Hybrid Vehicles Spell Savings for Those Who Pay the Price

by Terry Costlow

We are seeing more and more hybrid vehicles on U.S. roads as their popularity grows, but questions remain about their general acceptance and their overall impact on meeting tighter government regulations for fuel economy and low emissions.

Automakers altered their view of electric power dramatically after all-electric vehicles failed to gain ground in the marketplace. “Plugging a car in” is no longer in the plans; instead, new vehicles use brake-generated power to help the engine recharge battery packs. The fuel savings can be significant. The hybrid version of Ford’s Escape SUV that should hit the market this summer has a government rating of 35 to 40 miles per gallon (mpg) for city driving, according to Mary Ann Wright, chief engineer for Ford’s Hybrid Escape program. This rating is roughly double the 19 mpg rating of the conventional V-6 version and should help trim emissions substantially.

However, the fuel savings come at a price. “Hybrids will always carry a cost premium over gas engines because they have more components,” said David Hermance, executive engineer at Toyota Technical Center of Ann Arbor, Mich.

Most studies show that hybrid car buyers are willing to spend more to play a part in cleaning up the air. A J.D. Power and Associates survey shows that 43 percent of car buyers would consider a hybrid if the price differential between hybrid and conventional models were $1,500; however, only 20 percent would consider the switch with a price differential of $4,000. “But that’s 20 percent of 17 million, which is still a significant number,” said Walter McManus, executive director at J.D. Power & Associates.

Recouping that pricing premium won’t come from fuel savings. It will take someone who drives 15,000 miles per year close to a decade to recoup the premium price they pay for a hybrid, which generally costs $2,000-$4,000 more than a similar gas-only model. However, McManus noted that drivers who expressed the most interest in hybrids expect sharply higher gasoline prices than others. If they’re correct, they would recoup their investment more quickly.

Automakers largely say that hybrid driving performance will rival that of comparable gasoline-powered cars. “We’re selling SUVs based on performance, and then giving them good fuel economy and hoping (consumers will) tell their friends,” Hermance said. That word-of-mouth will play a significant role in helping hybrids gain market acceptance.

Hybrid Technology: It’s Not Just for Cars

Although cars are getting most of the current public attention, other transportation areas are applying hybrid technology. General Motors is having solid success with its Allison bus program, which could help public transportation agencies trim fuel consumption and emissions. The Seattle area’s regional transportation agency has purchased hundreds of hybrid buses, and a handful of other cities have begun pilot programs. The buses' significant size and operating conditions can play a significant role in reducing the nation’s fuel consumption.

Vehicles over 4,900 pounds consume 20 percent of the nation’s fuel, noted Peter Savagian, engineering director at GM Hybrid Powertrain Systems. Because of this, “you get the most fuel savings when you apply hybrids to the largest vehicles.”

However, others note that cars consume the largest percentage of the gasoline burned for ground transportation, so hybrid cars can make a significant dent in U.S. fuel imports. “It takes only 14 small- to mid-sized hybrid vehicles to match the fuel savings of one bus,” said Hermance, who estimated that since Toyota began shipping its Prius hybrid in 2000, that model alone accounts for 25 million gallons of gas in the United States alone.

Can Other Alternatives Compete?

The jury is still out on the short-term market success of hybrids. Some analysts suggest that hybrids are the only alternative technology that will help automakers meet corporate average fuel economy (CAFE) regulations during the next several years. Might other alternative technologies, such as fuel cells, compete or replace hybrids in the coming years? “I doubt it,” said McManus.

 

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