Luxury Hybrid Category Gets Crowded

Mercedes S400 on road

The Mercedes S400 hybrid was the first hybrid from the luxury carmaker. Mercedes, and other luxury brands, will increasingly go hybrid.

Great hybrids. Big jumps in MPG. But luxury, all too often, means low volume.

The field of hybrid gas-electric vehicles is expected to triple from about 20 today to 60 or more by the middle of this decade. If current trends continue, much of that growth will come in the luxury segment. Ford will offer a Lincoln MKZ Hybrid—essentially a luxury version of the Ford Fusion Hybrid—later this year. That news, which leaked out prior to the official announcement from the New York Auto Show, follows last month’s reports from Mercedes and Lexus that more luxury hybrids are on the way.

Is the availability of the Lincoln MKZ Hybrid worth getting excited about? Yes and no. The MKZ Hybrid will beat the fuel economy of the Lexus HS 250h by about 6 mpg—while providing room for an additional passenger. Moreover, Lincoln’s first hybrid could more than double the conventional MKZ’s current 18 mpg in city mileage. That’s a big deal.

Unfortunately, the conventional Lincoln MKZ is not a big seller—so don’t expect much of an impact on overall hybrid sales. That follows a pattern in which Ford produces a stellar hybrid product and puts marketing dollars behind it—but fails to pump out enough units to raise it above niche status.

Luxury Brands Go All Hybrid

There’s more cause for celebration—sort of—for green car fans. Numerous media outlets are reporting that Mercedes-Benz will go 100-percent hybrid with its next-generation S-Class lineup in America—excluding the $130,000 AMG models. In other words, you won’t be able to buy an S-Class that doesn’t have a hybrid system—lifting the fuel economy of the entire line. Bear in mind that the S400 Hybrid is the least expensive of the S-class models—although it sells for nearly $90,000. The other S-Class models move up in price toward Tesla territory and beyond. That renders the impact of an all hybrid Mercedes segment as mostly symbolic—until Mercedes goes all hybrid for the relatively proletariat E or C classes.

On the other velvet-clad hand, the recently announced Lexus CT 250h luxury hatchback could really move the needle for hybrids. The Lexus CT 200h would be Lexus’s first compact car, and the first compact hybrid sold by Toyota in the US. The model could also become the least expensive Lexus model—maybe just above $30,000. And it will be Lexus’s most efficient—with mileage reaching toward Prius-levels.

The CT200h could go on sale in the US as early as next year, when it would become the fifth Lexus hybrid model. That pushes the hybrid-ness of the brand even further. No other brand has more gas-electric vehicles—and no other brand has hybrids from the top of the line to the bottom, and in every size from compact to SUV. The Lexus RX450 SUV and Lexus HS250h sedan are already produced in decent volumes, and were among the best-selling hybrids for most of the last year.

The hybrid wave was slowed down by the economic recession. But it’s looking more and more like the recovery is going to start with the luxury segment—and slowly make its way to plebeian brands of nearly every size and shape, and every price point.


  • thebarnett

    Just wait until the Karma is released. It will be a whole new ball game.

  • DownUnder

    Yes, more brands are going hybrid. Mazda just signed an agreement to have hybrid components supplied by Toyota.

  • veek

    I’d be interested in seeing the mileage figures for the Benz and Lexus models. Based on current figures, they should not, under any circumstances, be considered high-mileage (or even adequate-mileage) cars, and the same could be said for their environmental impact. If everyone drove one of these things, we’d still have oil dependency, and global warming would not be reduced.

    A bloatmobile is a bloatmobile, even with a hybrid powertrain, and even if it is not made in the US.

  • Yegor

    I do not understand this – super strange. There are several not opened niches in the mass markets but they spend efforts on low production models. Where is Ford Fusion hatchback hybrid? Where is Toyota RAV4 hybrid? Where is Toyota Camry hatchback hybrid? Where is Honda midsize hybrids?

  • DownUnder

    Yegor,
    It’s easy to understand: Because they have bigger margins, so only a small number in sale is enough.

    veek,
    Those “luxury brands’ priority is not economy (high MPG). Their highest priority is performance (powerful engines -> low MPG), safety (heavy body -> low MPG again), add-on gadgets (low MPG again), etc. High MPG is their lowest priority, I think.
    There are people who don’t care much about MPG.

  • Mr. Fusion

    Yegor: I agree. Seems like the hybrids are trickling in from the fringes of the car market. They have the small and the expensive sides covered, now it’s time for the rest of us.

    How about a pickup truck, Toyota?!
    Show me a hybrid Tacoma, or even better, a Tundra, and I will be first in line to sign up.

  • Achilles

    Most innovations in all industries enter at the top of their markets. If the novelty appeals to the rich, then major cost-reduction efforts are applied to push them down into the mass market, with aspirations doing the pulling.

    Think of a new dress fabric. It will probably show up first in a $6000 frock on a Paris catwalk. A few years later it’s available at Walmart, for $50.

    Hybrids were an exception to this general rule, with Toyota prepared to use its massive financial and marketing resources to drive the Prius ‘sideways’ into the middle of the market, very successfully. Hybrid game on!

    Now normality has returned, with most other manufacturers making relatively modest, and less risky, investments at the top of their ranges. There is already little doubt that hybrids of various types will come to dominate sales beyond 2010 in the automotive mass market. The remaining key questions are plug-in or not, fuel cell or ICE, what share for BEVs at the bottom of the market, and how the mix of these will vary over time from country to country and region to region. The answers to these questions will evolve as the technologies improve, but we can already be certain that hybrids will be driven deep into the mass market globally, judging by the scale of the efforts that are currently in place.

    If expensive hybrids sell well, cheaper ones will follow, and quite soon – twas ever thus. So tell your rich friends to buy expensive hybrids and help subsidize developments for the mass market. It’s their duty!

  • Nelson Lu

    Redbeard, hybrid != Toyota.

    Full-size hybrid pickup trucks already exist. Check out Chevrolet and GMC products. While they’re hefty in price, the provide real gas savings.

  • Nelson Lu

    I will also say that I find it odd that the article implies that the Fusion Hybrid is a “niche product,” when it has been outselling the Camry Hybrid and, in some months, was outselling the Insight. If the 2nd/3rd best-selling hybrid is a niche product, what does that make all of the others?

  • John K.

    Ford’s next new hybrid should be a Taurus. They’ve got the excellent Fusion hybrid to cover smaller sedan segment of the market, they’ve got the Escape hybrid to cover the small SUV segment, and I’ve read that they’re coming out w/a Focus EV before 2012. A Taurus hybrid (and later a hybrid full size SUV), will put Ford in an strong position as gas prices once again increase as the economy recovers.

    Nelson Lu: hybrid and EV enthusiasts are, even now 2 yrs after the most recent gas crisis, a fringe group in America. Total hybrid sales, which are broken down by make and model on this site monthly, are still only a drop in the bucket of total US automotive sales (cars and trucks/SUVs). The Volt, Leaf, and Aptera will do nothing on their own to change that. Compare the sales numbers of the excellent Fusion hybrid to the sales of all non-hybrid Fusion models.

    Rough guess: Expect hybrid sales to slowly but steadily increase from a minor fraction of total sales in 2010 to a significant fraction by 2015. Expect plug-in hybrids to do the same from 2015 (when NiMH goes off patent protection) to 2020 and EVs to follow that starting in 2020. Sure there will be plug-ins (Volt) and EVs (Leaf) this year, but I’m talking about when these vehicles will make up a significant fraction of total US auto sales and start having a significant impact on America’s dependence on foreign oil.

    Note well that these initial offerings can have a significant impact on your personal dependence upon oil if you are an early adopter.

  • John K.

    I should also have mentioned how even if *every* car or truck sold this year and the following years was a hybrid (which ain’t happening), I’m guessing it would take about 5 – 10 yrs for them to make up 25% of the cars and trucks on America’s roads. Only a small fraction of all the cars-trucks on the road are replaced in any one year. I’m sure someone can search for the actual numbers. Don’t mean to be pessimistic. Just being realistic. We probably won’t come close to energy independence regarding personal transportation until the mid-2020s.

  • Roy S.

    What we shouldn’t miss is the importance of the Hyundai Sonata. It has two features which are notable. It has a minimum of components which make it a hybrid. An electric motor, a DC/AC converter and a batttery. Except for the battery we can assume that the cost of the other two items will drastically decline in cost as time goes by and is already offset by the elimination of the torque converter and the lack of a continuously variable transmission. The battery is a polymer based battery which permits large reductions in weight and improved performance. In other words, the hybrid train is headed for lower costs and improved performance. With a slight improvement in the Sonata battery and therefore a larger electric motor, it will not be too long before the transmission as well as the torque converter is eliminated. In five to ten years we will probably be looking at a cost premium of about $1,500-$2,000 as well as improved MPG.

  • iBidHybrid.com

    KissMyHybrid site has pictures of a BMW 7 Series Hybrid. I dont know if its real or not, but it looks just a regular 7 Series model.

  • Lin

    I truly love the price and mileage of the Lincoln. However, I can’t stand the body. It’s better but not good enough. Still looks like an old person’s car and I’m 62 yrs. old/young. Doesn’t look as slick as others. If the body style improves for 2013, I will definitely be buying a Lincoln.

  • tapra2

    The other S-Class models move up in price toward Tesla territory and beyond. That renders the impact of an all hybrid Mercedes segment as mostly symbolic—until Mercedes goes all hybrid for the relatively proletariat E or C classes.Top UK Hosting