FORD ESCAPE HYBRID
Ford via AP
The 2005 Ford Escape Hybrid looks like its gasoline cousin. It costs $3,300 more, but gets nearly double the mileage.
msnbc.com news services
updated 1/17/2005 11:24:03 AM ET 2005-01-17T16:24:03

Despite a tiny presence in the U.S. car market, hybrid vehicles were the most popular topic at the North American International Auto Show last week as auto executives gauged the future of the gas/electric system and other engine novelties.

After a year with 88,000 hybrid units sold through just three brands — Toyota Motor Corp., Honda Motor Co. and Ford Motor Co. — sales of vehicles with gasoline-electric engines are expected to more than double to at least 200,000 units in 2005.

Some rosy forecasts for the end of the decade range from 500,000 units to 1 million. But while pioneer Toyota has aggressive goals to eventually offer the hybrid option on its entire fleet, many major players remain cool on the vehicles, opting instead to promote other forms of fuel-saving technology such as cleaner diesel, hydrogen-powered fuel cell vehicles and advanced direct injection systems.

Hybrid vehicles twin a combustion engine with an electric motor and battery in which the act of braking captures lost energy, enabling it to save fuel and emit fewer pollutants.

With the hype surrounding hybrids picking up steam and consumers still lining up months to get their hands on Toyota’s Prius sedan, analysts like Thad Malesh at Automotive Technology Research Group are optimistic about their prospects.

Malesh projects U.S. hybrid sales at 1 million units at the turn of the decade — or 6 percent of the overall auto market — with a projected 50 models available by then.

GM move seen as significant
Last month, top automaker General Motors Corp. made headlines by announcing a tie-in with rival DaimlerChrysler AG on hybrids in an apparent about-face after being one of the most vocal skeptics of the technology.

“The GM-Daimler agreement makes the 1-million-unit forecast conservative,” he said. “GM is really the question mark. If they really get serious — and this is the first sign that they are — the hybrid market could really take off.”

GM now sells only “mild” hybrid versions of the Chevrolet Silverado and GMC Sierra pickup truck in limited numbers, but has plans to expand its hybrid line-up to 12 models over the next several years. So-called mild hybrids achieve only about half the fuel savings of full hybrids.

Eventually, GM envisions allowing customers to choose a hybrid system based on how much they want to pay and how much gas they want to save.

Toyota has received more than 11,000 orders so far for the Lexus RX400h ahead of its April launch, more pre-sale interest than it has had for any other model. The Highlander SUV hybrid due in September has counted nearly 100,000 interested buyers.

Bumps in the road?
But consumer research firm J.D. Power and Associates foresees slower growth for hybrids. The roughly $3,000 price premium on hybrid cars will likely put off most customers, said Anthony Pratt, manager of J.D. Power’s Global Powertrain arm, noting that 40 percent of Prius buyers have a six-digit income.

Cleaner diesel and other alternative powertrains and fuel options may also emerge in the next few years to compete with hybrid technology, limiting the sales rise, he said.

Volkswagen AG is planning to make cleaner diesel engines available on almost every model offered in the United States. The engine now accounts for a tenth of U.S. sales.

Nissan Motor Co. is another vocal hybrid nay-sayer. Experts estimate the dual-engine system costs up to $7,000 more to make than conventional gasoline-only engines, with only half the costs passed on.

“We’re careful about hybrids,” Nissan Chief Executive Carlos Ghosn said at the Detroit show. “The value of offering them has to be superior to the cost.”

Automakers also have to educate consumers who are still skeptical about the benefits and mechanics of hybrids. Throughout this year’s auto show, prominent signs tell consumers that hybrids don’t need to be plugged in, which automakers say is one of the biggest misconceptions about the technology.

Automakers also are trying to convince consumers that hybrids can be just as powerful as traditional vehicles. It’s no accident that at the Detroit show, Toyota is prominently displaying a Prius hybrid that achieved 130.7 miles per hour at the Bonneville National Speed Week in Utah last August.

“It was amazing to see the hot-rodders come to accept it as just another variance,” said Bill Reinert, the U.S. manager for Toyota’s advanced technology group. Reinert believes hybrids will be about half the market by 2025.

Eyes on fuel cells
GM’s CEO Rick Wagoner also repeated his company’s line that commercializing zero-emission, hydrogen-powered fuel cell vehicles was the ultimate goal, with hybrids merely an interim solution to advance fuel-cell technology.

Slideshow: Fuel cell specs Fuel cells combine hydrogen and air to create electricity to power a vehicle. The only emission is water vapor. But fuel cells are still prohibitively expensive and obtaining hydrogen has yet to prove cost effective.

Even Wagoner's counterpart at Honda, one of the leaders in the technology and the first to sell a hybrid in the United States six years ago, said he believed fuel cell vehicles would be most popular.

“After all, hybrids only achieve about 20 percent more fuel economy on average than regular cars,” CEO Take Fukui said. “I think we’ll see FCVs taking over in the end game.”

Tom Stephens, GM’s vice president for powertrains, said he expects hybrids will never command more than 15 percent of the market. But in the meantime, automakers can’t afford to sit back and wait while rivals develop better hybrids, diesels and fuel cell vehicles.

“None of what you see here individually is a silver bullet,” Stephens said. “We have to improve on all fronts.”

Reuters and The Associated Press contributed to this report.

Video: New cars go clean, green

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