, of the Automotive Career Development Center—Craig is an advisor to HybridCars.com—says that the problems might be as simple as vehicle running out of gas, improper shifting, or bad oil-change jobs.

HybridCars.com blogger Walter McManus, responds, “Not so fast.” He links site visitors to the full list of NHTSA Prius complaints:

Walter also adds that only “hybrid rednecks” will accept or explain away the risk of injury related to the Prius stall-outs. Walter has a good point. We should take this story very seriously, as Toyota and NHSTA appear to be doing. Highway stalls are serious business, and could potentially involve loss of life or limb. But in fact, none of the reported Prius complaints has involved an injury.

The real cause, in advance of a detailed investigation, is anybody’s guess. In the discussion forum, “Paul” offers his explanation: drivers might have accidentally hit CTRL+ALT+DELETE while on the freeway!

TOYOTA’S GREEN FOG, ACCORDING TO AUTOEXREMIST
Peter DeLorenzo, the irreverent force behind Autoextremist.com, adds his voice to the anti-hybrid invective discussed in previous issues of this newsletter. In his May 18 blog, he says that Toyota’s hybrid strategy is “a green fog” and a pure matter of marketing exploitation: “They can couch [hybrids] in all the Mr. Green Jeans blather they care to generate, but at the end of the day, they’re glossing over the true, long-term costs of hybrid ownership.” He adds, “Consumers have been brainwashed to think that hybrids are somehow the Magic Bullet and The Answer and that by owning and driving one they will not only save money, but they will do their share for the environment too.” DeLorenzo further criticized Toyota for using hybrids as a ploy to distract Detroit automakers into a game of hybrid catch-up, while Toyota launched an “all-out attack” on the full-size pickup truck market. (More about pick-up trucks in a moment.)

The Autoextremist lists the fear of a protectionist backlash against the Japanese company as one of Toyota’s biggest causes of concern. He quickly dismisses the concern as unfounded, but then suggests that Toyota is “out to conquer the world any way they can.”

Why do these attacks sound like Prius envy?

RESALE VALUES AND PAYBACK PERIODS
The Autoextremist is not alone with his criticism of hybrids not being worth the cost of admission. A few weeks ago, Edmunds.com did an analysis for USA Today, and concluded “the cost for advanced technology isn’t completely offset by gas savings and federal tax credits over the five years that owners typically keep their vehicles.” The story proclaims, with dramatic flair, that hybrid owners would have to drive tens of thousands of extra miles a year, or gasoline would have to hit $5.60 a gallon before reaching the break-even point with a comparable gas-powered model. Their study reportedly considers purchase price, taxes, financing, insurance and maintenance over five years.

The British Columbia Automobile Association (BCAA) conducted its own study and came to a different conclusion. Their cost analysis reveals that, over a five-year period, the cost differential between fuel-efficient hybrids and comparable gas-powered vehicles is minimal. And in a cost battle between the hybrid and traditional versions of the Honda Accord, the hybrid is actually cheaper. The BCAA study calculates initial purchase price, and a number of other variables: fuel savings, the provincial Alternative Fuel Vehicle tax concession, and eligibility for low-interest rate financing.

Calculating relative maintenance cost may be tricky. The regenerative braking system should actually reduce wear and tear and reduce costs. The L.A. Times ran a story on June 1 about the maintenance costs for a Prius. Auto technician Gus Heredia of Anaheim, Calif., said "We get an average of about 100 cars a day through the service department." He added, "Maybe three or four are Priuses, and they’re usually just in for an oil change. I’d go broke if the Prius was all I worked on."

The obvious flaw with all of these studies is the limitation to five years, not the lifetime of the vehicle. You might wonder what good it does you to have value wrapped up in the car, if you decide to sell at the five-year mark. Easy. Resale value.

The May 23 issue of Automotive News carried a story entitled “Used Prius costs same as new one.” Using data from Toyota’s reports on certified-used Priuses, we learn the following:

• The base price of the 2005 Prius is $21,440, including shipping.
• Kelly Blue Book data shows that a used 2004 Prius typically sells, at wholesale, at or above the original base sticker price of $21,510.
• Dealers add $1,000 to $3,000 to the price of used Priuses at retail. (Sell a Prius for yourself, and you can get as much as $25,000.)
• Used Priuses usually stay on a used car lot for just a day or two.
• Toyota expects U.S. sales of certified-used Priuses to nearly double this year, compared with 2004.

Most people say, “You lose a couple thousand dollars as you soon as you drive off the lot.” Hybrids may be an exception to this rule.

RECOUP THIS!
I’ve always felt that the “you’ll never recoup your extra investment” argument was entirely beside the point when it came to hybrids. I received this email from Steve Lancaster of Atmore, Ala., who explains why all cars never recoup their cost. Here’s Steve’s email:

"There is no such thing as recouping cost for a car. All cars are horrible investments, so the concept of recouping cost is irrelevant. When I see the 69 Vintage Car with 40,000 original miles, all I see is a car that someone bought that they did not need and never really enjoyed. A farmer who buys a $100,000 tractor is frowned upon for getting a CD player and Air Conditioning, but a frat boy expects everything on his new Corvette at $60,000. Will the frat boy’s feeling of coolness and social superiority ever exceed the cost his father put into the car? Will the amount of girls and party invites increase in proportion to the cost invested in the said cool car?

"Will the Corvette ever recoup the extra cost of the two-tone paint job? Will the farmer’s comfort outweigh the extra $1000 for air conditioning? The guy who buys a stick shift to save $2000 at purchase, does he break even on gas mileage and resale? (I know this answer is NO).

"You buy a car because it does something for you. The welfare mom buys something that will get her to the store at the cheapest price. The construction contractor buys a truck bigger than his needs in case he ever needs it. The basketball player who just signed a new deal adds a new car to his fleet. And you bought a green car for your reasons. You don’t have to justify it to anyone except the bank. If spending your money on a car that somehow helps causes you support, then good for you. Like the frat boy, farmer and construction worker, you have your reasons and the calculation of recouping cost is for real losers with nothing better to do.

"I want a Black Auto Diesel Volkswagen Bug with leather interior and a sunroof. I am waiting to find one with about 80,000 miles on it. Why? Because I am an American, and as an American, I can buy almost whatever I am willing to work to pay for."

PICKUP TRUCKS IN THE EYE OF THE HYBRID STORM
It’s time for a puzzle. Assume that Americans are going to buy what they want—devil may care— and what they want is manly vehicles with lots of size and speed. Add another assumption (not shared by all): it makes good sense to reduce our dependency on foreign oil and to breathe cleaner air. Now the question: which automaker is best positioned to save America the most gallons of gasoline? General Motors.

A 10 percent increase in fuel economy across the entire large pickup truck market would save more than twice the number of gallons of gasoline as an equal gain in small cars, three times as much as the same gain in minivans, and perhaps 30 times as much as small SUVs. Why? Because American buy millions and millions of pickup trucks every year. That’s why the Japanese automakers are trying to convert some of those those truck buyers, who have been very loyal to GM and other Detroit automakers.

Toyota might give a hybrid pickup truck a wink and a nod, but General Motors, in partnership with DaimlerChrysler, has come out full force with their plans to introduce mild hybrid pickup trucks in 2007 and full hybrid pickups in 2008. For hybrid enthusiasts, what makes more sense? Continue to criticize General Motors for being behind Toyota in bringing hybrids to the market, or to cheer them on for their efforts to move into the market segment that could make the biggest difference.

HybridCars.com blogger Walter McManus takes this matter a step further. In his blog, he points out:

• GM improved fuel economy from 1975 to 2004 by 8 MPG (62%) and reduced their average vehicle weight by 250 pounds (6%).
• Toyota improved from 1975 to 2004 by 5 MPG (25%) and increased their average vehicle weight by more than 1,000 pounds (38%).
• If GM had only improved their MPG as much as Toyota did, then their 2004 model year fleet would have burned 647 million more gallons of gasoline per year (19% more).
• If Toyota had improved their MPG as much as GM did, then their 2004 fleet would have burned 169 million fewer gallons of gasoline per year (13% less).

Walter asks, "Who would you give the gold star?"

The Sierra Club isn’t quite ready to give the gold star to GM. In fact, On May 26, they sent all the Detroit automakers to the equivalent of afterschool detention, with their new report, “Shifting Out Of Reverse: Making Pickup Trucks Go Farther on a Gallon of Gas." They say that automakers can use existing off-the-shelf technology—such as starter-generators, cylinder deactivation, and more aerodynamic design—to raise the fuel economy of a full-size pickup from 20 mpg to 34 mpg. The net result would be 9.3 billion gallons of savings every year. Ironically, the list of off-the-shelf technologies that the Sierra Club recommends to boost fuel economy are all important components of GM’s nascent hybrid program.

The Sierra Club says that inaction on the part of the automakers cost pickup truck drivers $387 million at the pumps last year. The U.S. PIRG Education Fund issues its own report on the same subject, entitled, “American Idles: President Bush’s Inaction Costs Americans $5 Billion at the Pump in 2005.” I’m sure its recommendation to increase Corporate Average Fuel Economy to 40 mpg will send my Republican and Libertarian friends into apoplectic fits. So the free-market hybrid naysayers sit in their corner and stew over government interference, the environmentalists can sit in their corner wagging their finger at Detroit, and we all become a little more dependent on oil. Can’t we all just get along?

WRAP-UP
That’s all folks. Don’t forget to sign up to participate in our mileage study. This issue will serve as the June-July early summer release of our newsletter. We’ll be off next month for a little summer break. Please forward the newsletter to friends and family—and stay tuned for our next issue coming out in early August. Until then,

Happy Driving,
Bradley Berman
brad@hybridcars.com

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