Newsletter Archive Index

~~~ Hybrid Cars Newsletter: Issue No. 0018 ~~~
Moderator: Bradley Berman [[email protected]]

In This Issue:

Updates
Incentives Update | What’s Selling | New Bloggers

New Blogs and Hot Discussions
HybridCars.com now features blogs from the world’s first hybrid taxi driver, an energy markets writer, and the entrepreneur behind the Plug-in Prius campaign. Discussion threads started by their blogs (and in our discussion forum by everyday visitors) answer technical questions, stir political debate, and point the way to the future of sustainable transportation.

The Shifting Hybrid Chasm
In an attempt to move hybrids over the chasm from interesting niche to mainstream acceptance, the auto companies have abandoned the strategy that made the hybrids such as hit in the first place: maximum mpg. How long will it take them to get them back where they were?

Car Owners Strap into the Industry’s Driver’s Seat
Felix Kramer explains how organized groups of outsiders, and the Internet, are changing the power dynamic between car companies and drivers. We could be at a point of "punctuated equilibrium," or rapid evolutionary change.

Greetings, Hybrid Car Enthusiasts,
It’s a cliché, but an undeniable fact that the "perfect storm" is brewing on the world energy landscape. Rising demand from China and India, fears of global warming, instability in oil-producing nations, and an auto industry bent on producing gas-guzzlers. That perfect storm has collided with Hurricane Katrina to send gas prices over $3 per gallon. In the New York Times, Nariman Behravesh, chief economist at Global Insight in Lexington, Mass., noted that if the disruption of supplies gets any deeper, oil prices could spike to $100 a barrel and gas at the pump could soar to $3.50 a gallon for 4-6 months. He adds that this price shock could bring economic growth for the October-December quarter to a halt. How does this economic picture affect your personal economic decision to spend a little more for a hybrid? And how has the power dynamic changed between automakers and drivers? We’ll take a look at these pressing matters in issue number 18 of our newsletter.

UPDATES
New Hybrid Incentives Update
As you probably know, on Aug. 8, President Bush signed a new energy bill into law. The new law contains a revised federal tax incentive program for hybrid cars. The new incentives—full-dollar tax credits—are more valuable than the current tax deductions, which are a reduction of taxable income. If that’s confusing to you, then don’t even try to understand the complex formula that calculates fuel economy and total expected lifetime fuel savings to establish the exact tax credit amount for each hybrid under the new law. Leave that to the professionals.

The American Council for an Energy Efficient Economy (ACEEE) ran the numbers, and produced a list of estimated tax credits based on 2005 models and "best-available" information. The numbers may shift when the government issues their tax credit figures, but it’s the best educated guess available right now. Credits range from $3,150 for the Toyota Prius to $650 for the Accord Hybrid.

Check out numbers for the full list of hybrids.

What’s Selling?
With barely a mention in the popular press, the two GM full-size hybrid pickup trucks—the Chevy Silverado and the GMC Sierra—were introduced in all 50 states. The previous model year was available only in six states. The wide availability of the pickup hybrids brings the total available hybrid models to 10. In order of their appearance on the American market, there is the Honda Insight, Toyota Prius, Honda Civic Hybrid, Ford Escape Hybrid, Honda Accord Hybrid, Lexus RX400h SUV Hybrid, Toyota Highlander Hybrid, and Mercury Mariner. (No minivans yet.) G.M. is only producing 2,000 of these trucks, but it will be the first opportunity to see if a less expensive hybrid system—about $1,500 over the conventional trucks—that produces only a 10 percent improvement in fuel economy, will appeal to consumers. The pickup’s hybrid system also functions as a built-in generator to juice up power tools, laptops, or other appliances.

Steve Poulos, chief engineer for G.M.’s belt alternator starter (BAS) and flywheel alternator starter systems, told me, "We’re trying to get to the thing that the customer will perceive as a dollars and cents value, and less of the performance. You see the competition putting a lot of emphasis on performance. Our value-based systems are focused on extracting the fuel economy." He added, "Nobody else is doing full-size hybrid trucks." I got a chance to drive the FAS Silverado at GM’s Milford Proving Grounds. I was impressed by how aggressively the idle-stop function worked. The truck went into all electric mode at a standstill much more quickly and consistently than my Civic Hybrid.

New HybridCars.com Bloggers
We are very pleased to announce the introduction of three new bloggers on HybridCars.com. The inaugural blog from Andrew Grant, the world’s first hybrid taxi driver, sets the record straight on the longevity of hybrid batteries. Energy writer Michael Sultan launched his blog, "The Second Boston Tea Party," with a call for oil prices to climb higher (not a typo) as a way to force us into a necessary energy transition. And Felix Kramer, of CalCars and Plug-in Prius fame, started his blog, "Power, Plugs, and People," with an insightful analysis of the shifting power relationship between auto companies and car owners. A condensed version of Felix’s blog entry is featured below. All of these blogs are worth a read:

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

HOT DISCUSSION TOPICS
HybridCars.com’s discussion forums went berserk in August. The original concept of the site—to create an online community of people who not only want to discuss hybrid cars, but the serious social, political and environmental issues related to all cars—has become a reality. In fact, there is so much buzz buzzing, it’s hard to keep track of some of the juiciest discussion threads. Here are a few highlights:

California DMV Clean Air Stickers Suck!
Chad wrote about the large yellow stickers distributed by the California Department of Motor Vehicles that grant solo-driving hybrids the ability to use the carpool lanes. He said: "You have to put four of them on your car. One on each fender on the right side. One behind each rear wheel. The ones that go on the fender are about two inches by three inches. The ones that go behind the rear wheels are four inches high by about six inches long. They are so UGLY!" But Penny responded, "I had the same reaction when I first saw my stickers. Yikes! Huge and YELLOW. Then I breezed home from work on Friday and into work this morning and the color or size of the stickers matters less and less with each car I passed."

Gas Mileage Discrepancy
A discussion thread revived from a few months ago explored the discrepancy between dashboard computer mpg readings and the "real and exact" mpg. Website visitors discuss all the nuances of filling up at the pumps, and suggest a number of practical (and impractical) methods for obtaining an accurate mpg measurement. For example, Tim said always fill up at exactly the same pump. Jason added, "When your car is almost out of gas, drive around the block until your car completely runs out of gas. Then putter over to the gas station using what’s left in the batteries…then fill up with as much gas you like."

OPEC Thugs Threaten Even Higher Oil and Nukes
David Miller’s Aug. 12 blog provocatively states, "We in the West either have to let those terrorizing, women-torturing thugs—the stoning of women in Iran continues—have nukes or they are going to try to bleed our economy at the pump…The need to get off of foreign oil is the most pressing issue we face." An online firestorm erupted. One site visitor, Glenn, stated in harsh terms, "Mr. Bush or more likely the Israelis may be backed into a corner by the Iranian threats, and then Tehran and much of Iran will glow in the dark for decades to come." Another visitor, Stewart, fired back, “The Americans and the British overthrew a democratically elected government in Iran by staging a coup in 1953, because that democratically elected government nationalized oil production. They did this to control the oil production. I’d call that theft…I wonder how you would feel if Iranian agents set up a coup in the U.S. for your raw materials?" Then it got nasty.

Pat Robertson, Hugo Chavez…And Hybrids
Blogger Paul Burnett drew a line between Pat Robertson’s call for the assassination of Hugo Chavez, president of the United States’ fourth-largest oil supplier, Venezuela, the price of gasoline and hybrid cars. This prompted Randwolfe to post the entire Venezuelan constitution to the discussion thread. That’s right. The entire constitution. When a few folks came to the defense of Chavez, Chris responded, "Marxists never created anything, including a hybrid car. Every car that you can buy, including the beloved Prius, was designed and built by a capitalist’s corporation. So it seems that Mr. Chavez is not really in tune with the hopes and dreams of a hybrid elite (sic). So why defend the despot? I wonder what kind of mileage the old Soviet cars got?" Lolita quickly answered, "Much better than Hummers."

THE SHIFTING HYBRID CHASM
By Bradley Berman
Are carmakers thinking about rising gas prices? You bet they are. The reality of $65 plus for a barrel of oil and $3 for a gallon of gas has put lumps in their throats. They didn’t particularly want to pause and question their collective decision to continue producing ever-larger, ever-more powerful, fuel-inefficient vehicles. Consumers have forced them to pay attention. R.L. Polk, a market research firm, surveyed 500 vehicle owners in August. 55 percent said they would change the type of vehicle they buy on their next purchase. "Loyalty among owners of large cars and full-size SUVs has dropped more than that of any other vehicle segment over the past year," said Lonnie Miller, director of industry analysis for the Polk Center for Automotive Studies. "More consumers are opting out of these gas guzzlers for compact SUVs and midsize cars." 84 percent said they would consider buying a hybrid vehicle.

American and Japanese automakers may have started to think about the effect of rising gas prices; however, that thought has not resulted in action. All the carmakers, Toyota and Honda included, are doing precious little about it. In August, Environmental Defense issued a report about the continued rise of automobile carbon emissions, which is directly tied to fuel efficiency. The study examined emissions increases from 1999 to 2003. G.M.’s model year 2003 vehicles will emit 6.4 million tons of carbon annually, the biggest carbon burden among automakers. But Toyota should not be let off the hook. Although the Toyota’s fleet-average CO2 emissions rate worsened by 2.9 percent, less than other major automakers, it still reflects a harmful trend. John DeCicco, the lead author of the report, said, "While the company cultivates a green image, Toyota is merely staying on top in what remains a race to the bottom."

Hybrids are a bright spot on the dark, carbon-choked landscape. At this point, no self-respecting auto executive can ignore the impressive hybrid adoption rates. Even G.M.’s "product guru" Bob Lutz has cried uncle, stating "It would be foolish at a time like this not to be focusing heavily on all kinds of hybrids." But a devil on the shoulder appears and nags, "We’re not making money on hybrids…Hybrids are still only 1 percent of the new car market…Americans care more about speed and size than fuel efficiency." The executives dish off these concerns to the hybrid marketing and engineering folks, and ask them to figure out if there’s a way to break hybrids out of their niche and into the mainstream.

Where Is the Chasm? Anybody Seen the Chasm?
The marketing teams, scrambling for wisdom, dust off their copies of "Crossing the Chasm" by Geoffrey Moore. In the book, published in 1991, Moore describes five distinct types of buyers of new technology: innovators, early adopters, early majority, late majority, and laggards. The "adoption life cycle" of any technology looks like a bell curve. There will always be a few risk-taking innovators and early adopters, but the steepest part of the climb is the tricky part. How do you get the risk-adverse mainstream buyer to adopt the new technology?

For Toyota and Honda, it appears that placing equal or greater emphasis on performance rather than fuel efficiency was their play for crossing the chasm. For almost a year, Ford, Toyota, and Honda have hit us hard with "no-compromise" hybrid messages. These new products have certainly increased awareness of hybrids, but if you only get halfway across the chasm, you descend into a ditch. Sales of the Toyota Prius continue to eclipse the performance-oriented hybrids.

Could the hybrid-marketing strategists have miscalculated the location of the chasm? Maybe gas prices and increasing concerns about oil dependency have shifted the lines of Moore’s categories. In other words, all Americans are starting to look more like early adopters. They are more afraid of rising gas prices than they are of new hybrid technology.

The result? The products and strategies that achieved explosive growth in hybrid cars in the past few years will remain effective for years to come: maximize mpg in a unique hybrid design. Detroit, and Japan, can listen if they like or they can ignore these signs—at their own peril.

The Wisdom of Hybrid Drivers
Maybe the marketing folks should pick up a more recent book: "The Wisdom of Crowds" by James Surowiecki. The author pulls together pop culture, psychology, and behavioral economics to explain why large groups of independent thinkers are smarter than elite cadres of insiders.

One of my favorite references in the book is to a classic experiment in group conformity by social psychologist Solomon Asch. He asked groups of people to judge which of three lines is the same as a line on a white card. When eight or nine people stand in front of you, and one by one, give the wrong answer, it’s likely that you will agree with them—even if deep down you know they are wrong. It’s easier to go along with the crowd. However, even if one of those eight folks in front you—a single intelligent voic—provides the right answer, then you are much more likely to publicly state what you know is true.

Car marketers have drawn three lines for car shoppers: size, performance, and fuel efficiency. For decades, the crowds have shouted that size and performance is the answer, when independently, many of us might choose fuel efficiency as a match for our needs. But it’s just easier to go along—unless you exercise your independent skills of analysis, as 200,000 hybrid owners will do this year. The hybrid drivers are Solomon Asch’s single intelligent voice, which gives everybody else the courage to say what we can clearly see.

The carmakers don’t need to change the strategy that produced the phenomenal success of the Toyota Prius and other hybrids. They need to pursue that strategy more aggressively. They need to stop giving the excuse that "Americans don’t care about fuel efficiency," and get busy producing more high-mpg hybrid vehicles to meet the demands of an American public. Gas prices will continue to rise. Global warming poses a huge threat. And our national interests depend on weaning ourselves from oil-thirsty vehicles.

CAR OWNERS STRAP INTO THE INDUSTRY DRIVER’S SEAT
By Felix Kramer

See the complete entry, including all the links and the many responses.

The hybrid wave that’s taken carmakers by surprise continues to astound the world with its vitality and its unexpected turns. Clearly, a growing number of Americans want cleaner, better cars.

"Outsiders" have long wanted a say about the kinds of cars produced in this country. But the industry’s insiders—carmakers, the oil industry, and government—are still firmly planted behind the wheel. Yet some outsiders have had limited success, including Buckminster Fuller, Preston Tucker, Ralph Nader, Paul MacCready, Amory Lovins and William McDonough.

We may be in the midst of what scientists call a "punctuated equilibrium" as the auto industry rapidly evolves. Now catalyzing it are organized groups of outsiders, not individuals. Here’s what’s happened very recently in ToyotaLand:

  • Four self-described "middle-aged hybrid drivers" staged a two-day LeMans-style race to see how far they could drive a Prius on a tank of gasoline. Using "pulse and glide" techniques (as described at HybridCars.com by Kip Munro), they got 110MPG. After an initial silence, Toyota found the good sense to applaud the group and send them goodies.
  • Toyota representatives asked by journalists about their reactions to Prius conversions began to sound increasingly open-minded. The pressure increased when they got criticism about the mpg of Lexus and Highlander hybrids. (See the CalCars News Archive.)
  • RAV4 EV owners and other electric vehicle advocates organized dontcrush.com, rallied and worked for months to gain support from public officials. Their campaign succeeded: Toyota agreed to extend leases and allow lease buyouts for these cherished electric compact SUVs.
  • Attention to plug-in hybrids ratcheted up significantly as advocacy streams for environment, energy security and economic development met at an intersection called "record-high oil prices."

These breakthroughs wouldn’t have happened if we weren’t all so "plugged in." As interactive media have claimed turf alongside the top-down print and broadcast outlets that bloggers call "MSM"—Mainstream Media—car culture has morphed.

Think back to the old pre-electronic media days. Car drivers who needed to get information, make buying decisions or vent their gripes went to dealers. If they didn’t get satisfaction, they contacted the company or wrote letters to local newspaper editors.

Along came email, then complex car websites. Now half of all car buyers start their shopping online. And sites like HybridCars.com blend information, blogs and a user community. Tens of thousands of hybrid car owners frequent this and other online water coolers. Through these new channels, they’ve transferred their loyalty from car makers and dealers to fellow drivers, wherever they find them. They connect online to compare what they like and don’t like.

Ironically, their conversations get magnified as the new alternative channels now shape the institutions they were trying to supplant.

First, we know car companies and auto analysts monitor online communities—and why not? They harvest immediate feedback and cumulative market research.

Second, the MSM watch the Internet closely, and their megaphones amplify the stories that bubble up. Automotivejournalists now routinely mine the groups and the blogs for the latest trends.

PRIUS+ conversions incubated in these communities, among hybrid fans who got excited about the Prius, discovered the EV button, and came together in our open-source style Conversion Discussion Group. Expertise and volunteer reinforcements arrived from the online communities of electric vehicle owners and carbon-reduction advocates.

Now CalCars is exploring the real possibility we can harness all this interest and momentum to incentivize an automaker to build Plug-in Hybrid Vehicles (PHEVs). Like a concept car going into production, we’re poised to expand our range and capabilities.

Our combined communities have enormous potential power. We haven’t yet seen what they’re capable of. So online hybrid fans, buckle up for a wild adventure.

WRAP-UP
Thanks for reading our newsletter, visiting the site, and participating in our discussion forums. To make the change we desire, all of us need to start speaking up. The car you buy sends a loud message to the automakers, the government, and your social network. We hope the content from HybridCars.com help you, in some small way, make an informed decision. Until next time,

Happy Driving,
Bradley Berman
[email protected]

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