Small Cars Hit the Big Time

The recent increase in small vehicle sales is “easily the most dramatic segment shift I have witnessed in the market in my 31 years here,” said George Pipas, chief sales analyst for the Ford Motor Company.

Hints of the Next Prius
Bigger, faster, and breaking 50 mpg. But sorry, no lithium batteries and no plug. The next Prius is on its way.

Legal Problems for Electric Car Companies
The electric car industry promises great wealth for companies that can deliver vehicles with the right combination of features, range, and prices. But for now, only the lawyers are getting rich.

Hybrid Politics
Finally, an answer to the most important question in this political silly season: Do latte-sipping, Birkenstock-wearing hybrid owners prefer Barack Obama?

Footprint Formula Explained
New federal fuel efficiency laws will consider the overall size—or footprint—of a company’s fleet. We get the skinny on the issue.

The Car-Electric Grid Utopia, With Caveats
Plug-in hybrid fans share great excitement about getting energy from the grid—and then giving it back. But according to one industry expert, “Vehicle-to-grid is kind of like hydrogen and fuel cells. It’s not just around the corner.”


Greetings, Hybrid Car Enthusiasts,
Recent news reads like science fiction. Oil prices rise above $120 and keep on climbing. New fuel efficiency laws will soon go into effect. American car buyers embrace small cars. Politician bickering over which plan provides more support for hybrids. Those are the new realities. Read on, and we’ll see if we can make sense of it all. Thanks for tuning into our newsletter and visiting


Small Cars Hit the Big Time
April sales figures for cars and trucks sent a clear and resounding message to the auto industry: Make smaller, more fuel-efficient cars, or die. About one in five vehicles sold in the United States was a compact or subcompact car. Sales of traditional Sport Utility Vehicles are down more than 25 percent this year—and full-size pickup sales have fallen more than 15 percent. And for the first time, fuel-efficient, four-cylinder engines surpassed six-cylinder models in popularity.

“It’s easily the most dramatic segment shift I have witnessed in the market in my 31 years here,” said George Pipas, chief sales analyst for the Ford Motor Co. Is this a one-time fluke or have we hit a tipping point again? According to Jesse Toprak, chief industry analyst for the auto information Web site, “This shift appears to be a permanent situation.”

Does all the focus on downsizing make you worry about vehicle safety? Based on data published by the Insurance Institute for Highway Safety, those fears might be somewhat justified. Drivers of subcompact and compact cars are more likely to be killed in a multiple-vehicle accident.

“The gap will remain until we figure out how to repeal the laws of physics,” Russ Rader, IIHS spokesman, told “They dictate that all other things being equal, people in small, lightweight vehicles are always at a disadvantage in crashes with heavier vehicles.”

Rader suggests that mid-size cars with efficient, four-cylinder engines can offer the best of both worlds. Vehicles like the Toyota Camry Hybrid and Nissan Altima Hybrid, as well as the Toyota Prius, provide fuel economy that matches or exceeds compacts, while still being large enough to contend with a SUV in an accident. “The bottom line is that you don’t have to buy a tank to be safe on the road,” said Rader.


Hints of the Third-Generation Prius
The second-generation Toyota Prius became an instant hit when it was introduced to the U.S. market in 2003. The vehicle continues to dominate the hybrid market, making up more than half of all hybrid sales. The quintessential hybrid is past due for a redesign and technology upgrade. The first hints about the third-generation Prius are starting to emerge. After speaking with a “well-placed Toyota source,” Edmunds’s Auto Observer is reporting the following details about the next Prius:

  • It will be unveiled at the Detroit auto show in January 2009.
  • The gen-three Prius will be bigger and more powerful. The engine will grow from 1.5 liters to 1.8 liters—giving a boost in horsepower from 110 to 160—and the body will be three to four inches longer and about an inch wider.
  • The combined U.S. fuel economy rating will exceed 50 mpg, by keeping the weight down to current levels and re-engineering the powertrain to extend the range of all-electric driving.
    As previously reported, the next Prius will not offer plug-in capabilities and will continue to use nickel metal hydride batteries, rather than switching to lithium ion batteries. Also, there’s no definitive word on Toyota’s plans to offer the Prius in a range of models, from compact to wagon to small SUV.
  • For greater clarity about these details and additional information, hybrid fans will have to wait until January 2009 or hope that Toyota insiders continue to leak more about the company’s plans.


    Legal Problems for EV Companies
    The road leading to an electric car future is apparently full of potholes. Here are few highlights—or, more accurately, low points— from recent news rocking the relatively small world of electric vehicles.

    Tesla Motors is suing rival Fisker Coachbuild for doing “substandard” design work on the fledgling car company’s second car—codenamed White Star. Tesla’s suit also adds that some of its proprietary technology was pilfered during the period the two companies were working together.

    Michael Papp, the head of Spark EV, is in jail after being charged with failing to deliver 14 EVs for which he was paid $100,000. His retort is that he is filing for bankruptcy—for the fourth time—but that the cars will be delivered.

    Phoenix Motorcars has been planning to sell a Korean Ssanyong EV pickup and promising to deliver an electric SUV soon afterward. The company cut its ties with its motor supplier and engineering firm, Boshart Engineering. Boshart is suing Phoenix for reneging on its contract.

    Zap, a company that has been selling a variety of electric scooters, bikes and neighborhood electric vehicles for several years, has only delivered a three-wheeled electric vehicle called the Xebra with a 40 mph top speed and a 25-mile range. The company also is in litigation over its attempt last year to import and federalize Daimler Smart cars.

    And check out:
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    Hybrid Politics
    After a Hillary Clinton supporter recently referred to Barack Obama supporters as “latte-drinking, Prius-driving, Birkenstock-wearing, trust fund babies,” Ethan, from a culinary website called, wondered whether there was actually a statistical correlation between a voter’s tastes in cars, footwear and caffeinated beverages, and their taste in Democratic presidential candidates. With no direct data available on the subject, Ethan decided to look at the per capita numbers of Starbucks locations, hybrid car owners, and Birkenstock buyers in each state to see whether it correlated to results in the Democratic primaries.

    So are hybrid car owners actually more likely to vote for Obama? Not according to this measure. Ethan found no statistically significant correlation between hybrid ownership and the percentage of Obama voters in each state. That doesn’t mean for sure that hybrid drivers don’t support Obama more, but if they do, it’s going to require some more exacting research to determine it. Interestingly, there was a correlation between the number of Obama supporters and number of Starbucks franchises in each state.

    No amount of research—or common sense—will resolve the ongoing debate about a “gas tax holiday.” First, U.S. Senator John McCain endorsed a plan to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for the summer travel season. Then, Senator Hillary Clinton jumped board with the plan, just as the price of gasoline hit a new record of $3.60 a gallon nationwide, and just before oil prices passed $120 a barrel. Senator Barack Obama, Clinton’s Democratic rival, pushed back. He said the summer gas tax break would save the average consumer no more than $30. Ironically, the Bush administration is siding with Obama. Dana Perino, the White House spokeswoman, said “it would be disingenuous and unfortunate for American consumers for them to be led to believe that there is a short-term fix” for high gas prices and energy dependence.

    We also ran down a quick summary of the three candidates’ positions on hybrid cars.


    Footprint Formula Explained
    A couple of weeks ago, the National Highway Traffic Safety Administration announced its new formula to calculate fuel efficiency standards based on the footprint of vehicle lines—rather than a one-size-fits-all approach. The proposed rules mean that Porsche vehicles will have to reach 41.3 mpg by 2015, while Chrysler’s target is 33.6 mpg. interviewed John DeCicco, senior fellow for automotive issues at Environmental Defense, to get a better understanding of the logic of the new rules. What’s the rationale behind CAFE’s new size-based formula?

    John DeCicco: There are a couple of rationales for the footprint-based formula. The most fundamental but understated rationale is the distinction between full-line and limited-line manufacturers, which is a Big Three versus Asian issue. A footprint-based standard essentially sets a lower standard for larger vehicles, where largeness is measured by footprint: wheelbase times track width. A manufacturer whose fleet has a greater share of larger vehicles will get a lower standard, so that provides a relative advantage for say, General Motors or Ford versus Honda or Toyota.

    When you get the final numbers, you get a range—like Porsche being required to hit 41.3 miles per gallon, all the way down to Chrysler’s target of 33.6 mpg.

    It makes intuitive sense. Porsche—think about the 911 and the Boxster—has a small footprint. You see that their standard is close to Suzuki’s, even though they’re in very different segments. For the footprint, you take the car, drop it in the sand, lift it up, and see where the four tire points are.

    Doesn’t it create a disincentive for car companies to make smaller cars?

    That’s yet to be seen. If NHTSA did the curve calculation technically correctly, it should require an equal level of effort regardless of the size of the car.

    In other words, they don’t necessarily want to encourage automakers to emphasize smaller cars to pass the standard.

    The whole point was to provide to an equal level of effort, because in previous one-size-fits-all standards, you had some companies—Honda was the case in point—that were always way above the CAFE standard. They don’t struggle to meet it. In fairness to Honda, that’s partly because they have some very good technology. In fairness to Ford and General Motors, it’s also because Honda’s fleet mix is smaller than Ford’s and GM’s.

    In terms of the outcome from the relative footprints, do you think it cuts slack where it shouldn’t?

    No. I’m agnostic on those issues. The companies can argue what’s fair with each other until the cows come home. There are so many different ways that people position products in the market and so many considerations. As an environmentalist, somebody who cares about the bottom line—how much carbon is this going to cut—it’s the overall average that matters.


    The Car Electric-Grid Utopia, With Caveats
    The vision of hundreds of thousands of electric cars buzzing along American highways makes most utility companies downright giddy. It’s not just the opportunity sell a lot more electricity that gets them excited. “We think there’s a fundamental game-changer here. And that’s energy storage,” said Ed Kjaer, director of electric transportation at Southern California Edison, at Auto FutureTech – Summit 2008 in Vancouver, British Columbia.

    Electric utility managers and plug-in hybrid fans get euphoric when they start talking about the ability to take that energy stored in cars, and put it back into the grid during times of peak use. “There’s a lot of talk about vehicle-to-grid,” said Kjaer. “We get all spun up about how exciting this is. Vehicle to grid is kind of like hydrogen and fuel cells. It’s not just around the corner.”

    Kjaer rattled off a laundry list of problems to be solved before the car-grid utopia becomes a reality, most notably the current lack of plug-in hybrids or electric vehicles on the market; the lack of next-generation car batteries; the lack of a smart grid that can move energy back and forth; and the lack of common codes and standards for all of these things. He said, “Today, every single battery in every single car from every single automaker and every single driver is different.” On top of that, there are at least six different lithium ion battery technologies competing for prominence in the hybrid market.

    Given these challenges, attempts to create car battery swapping systems, such as the one being attempted by Israel’s Project Better Place, seem quixotic. “With battery swap-outs, you’re dealing with 300 pounds of batteries and every one is different,” said Kjaer. “You’ve got liability issues. You have issues around how that battery has been consumed by the previous driver. It’s not there today because the technology is not mature and we don’t have standardization.”


    Well, that’s where we stand. Tons of potential. Great technology waiting in the wings. But lots of work to be done. Stay tuned for more.

    Happy Driving,
    Bradley Berman
    [email protected]


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