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Hybrid Cars Newsletter: Issue No. 030
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IN THIS ISSUE:
Supreme Court Decision
The quest for cleaner cars got a big boost on April 2, when the U.S. Supreme Court ruled, in a 5-4 decision, that global warming pollution from automobiles can be regulated under the federal Clean Air Act. The EPA now is legally responsible for setting limits on greenhouse gases emitted from cars. That’s huge.
Prius Sales Take Off
The Toyota Prius hit another all-time monthly high in March, selling 19,156 units. To put this in perspective, Prius sales in March exceeded the sales volume of entire brands such as Subaru, Mercury, and Cadillac.
Shattering Myth of Hybrid Premium
A new survey shows the Prius was not only the hybrid vehicle owners’ most desired vehicle, it was cheaper than other cars on their shopping list.
Test Drive: Nissan Altima Hybrid
I spent one week driving the Altima hybrid and meeting with Camry hybrid owners to study the differences between the two vehicles. The Altima won on performance and style, but lost on overall quality and dashboard displays.
Who Killed the Hybrid Pickup?
Trucks make up more than half of the new vehicle market in the United States. So why isn’t there a hybrid pickup? Well there was, kinda sorta, for a short time.
The Cars America Needs
When auto economist Walter McManus commented that the cars Americans would like Detroit automakers to make differ fundamentally from those that GM likes to make, it evoked a sad reply from the son of a UAW auto worker.
Wimpy Hamburger Syndrome
A few weeks ago, there was an historic and unlikely meeting between GM’s Bob Lutz and the Union of Concerned Scientists’ David Friedman. Minds were not changed; however, the fact that it happened at all is encouraging.
Interview: Bricklin is Back – With a Plug-In
I recently spoke with automotive maverick Malcolm Bricklin, who is planning a luxury plug-in hybrid that gets 100 mpg with a Chinese-built lithium ion battery.
Greetings, Hybrid Car Enthusiasts,
The recent U.S. Supreme Court decision declaring that global warming pollution is a pollutant under the Clean Air Act is a significant yank on an unraveling sweater that continues to leave the auto industry more exposed to changing public sentiment about cars and climate change. Record-breaking sales of the Prius tugged further on that thread. Will the auto industry respond? What new hybrid products are being introduced? What brilliant new plans are being hatched? In this issue, we do our best to capture this pivotal moment in hybrid history. Enjoy.
The quest for cleaner cars got a big boost on April 2, when the U.S. Supreme Court ruled that global warming pollution from automobiles can be regulated under the Clean Air Act. The significance of this cannot be overestimated. "The debate over global warming has ended,” said Joe Mendelson, legal director of the International Center for Technology Assessment (ICTA). The decision establishes carbon dioxide (CO2) and other heat-trapping gases as “air pollution” under the Clean Air Act.
Despite enthusiasm from environmental organizations, the Supreme Court’s decision doesn’t actually set new car standards. However, it does remove a key legal question that has been hanging over national and state-based greenhouse gas standards. It also presses Congress to enact a national cap on carbon emissions that might trigger big changes in car technology.
Environmental groups cheered the decision for three reasons, according to John DeCicco, senior fellow at Environmental Defense. “It compels (the) EPA to start addressing global warming, it opens the door for state policies such as California’s greenhouse gas emissions standards for cars to get past court challenges they face, and it puts added pressure on the U.S. Congress to enact national climate protection legislation sooner rather than later,” he said.
The decision puts the EPA back under fire, just a few weeks after it announced overdue plans to create more accurate mileage ratings for cars and trucks. The new standards will get closer to reality by factoring in higher speeds, stop-and-go driving, more aggressive acceleration, use of air conditioning and driving in colder temperatures. Hybrids’ fuel economy is likely to get a haircut of up to 30% for city driving and 20% for highway.
Reactions from visitors to HybridCars.com were mostly positive. Alex wrote, “I give praise to the EPA for finally being realistic in their testing. Now the car companies can no longer hide how inefficient all of our vehicles are.” Bob reminded everybody that “unfortunately this change will have no effect on the mileage values used by automakers to comply with CAFE regulations.”
HybridCars.com and R.L. Polk continue to closely monitor and report on hybrid sales and trends through our Hybrid Market Dashboard. We reported that the Toyota Prius hit another all-time high, selling 19,156 units in March, a 57% increase over February. Put into perspective, consider that more Priuses were sold in March than that of entire nameplates such as Subaru, Mercury, and Cadillac. Camry Hybrid sales also hit a record level, rising 54% from February to 5,144 units. Even the Highlander Hybrid had respectable sales of 2,501 units, 32% above February levels. With these results, Toyota seems well-positioned to meet its target of increasing North American hybrid sales by 50% over 2006 levels.
As mentioned in the February dashboard, the rise in Toyota hybrid sales is due partly to the company’s marketing efforts. In addition to its advertising campaign for the Prius, Toyota offered discounted financing on both the Prius and the Highlander Hybrid and, in some areas, also had dealer incentives in place (as much as $400/unit on the Prius, and $2000 on the Highlander Hybrid). Sales also were buoyed by rising gas prices, as well as a general uptick in vehicle sales this month. As a result, all hybrid models showed sales gains over February’s numbers.
A new study of 118 Prius drivers, recruited mostly through flyers placed on their windshields, shatters the conventional wisdom that hybrids do not pay for themselves. Most of the Prius shoppers wanted an eco-friendly car. But when asked what kind of car they would have purchased if they had not bought a hybrid, these shoppers would have purchased a vehicle costing thousands of dollars more than a Prius. Therefore, the Prius was not only their most desired vehicle; it was cheaper than other cars on their shopping list.
“This study captured the people that traded down from a luxury vehicle, such as Audi A6, BMW X3 or Acura TL,” said Jonathan Klein, general partner of the Topline Strategy Group, the Boston-based business and technology strategy firm which conducted the study. Klein said today’s hybrid buyers “could be considered the second wave of the hybrid market.” The first group of hybrid buyers, considered early adopters, was motivated by a desire to reduce their environmental impact or buy their fascination with new technology. The changes in the market reflect a move “from green to practical,” according to Klein.
What if the hybrid version of a vehicle carried a price tag identical to the non-hybrid version of the car? Well, take a look at the Saturn Aura Green Line, the first hybrid that essentially costs no more than its conventional counterpart. In broad and simple terms, the Aura Green Line, which starts at $22,695, costs about two grand more than the Aura XE. When you subtract a $1,300 federal tax credit, you’ve whittled the premium down to a few hundred bucks. In exchange, you bump your city mileage from 20-mpg to 28-mpg, and the highway fuel efficiency from 30-mpg to 35-mpg. Depending on how much you drive, the fuel savings could erase the cost of the hybrid system within a few months. From there on out, it’s all gravy.
Of course, these accounting gymnastics mean nothing unless the vehicle’s styling, safety, performance and handling are up to snuff. And on these accounts, the Saturn Aura is scoring very high marks.
I spent one week driving the Altima Hybrid and meeting with Camry Hybrid owners to study the differences between the two vehicles. Here are the most important distinctions:
Power & Style: There’s no doubt about it. The Altima Hybrid is noticeably more responsive than the Camry Hybrid. If the extra pep is essential, and you’re willing to sacrifice the ultra-quiet (some call it “numb”) ride of the Camry, then your decision is made.
Interior Quality and Room: After jumping back and forth between the seats of the Camry and Altima, you definitely feel that the Camry has more space and a generally more pleasant feel. The high degree of finish on the materials of the Camry makes it seem like Nissan didn’t spend as much money or care on the Altima interior.
Instrumentation: Half the fun of driving a hybrid is monitoring the fuel efficiency and flow of energy. Toyota’s been in the hybrid game for nearly a decade, and benefits from its experience in producing hybrid instrumentation. The Altima’s dashboard, on the other hand, made reading the mpg a guessing game. The one exception, and it’s an important one, is the Altima’s backup camera. The Altima’s use of overlay guidelines to show distance from the car and likely distance from the curb beats out the Prius. The Camry lacks the backup camera entirely.
If hybrid technology is going to make any dent in reducing emissions and saving oil, then pickup trucks cannot be ignored. In 2006, sales of Ford F-150s, Chevy Silverados and Dodge Rams came in first, second, and fifth places, respectively, for all light-duty vehicles. When you add sales of SUVs built on truck chassis, you have more than half of the entire 16 million vehicle market in the United States.
On a microeconomic level, hybrid pickups also make two tons of sense. Pickup drivers can easily use 1,000 gallons of fuel per year. At $3 per gallon, the savings from a hybrid system on a pickup would put the most self-righteous Prius driver to shame.
So why isn’t there a hybrid pickup truck? Well, there was, kinda sorta, for a short time. In late 2004, General Motors launched an ultra-light hybrid system on the Silverado and Sierra models. The total production run on both was about 3,000, but it was never entirely clear if or where you could buy one. Then, in December 2006, GM “quietly dropped the hybrid versions of the Chevrolet Silverado and GMC Sierra pickups,” according to Automotive News.
Before the conspiracy theorists go too far, don’t expect a documentary release of “Who killed the hybrid pickup?” GM phased out the ultra-light hybrid pickups that produced a 10-15 percent increase in fuel economy to make room for full hybrid versions of the Silverado and Sierra, which are expected to get a 25 percent increase in fuel efficiency. The so-called two-mode hybrid pickups are scheduled to launch in late 2008. DaimlerChrysler will use the two-mode system in the Dodge Durango and Chrysler Aspen, also in 2008.
Our friend Walter McManus, an auto economist with the University of Michigan, wrote a commentary entitled “The Cars America Needs” in his HybridCars.com column. Here’s an excerpt:
“The domestic automakers say there is little more they can do to improve fuel economy without a technological breakthrough and billions of dollars. But they invest billions of dollars every year in engine research heretofore to make vehicles heavier and faster—something my research shows that American consumers stopped demanding when the price of gas starting going up. GM’s Vice Chairman Bob Lutz even complained that to improve fuel economy would consume the “quasi-totality of our investment in engineering resources.” and “You can either spend the money meeting the law or spend the money to do the cars you’d like to do but you can’t do both.” The cars Americans would like Detroit automakers to make—the cars America needs Detroit automakers to make—apparently differ fundamentally from those that GM likes to make.”
Walter’s comments elicited this response from a site visitor, Justin Jones:
“As the son of a retired UAW auto worker from Ford, I was taught my duty was to help support the American worker by buying American made products. This was especially true when it came to what car I was supposed to buy. The American auto companies and UAW helped put food on my table and I should take care of them. And protect the American middle class. But when do we stop taking care of those who don’t take care of themselves or anyone else anymore? In the 70s during the energy crisis, the American auto companies did adjust their fuel economy. Today they are helping the oil company’s best interest while hindering the future health and welfare of people and our planet’s global warming illness. For the first time ever I am going to say I’m sorry to my father when I buy a foreign hybrid car because my priorities are not the same as the company he spent his life working for. It makes me sad.”
The auto industry is feeling the heat on climate change. How do you know? A few weeks ago, GM’s Bob Lutz opened his door to David Friedman, head of the Clean Vehicle Research program at the Union of Concerned Scientists (UCS).
The unusual meeting came about after Mr. Lutz, GM’s vice-chairman and product guru, repeated his claims that his company does not have affordable technology to significantly improve vehicle efficiency. “This is a challenge I want to put out to people who think they have a solution, and are so much smarter than we are,” Lutz told the Wall Street Journal. "Let them come and see us. If the technology were readily and easily available, what on earth would our motive be for withholding it?" So Friedman picked up the phone to see if Lutz was really interested in hearing about UCS’s research into off-the-shelf technologies that could increase efficiencies and reduce tailpipe emissions for a few hundred dollars per vehicle.
Lo and behold, Lutz agreed to the meeting. The significance of the meeting was not the subject matter of the discussion. The importance was that it occurred at all—opening up more dialogue between GM and environmentalists. Friedman said, “I don’t think I convinced them of anything. And they didn’t convince me.”
GM and other carmakers have unveiled a number of very promising high-efficiency low-emissions concept vehicles—which lack definitive production timetables because key components are not yet available. “It’s the Wimpy thing,” said Friedman. “You know, I will gladly pay you Tuesday for a hamburger today. That would be fine if we weren’t living in a world where climate change is a reality, not to mention all sorts of problems associated with oil dependency.”
Friedman said that a follow-up meeting is likely, but could not discuss the details due to confidentiality. He said, “They’re open to taking this conversation to a next step. That’s a good sign. They want to talk.”
Malcolm Bricklin, the indefatigable auto entrepreneur, has taken his ambitions to a new level with his latest goal of creating a mass-market, plug-in hybrid car industry, including: creating his own high-volume 100-mpg luxury vehicle; building a new dedicated component factory in China to produce lithium batteries and electronic parts for his car and for other fledgling electric car makers; organizing a chain of exclusive dealerships placing advanced bulk orders; and engineering a wireless network allowing service technicians to monitor vehicle performance from a distance.
I spoke with Bricklin in the New York City office of Visionary Vehicles, his company.
Bradley Berman: Where does China fit into the future of the car business, both in terms of manufacturing and as a burgeoning market?
Malcolm Bricklin: China will be the biggest home market for cars in the world. They’re building the roads. They’re building the factories. They have the people. To not kill the whole population, they have to dramatically move into clean [car technology]. Not just environmentally clean, but really good mileage. We’re not talking going from about 26 to 28 mpg. I’m talking about 75 mpg.
The only thing that’s been keeping electric cars and electric hybrids from happening is the need for the next-generation in technology, the lithium battery. Engineers needed to get rid of the “boom” part…where the battery goes “boom” every once in a while. The engineers put phosphate and a couple of other things, and the “boom” is gone. But the price is too high.
We are going to invest in the factories necessary to bring the prices down so our components’ costs are in line with conventional cars. So when you get rid of the engine and the transmission and the rest of the stuff [required for a conventional car, but not required for a series hybrid], we’re about equal. We’re going to make those same components available to other people who want to be in the electric vehicle business.
BB: You’ve said that you plan to manufacture Chinese-made plug-in hybrids, and bring them to the United States by 2009.
MB: The end of 2009.
BB: What are the greatest challenges in making that happen?
MB: Just about everything known to man. Where would you like to start? That we do the engineering right. That we test it sufficiently. That the battery factory capacity doesn’t produce flaws. That we find ways to check all the components of the electric system to make damn sure everything goes in perfectly. That the Chinese pay attention and give us the kind of quality we demand. That I don’t die too soon. That the ships with the cars don’t sink in the sea.
There you have it. Lessons learned from the steady growth of the hybrid market are coming in very handy, as government officials and auto industry leaders come to terms with the realities of climate change and oil dependence. That growth was fueled by consumer demand, showing once again that a handful of committed citizens can make their voices heard—and their pocketbook decisions felt—to produce meaningful change. The saga continues.
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