Lets hope!!

Hybrid Cars Are Catching On

January 28, 2003
By DANNY HAKIM
www.nytimes.com


DETROIT, Jan. 27 - Hybrids, vehicles that save gasoline by
combining electric motors with internal combustion engines,
are emerging as the first alternative-powered cars to show
signs of catching on with automakers and some consumers
since the automobile's early days.

Toyota and Honda are already selling tens of thousands of
hybrids, and General Motors and Ford, worried about ceding
another fast-moving market to the Japanese, have announced
plans to join them. The hybrid's rise has been encouraged
by pressure from environmentalists and regulators,
particularly California rules curbing greenhouse gases and
smog-forming pollutants.

"Hybrid technology is one that has great appeal because we
don't have to really invent anything; we know they work,"
said William Clay Ford Jr., Ford's chairman, in a recent
speech. "If these vehicles don't get customer acceptance, I
really don't know what we do next."

A hybrid's battery is recharged by the internal combustion
engine and by collecting energy when the car brakes. The
battery powers an electric motor that supplements, or takes
over for, the gasoline-powered engine. In the Honda Civic
hybrid, an electric motor assists when the car is climbing
hills or accelerating sharply. In the Toyota Prius, the
electric motor takes over at low speeds. In both, the gas
engine shuts off when the car stops.

Hybrids have until now been something of a curiosity and
account for a small fraction of overall sales. Only three
models - all small cars - are available, one from Toyota
and two from Honda, and they cost a few thousand dollars
more than conventional cars. About 150,000 have been sold
worldwide since hybrids were introduced in the late 1990's,
fewer than the number of vehicles typically produced by a
single auto factory in a year.

But carmakers now appear ready for a much broader rollout.
Earlier this month, at the North American International
Auto Show here, G.M. - previously the industry's most vocal
skeptic - publicly embraced the technology. The company
said it would sell a hybrid version of its Saturn Vue sport
utility vehicle in 2005 that would approach 40 miles a
gallon in fuel economy, compared with mileage in the low
20's for current models. G.M. said it would offer vehicles
with more limited forms of hybrid power, too, promising 10
to 15 percent improvements in fuel economy on four other
models by 2007.

Also at the auto show, the annual beauty pageant where the
industry trots out its latest designs and biggest
pronouncements, Toyota said it would sell the first luxury
hybrid, a Lexus sport utility vehicle, starting next year -
part of a plan to sell 300,000 hybrids annually by
mid-decade.

Ford plans to sell what will probably be the first hybrid
sport utility vehicle, a version of the Escape, at the end
of this year, and showed off a new hybrid prototype called
the Model U.

Even the Army, which pays as much as $400 a gallon in
battlefield fuel costs, had a hybrid on display - a hulking
diesel combat vehicle, built by G.M., that is one of
several prototypes being considered for service within a
few years, including hybrid Humvees.

"You run those things on battery power; there's no noise,"
said Maj. Gen. Ross Thompson III, the head of the army's
Tank, Automotive and Armaments Command, explaining the
appeal of hybrids for the military. "For a reconnaissance
mission, or if you want to not be noticed, you can use the
batteries."

A century ago, in 1903, gasoline-powered Oldsmobiles
shouldered past steam-powered Locomobiles to become
America's top-selling brand. Never again would electric or
steam cars rule the road. There is scant suggestion that
hybrids may replace gasoline-powered cars in the same way.
Among other things, two motors cost more than one.

But Stephen Girsky, an auto analyst at Morgan Stanley,
predicts that hybrids could grow to 10 to 15 percent of
American vehicle sales, which approached 17 million last
year. Government incentives, gas prices and how much
manufacturing costs can be reduced will be important
factors, he said.

John Casesa, an analyst at Merrill Lynch, said that because
the Japanese "view this as a core technology over the next
decade," domestic automakers have to respond. "Inevitably,
we're moving toward a future with higher fuel economy
standards, risk to energy supplies and higher environmental
consciousness," he said. "So there's a market pull here."

In addition to representing a response to the latest
competitive threat from Japan, Detroit's hybrid plans are
good for public relations, especially as hot-selling sport
utility vehicles come under increasing criticism for how
much gasoline they consume. A recent ad campaign by an
evangelical group suggested that Jesus would find sport
utilities morally unfit; another, orchestrated by Arianna
Huffington, argued that these vehicles increased American
reliance on oil from the Middle East.

But there remains considerable debate within the auto
industry about whether hybrid technology is too costly to
become universal - and whether its advantages are so modest
that it represents a diversion from more worthy approaches
to improving fuel economy.

"Right now," said Wolfgang Bernhard, chief operating
officer of the Chrysler division of DaimlerChrysler,
"everybody is jumping on the hybrid bandwagon and saying
this is the most important thing and without it the world's
going to end. It reminds me of the hype we had around
e-business in the early 90's."

Daimler this year plans to sell a small number of hybrid
Dodge Ram pickups tailored for contractors, who could use
the trucks as mobile power generators. The company's German
executives, though, prefer the updated diesel-engine
vehicles already prevalent in Europe; diesels achieve 25
percent better mileage than comparable gasoline-powered
cars. American environmentalists, worried about emissions
of smog-forming pollutants, oppose a broad reintroduction
of diesel-powered vehicles.

To Japanese-based carmakers, the choice is clear from an
environmental standpoint. Hybrids are "the solution for
today," said James E. Press, executive vice president of
Toyota Motor Sales U.S.A.

"What's the cost of fuel?" he said. "It's not $1.80 a
gallon. It's how much does a war in Iraq cost? How much
does the fact you've got 75 years of this stuff left on the
planet cost? And then what's the cost of pollution? At some
point, the industry has to recognize it."

Last year, Toyota sold more than 20,000 of its Prius
subcompacts, making Prius, which gets about 40 miles per
gallon, the best-selling hybrid in the United States.

With a base price of $20,500, a Prius costs about $5,000
more than a Toyota Corolla. That is a considerable gap,
though Prius buyers can take a $2,000 income tax deduction.
Toyota says it now makes some profit on each Prius it
sells, if the research-and-development costs are not
factored in, but the company will not say how much less
profitable hybrids are than its conventional vehicles.

Toyota executives insist that the cost differential can be
brought down significantly. For example, Mr. Press said the
electric motor in a sport utility vehicle could be
configured to power the rear wheels, eliminating the need
for, and cost of, a conventional four-wheel-drive system.

In addition, Congress has considered adding more tax
benefits for buyers.

Rick Wagoner, G.M.'s chief executive, said such incentives,
which could quickly accumulate into a considerable
government subsidy, are critical to the future of hybrids,
because G.M. does not intend to sell its hybrids at a loss.


"For this to go, it's a team sport," he said. "We're going
to need the government in."

G.M.'s hybrid plans were promoted in full-page newspaper
ads and greeted as something of a road-to-Damascus
conversion. A Sierra Club statement likened the
announcement to "Nixon going to China." Nicholas V.
Scheele, Ford's chief operating officer, described himself
as "baffled," noting that only recently G.M. had dismissed
hybrids as too costly.

Lawrence D. Burns, G.M.'s vice president for research and
development, attributed the change of heart to the early
success of Toyota and Honda and "the uncertain future in
2005 and beyond with regulatory requirements and gasoline
prices."

Robert A. Lutz, G.M.'s vice chairman for North American
operations, was more blunt. "You just can't fly in the face
of public opinion," he told The Detroit News. "It would be
self-defeating to constantly say to ourselves, `It's not
gonna work, it's not gonna work.' "

Since the days of Thomas A. Edison, the auto industry has
been trying to make a credible alternative to the internal
combustion engine. Edison himself was a pioneer of the
battery-powered car, though he is said to have told a young
Henry Ford that his idea for a gasoline engine sounded
pretty good.

The first car bought by the government, during Theodore
Roosevelt's administration, was a Stanley Steamer, a
steam-powered car. In the 1950's, Chrysler was so sure that
cars powered by jet engines would be the future that it
built a small fleet of them. Today, the industry is
convinced that future generations of automobiles will be
propelled by hydrogen fuel cells, which generate
electricity through a chemical reaction.

If debate continues on hybrids, some clarity is emerging on
other alternative technologies. The future seems notably
dim for battery powered cars, whose batteries do not last
very long and take hours to recharge.

"At the moment I think it's being put to rest," said Fujio
Cho, the president of Toyota, adding that his company is
"hardly selling any."

Carlos Ghosn, chief executive of Nissan, agreed that
battery-powered cars are "completely obsolete," though
Nissan continues to lease battery-powered Altra station
wagons to California utilities.

Then there is the fuel cell, for environmentalists and even
many auto executives the nonpolluting ideal of alternative
fuel technologies. Not only did fuel cells power the inside
of lunar landers, they emitted water for astronauts to
drink. But will they soon supplant the internal combustion
engine?

"Today a fuel cell car probably costs about - I'm going to
be optimistic - $700,000," Mr. Ghosn said. "We're far from
sticker price, eh? We're going to have to get it down to
$20,000, $30,000."

http://www.nytimes.com/2003/01/28/business/28HYBR.html?ex=1044783572&ei=1&en=b4173513a92e58af