IN THIS ISSUE:

Hybrids Still Lead on MPG, According to 2008 EPA Numbers
For years, hybrids have been criticized for exaggerated official fuel economy numbers on window labels. New EPA fuel economy figures for 2008 hybrids are about 20 percent lower than last year’s numbers—but hybrids still remain at the top of the mpg charts.

Hybrid Tax Credit Caps
Tax credits for Toyota hybrids are gone. Honda hybrid credits are starting to phase out.

Bob Lutz, the Chevy Volt, and the Easter Bunny
Bob Lutz, GM’s vice chairman for product development, told a group of automotive journalists that the feasibility of the Chevy Volt plug-in hybrid concept will be proven by next Easter. He was fending off criticism from Toyota that the Volt is a marketing ruse. “Let’s wait for the Easter Bunny. Somebody’s going to have egg on their face. And I don’t like having egg on my face.”

The Next Wave of Hybrids
Are you tired of hearing about yet another hybrid SUV or luxury vehicle hitting the market? Take heart. There are signs of greater variety in the hybrid market, including an affordable compact from Honda, a Prius station wagon, and a full-hybrid full-size pickup truck.

Diesel Winding Its Way to the Showroom
Green car buyers take note: clean-burning, fuel-efficient diesel vehicles are on the way. But it’s going to take a little time to sort out the myths and realities of “clean diesel.”

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Greetings, Hybrid Car Enthusiasts,

Oil markets have recently been flirting with $100 per barrel. Analysts are expecting $4 per gallon at the pumps by next year. And the automotive world is gone gaga for green cars, promising to deliver real solutions pronto. At least, that’s what you might think based on plans for new more efficient and clean-running models. The challenge for consumers is to sort out the short- and long-term realities. In the short term, the most efficient of the current hybrids still reign when it comes to mpg. In the mid-term, more hybrid choices and clean diesel models are on the way—albeit slowly. And the auto industry continues to tease us with silver-bullet solutions. We hope you enjoy our summary of recent news in the hybrid world.

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Hybrids Still Lead on MPG, According to 2008 EPA Numbers

For years, hybrids have been criticized for exaggerated official fuel economy numbers on window labels. Forget for a moment that the city and highway mpg figures have been inflated for all vehicles—not just hybrids. It’s the hybrid buyer who would understandably be most upset about not reaping the fuel efficiency benefit after paying more for the gas-electric technology.

Back in January, the EPA announced that the figures would be adjusted downward for all vehicles starting with the 2008 model year. Those numbers were released in October. The fuel economy figures for hybrids are indeed about 20 percent lower than last year’s numbers, based on new testing procedures designed to better reflect real-world driving conditions, such as high-speed driving, use of air conditioning, and cold weather.

But even after the shakeup, hybrids remain at the top of the mpg charts. The Toyota Prius, with a combined highway/city mileage of 46, and the Civic Hybrid with combined mpg of 42, are the only vehicles to break the 40-mpg mark. The rest of the top five most efficient vehicles are also hybrids: the Nissan Altima Hybrid, Toyota Camry Hybrid, and two-wheel-drive Ford Escape Hybrid, the only SUV at the top of the list.

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Hybrid Tax Credit Caps

The pressure is on Congress to respond to spiraling oil prices and other energy woes. In the meantime, we’re still living with the 2005 Energy Bill—which granted consumer tax incentives for hybrid buyers. That was a good thing, but one quirk of that incentive program is a cap that reduces the value of the tax credit after any one carmaker sells 60,000 hybrids. Presumably, the idea was to allow domestic automakers to catch up with Toyota and Honda, the market leaders.

Toyota hit the number last summer, which initiated the beginning of the 15-month phase-out process. Today, new buyers of Toyota and Lexus hybrids receive zero tax credit. Customers who bought Toyota and Lexus hybrid models between April 1 and September 30 are eligible for tax credits ranging from $450 for the Lexus LS 600h L to $787.50 for a Prius. (See a tax professional at tax time.)

Just as Toyota tax credits dwindled to zero, Honda reached the 60,000 mark and began its phase-out. Consumers who buy a Honda hybrid before the end of the year can still benefit from the full tax credit, which is $2,100 for the Honda Civic Hybrid. The tax credit will be cut in half beginning on Jan. 1, 2008. Another reduction will occur after July 1, 2008, reducing the incentive by 50 percent yet again—to $525 for the Civic Hybrid.

Ford, GM, and Nissan will continue to offer tax credits at their full value—as much as $3,000 for the 2008 Ford Escape Hybrid. These three companies are not expected to reach the 60,000-vehicle cap before 2009, when the incentive laws will be reconsidered or discontinued. Or maybe Congress will have a new incentive program, which will hopefully be easier to understand than the current Byzantine rules.

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Bob Lutz, the Chevy Volt, and the Easter Bunny

Bob Lutz, GM’s vice chairman for product development, told a group of automotive journalists that the feasibility of the Chevy Volt plug-in hybrid concept will be proven by next Easter. By that time, he said GM will have put the Volt’s electric drive system and lithium batteries in stripped-down Chevy Malibu bodies and will have tested the ability of the Volt system to achieve 40 miles of gas-free range. The vehicle is primarily powered by an electric motor, with a small gasoline engine on board to extend its range.

Lutz made his comments in San Francisco at a meeting of the Western Automotive Journalists association, where he received the organization’s “Anti-gravity Award,” for lifetime achievement in the automotive industry. The playful title of the award was meant to recognize Lutz for his ability to repeatedly resist naysayers to his plans for producing groundbreaking vehicles.

Lutz then took on naysayers of GM’s advanced technology plans—throwing barbs equally at competitors, environmentalists, the oil industry, and Democrats. The most direct attack was levied at Toyota. Lutz referred to comments made by his counterpart at Toyota, Kazuo Okamoto, executive vice president of R&D and product development. Okamoto questioned GM’s ability to deliver the Chevy Volt at the recent Tokyo Auto Show. The two companies have been waging a war of words over competing plans for hybrid and electric vehicles. According to Lutz, Okamoto characterized the lithium battery-powered Volt as “completely wacky” and “nonsense.”

Referring to GM’s plans to demonstrate extended electric range of the Volt next spring, Lutz said, “Let’s wait for the Easter Bunny. Somebody’s going to have egg on their face. And I don’t like having egg on my face.” He said Japanese companies were guarding their advanced battery technology research and refused to bid on GM’s battery proposals. “Lithium battery technology is being husbanded in Japan. It’s like a secret weapon.” Lutz also criticized the U.S. government for not keeping up with the Japanese government’s funding of advanced battery research.

Lutz’s barbs could be dismissed as mere bravado, if it were not for his conviction that GM has a genuine solution to the long-term challenges facing the auto industry. The company is allocating considerable resources to the Chevy Volt. More than 600 employees across the globe are working on the project, and the company is aggressively hiring battery engineers. Lutz said, “Whether you’re talking about weaning us off imported oil, reducing CO2, or cleaning up air pollution in the L.A. basin, the electric vehicle with a gasoline range extender is the ideal solution.” There’s never been so much anticipation for the Easter Bunny in Detroit.

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THE NEXT WAVE OF HYBRIDS

With rare exception, the most popular hybrids today are four-cylinder sedans selling for between $20,000 and $30,000. And yet, nearly every hybrid introduction in the past year has been of an SUV or luxury vehicle. Where is the hybrid version of an economy small car, a wagon or minivan, or a pickup truck? Missing in action—but not for long.

Honda Aims for Most Affordable, Most Efficient Hybrid
Honda offers just one hybrid model—the Civic Hybrid—but will add a second model by the end of 2009. The new hybrid, rumored to use the Fit/Jazz platform, will be a hybrid-only car that seats five passengers—and could become both the most efficient and most affordable hybrid. Honda’s new hybrid could help the company achieve the goal set by Honda President Takeo Fukui: Make hybrids 10 percent of Honda’s overall global sales volume.

Honda plans to sell roughly 200,000 units of the new hybrid-only model. How will it achieve this goal? By keeping costs down. Fukui cited a target hybrid premium of $1,750. The current Fit starts at about $14,000, so presumably a hybrid model would cost less than $16,000. High efficiency and low cost could be a killer combo.

Toyota Announces Prius Station Wagon
Automotive News Europe reported that Toyota will produce a wagon version of the five-door hatchback Prius. According to the report, the Prius Wagon is expected to debut in either 2010 or 2011. That’s a year or two after the next generation Prius comes out in 2009, which itself promises to be roomier, more powerful, and offer better fuel economy than the existing model. (Caveat: Toyota insiders told HybridCars.com that news of a Prius wagon was “rumor.”)

Featuring added cargo capacity, the Prius station wagon could offer a great deal of practicality to any business that relies on the daily, local transportation of goods and services. But don’t think eco-conscious families won’t take notice. A Prius wagon has the potential to become the ultimate daily driver for Moms and Dads who crave the green lifestyle. A wagon’s versatility would add a level of convenience for loading up groceries or carting the kids around town.

GM Unveils 2009 Chevrolet Silverado Hybrid
In mid-November, General Motors unveiled the 2009 Chevrolet Silverado Hybrid at the Los Angeles Auto Show. This is the first full-size pickup to feature a full hybrid system. 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.

The new two-mode Silverado hybrid, expected in 2008, is expected to achieve 40 percent greater fuel economy in the city, and 25 percent better overall, compared to the standard gas-powered Silverado. That translates to EPA numbers of 19 city/21 highway. GM claims it will be the most fuel-efficient full-size pickup on the road, and still will offer up to 6,100 pounds of towing capacity.

“It’s unclear how much demand there is for full-size hybrids,” said Mike Omotoso, senior manager of global powertrain forecasting for J.D. Power and Associates. Every year, combined sales of the Silverado and Sierra add up to 700,000 or 800,000 units. If GM has the vision to produce 20 percent of these pickups as full hybrids next year, they could catch up with Toyota in hybrid sales in one year.

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DIESEL WINDING ITS WAY TO THE SHOWROOM

Green car buyers take note: clean-burning, fuel-efficient diesel vehicles are on the way. It’s going to take time to sort out the myths and realities of “clean diesel,” but it’s only a matter of time before the U.S. begins to follow in the footsteps of Europe, where diesel is nearly half the new car market. (The new diesel offerings could also spur greater use of petroleum-free biodiesel.)

Volkswagen Jetta TDI SportWagen – Coming and Going

Diesel fans cheered when Volkswagen unveiled its 2009 Jetta TDI SportWagen at the Specialty Equipment Market Association Convention in Las Vegas in early November. SEMA is generally regarded by young car enthusiasts as a showcase for all things hip and cool in the automotive world, and made the perfect venue to trumpet Volkswagen’s renewed diesel push in North America.

The new Jetta sports a 2.0-liter, 50-state legal, turbocharged direct injection diesel (TDI) that produces 140 horsepower and an explosive 235 pound-feet of torque. Though fuel economy ratings have not been released, Volkswagen claims the new engine will represent a significant improvement over the company’s former 1.9-liter diesel powerplant, which already offered 31 mpg in the city and 40 on the highway. When VW made the announcement, it said the car would go on sale in March 2008.

Several days later, Volkswagen announced that the Jetta TDI SportWagen and its highly anticipated sedan counterpart were to be delayed as much as six months due to a problem with the car’s emissions system. VW’s troubles lie with the strict 50-state emission test. For automakers to sell their cars in all 50 states, they must meet emissions standards in every single state, which includes more stringent California standards. Instead of hitting the dealerships in early spring, the Jetta TDI SportWagen is now slated to go on sale at some point late in the summer.

Cherokee Grand Cherokee Laredo CRD – Diesel Affordability
Chrysler is now offering its Common Rail Direct-Injection (CRD) diesel engine on the base-level Laredo model. Previously, it was only available in the uplevel Grand Cherokee Limited and Overland. The trail-rated Laredo offers 7,400 pounds of towing capacity, and combined fuel economy around 20 mpg—all for approximately $35,000. Chrysler also reduced the price of the Limited and Overland diesel options by $1,000.

That’s good news for consumers looking for a more affordable, more efficient SUV. But just how clean is it? The Grand Cherokee CRD is not a production version of the Bluetec Grand Cherokee engineering concept vehicle announced earlier this year. A Bluetec implementation would meet the new federal Tier 2 Bin 5 standards, thereby allowing the vehicle to be sold in all 50 states. This current Jeep CRD is only available in 42 states.

Furthermore, John Plecha, director of Jeep brand marketing and global communications, said, “By expanding engine availability and reducing existing prices, we hope that more consumers will be encouraged to take advantage of this clean, renewable fuel.” This statement is deceptive (unless he was referring to biodiesel). The diesel fuel more commonly available at conventional gas stations is a petroleum-based, non-renewable fossil fuel.

Audi’s TDI Wins Competition and Heads for U.S.

An efficient, new Audi clean diesel powertrain that achieved top honors at the Michelin Challenge Bibendum in Shanghai in late November is headed to the U.S. in 2008. The Challenge is an annual event, sponsored by the tire company, which promotes the development of sustainable transportation. To win in a category, a car is judged on several criteria including fuel consumption, emissions, driving safety, and handling characteristics. Audi’s new A5 TDI won in the prototype vehicle class.

The A5 coupe is powered by the company’s latest 3.0-liter V6 diesel that utilizes urea injection in its exhaust system. The technology is designed to significantly reduce the oxides of nitrogen found in diesel emissions. The A5 finished first in the emissions category, and placed very high for fuel economy, managing 40.6 miles per gallon.

The same diesel engine and low emission exhaust system will first be offered in the new 2008 A4 and Q7 TDI models. Other models are expected to follow. The powertrain, like Benz’s urea-based Bluetec system, will be available in all 50 states.

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WRAP-UP

We just returned from EVS23, the world symposium on electric vehicles, hybrids, and fuel cell cars. The volume of hybrid and other green car news from the show was overwhelming. And the pipeline of hybrid stories will undoubtedly grow throughout 2008. In the new year, we’ll continue to do our best to sort it out, and provide it to you in one neat and tidy package.

Happy Driving,
Bradley Berman
[email protected]

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