Hybrid Heartburn
by Drew Winter and Kevin Kelly Ward's AutoWorld, Mar 1, 2003 12:00 PM

Five years from now, the 2003 North American International Auto Show may well be remembered as the turning point for hybrid gasoline-electric vehicles (HEVs).

HEVs still are considered in many engineering circles to be overly complicated contraptions that represent the worst of both worlds for internal combustion and electric propulsion systems. Nevertheless, the world's three largest auto makers showed last January they are committed to pushing the technology into mainstream, high-volume U.S. vehicles — if they can get consumers to buy them.

General Motors Corp., the world's largest auto maker, announced it would make hybrid technology available on up to 1 million of its cars and trucks by 2007. Toyota Motor Corp., the world's third largest auto maker — which says it has a goal of selling 300,000 HEVs globally by mid-decade — showed off a hybrid version of its new RX 330 cross/utility vehicle (CUV). When launched in two years, Toyota promises it will deliver the performance of a V-8 and the fuel economy of a compact car — a potentially irresistible combination for American consumers.

The world's No.2 auto maker, Ford Motor Co., displayed a hybrid version of its Escape CUV (announced last year) that is due late this year, plus an HEV car that features a further evolution of the concept: a hydrogen-burning internal combustion engine working in concert with electric motors. Ford and some other manufacturers say such a setup could be an important “bridge” technology for the introduction of hydrogen-powered fuel cell vehicles.

Meanwhile, Honda Motor Co. Ltd. now is selling two hybrid cars, including the Civic Hybrid, considered to be the most advanced and consumer-friendly HEV introduced so far.

Although HEV proponents are buoyed by the prospects in the U.S. market, there is no interest from the market that should want them most: Europe.

Usually environmentally conscious and faced with fuel prices three times those of the U.S., Western Europe would seem the ideal location to launch HEVs in high volumes. Instead auto makers there show little interest in getting on the bandwagon.

BMW AG, Volkswagen AG, Mercedes-Benz AG and even GM's own Adam Opel AG contend that diesel powertrains, which make up about 40% of the European new car market, are the real solution to emissions and fuel efficiency challenges.

Most are waiting for U.S. regulators to get onboard and understand the benefits of diesels, an area where the Europeans could dominate if the U.S. eases its emissions standards and oil companies make cleaner diesel fuel available.

The European manufacturers contend that hybrid vehicles are forced to carry too much weight by virtue of their dual electric and internal combustion powertrains.

“Hybrids, in our summation, are in the end the worst compromise, because you put everything in the car that has to be prepared for all situations. You add weight and you deteriorate performance,” BMW Chairman Helmut Panke says. “We are convinced the hybrid way is just something like a ‘wash me, but don't get me wet’ type of solution.”

Hybrids may cut vehicle emissions and reduce U.S. reliance on foreign oil, but the Europeans have a point: HEVs still present major hurdles that promise a serious case of heartburn for their advocates.

Among them:

• Real world fuel economy and emissions that are far less than advertised, and in some driving cycles only marginally better than comparable cars with conventional powertrains.

• Costs that are $1,000 to $5,000 more than conventional powertrains — on average, too high to be offset by fuel-cost savings even with today's $2,000 tax break in the U.S.

• Modest sales, despite massive positive publicity.

• Battery issues that could impact warranty costs, customer satisfaction and vehicle residual values.

Of all the announcements GM made at the Detroit auto show in January, none was more dramatic than its promise to offer hybrid technology on up to 1 million vehicles by 2007.

Until then, GM had been relatively quiet on the subject of HEVs and other near-term strategies to reduce fuel consumption and emissions. It preferred to focus attention instead on its development of hydrogen-powered fuel cells, a promising long-term strategy that has been criticized because it isn't expected to produce salable vehicles until 2010.

Environmentalists also have roundly criticized GM for falling behind Toyota and Honda in HEV development.

Larry Burns, GM's vice president of research, development and planning, says the company's HEV strategy has been in the works for years and isn't a reaction to critics, Toyota and Honda's success or the threat of tough new corporate average fuel economy mandates on light trucks.

Instead, he argues that hybrids will play a crucial role in laying the groundwork and building a supply base for fuel cell-powered vehicles. “They are a move toward the electrification of the vehicle,” Burns says in an interview, explaining that HEV electronics and software are more similar to those used for fuel cell-powered vehicles than conventional internal-combustion engines (ICEs). Ramping up high-volume production of HEVs is an ideal way to gear up suppliers for high-volume fuel cell production, Burns says.

GM plans a 3-prong strategy with HEV systems that provide maximum flexibility to respond to consumer choice and market conditions.

The simplest of GM's HEV powertrains is a belt-driven alternator/generator that enables an ICE to shut down at stoplights and while coasting, then restart seamlessly. But the first hybrid design to reach production, beginning in late 2003, is a sophisticated version of that, an “integrated starter/generator” system GM previously announced it would incorporate into the drivetrain of its fullsize pickup truck.

Finally, the Saturn Vue platform in 2005 receives a full-blown HEV system that will boost composite fuel economy as much as 50% and allow the vehicle to reach speeds of up to 15 mph (24 km/h) on full electric power.

Ford, in addition to reprising its gasoline-electric Escape Hybrid — scheduled for low-volume production later this year — showed the Model U concept in Detroit. It's a hybrid powered by a supercharged, intercooled, hydrogen-fueled ICE.

Gerhard Schmidt, Ford vice president-research, says the powertrain could be production-ready as early as 2008. “Certainly within 10 years,” he says.

Instead of spotlighting hybrids, BMW's Panke says the German auto maker will concentrate on bringing diesel powertrains to the U.S. and making the hydrogen-powered ICE a reality.

Juergen Hubbert, who heads Mercedes-Benz, shares Panke's sentiments. He contends hybrids merely are filling a gap that will lead to fuel cell cars in the next 15 years. Until then, he says the inefficiencies of hybrids make diesels a more feasible step toward the hydrogen economy.

“Running a car with two engines to reduce fuel consumption and increasing weight is something where we feel it's not the best (solution),” he says. “There's no demand (for hybrids) outside of the U.S. Even the Japanese are selling (hybrids) in very, very small numbers in Japan. It is not an important step for mobility in the future.”

Hubbert says he's ready for Mercedes to lead a U.S. diesel movement. He envisions diesels accounting for upwards of 10% of the U.S. light-vehicle market in a few years. The problem is convincing lawmakers and regulators the oil-burners are a more practical solution to the fuel economy debate in the U.S.

Even GM's European leadership isn't convinced hybrids represent a huge step forward.

Carl-Peter Forster, who heads GM's Opel unit, says he's “not so sure” of the future of hybrids. He begrudgingly admits the industry can achieve better fuel economy improvements through other means, including diesels.

Toyota added to the hybrid hoopla at the Detroit auto show by showing off a concept with considerably more pizzazz than the thrifty but decidedly dull Prius HEV it's currently selling: A hybrid version of its new RX 330 CUV that's faster off the line than many sport sedans, while still being fuel efficient enough to make the Sierra Club happy.

Insiders say it will go from 0 to 60 mph (97 km/h) in 7 seconds, which makes it as quick as the Lexus GS 300 sport sedan. Officials will not give specific figures but say fuel economy will be equivalent to that of a compact car, and the hybrid will produce fewer emissions than a standard SUV.

The new drivetrain is called Hybrid Synergy Drive. It uses a V-6 gasoline engine in front working in concert with powerful front and rear electric motors. The system will operate at nearly double the voltage rate of the current Prius, whose electric power boost is considered wimpy by critics.

Jim Press, executive vice president and chief operating officer of Toyota Motor Sales U.S.A. Inc., declines to comment on pricing, but it is expected to be competitive.

“This is a rich chocolate soufflé without any calories,” declares a euphoric Press.

Despite the optimism surrounding the Detroit show, skepticism remains high in much of the engineering community because HEVs have yet to deliver on their promise. So far they are too expensive to be compelling to the average cost-conscious consumer.

The sophisticated battery packs, electronics software and electric motors still add $4,000 to $5,000 to the cost of a typical HEV. That makes it tough for consumers to justify buying an HEV based on fuel cost savings alone — even with a $2,000 tax deduction. More disturbing for HEV proponents is the fact that hybrids don't come close to delivering their rated fuel economy under real-world driving conditions in the U.S., where cars spend much of their time on the freeway.

Last fall, Ward's tested the newest hybrid currently available, the $20,000 Honda Civic Hybrid, for nearly two weeks. Rated at 51 mpg (4.6L/100 km) with a 5-speed manual, Ward's editors were able to get an average of only 39 mpg (6L/100 km), which is only a few miles per gallon better than a similar Civic LX sedan, which is $4,600 cheaper.

The Toyota Prius and Honda Insight HEVs also have been disappointments, with substantially lower fuel economy than expected.

GM's Burns and Toyota's Press promise that tomorrow's HEVs will be designed for U.S. driving conditions, and will deliver better real-world fuel economy. But unless fuel prices soar to new heights and stay there — or tax incentives are increased — there is a danger of HEVs being ignored in the marketplace.

HEV sales have not been impressive. Deliveries of the wonderfully engineered Civic Hybrid barely met the company's modest forecast of 2,000 per month during its first eight months of sales in the U.S., while sales of the less practical Insight 2-seater plummeted 53%. Toyota Prius sales were up 29% compared with 2001, but with only 20,119 unit sales last year, the size of the demand for HEVs remains uncertain.

“I think Prius proves the business case. We grew 51% last year in Prius (global) volume. Customers love it. And it is delivering 5-passenger, compact-car utility and performance with lower than subcompact gas mileage and a fraction of the emissions.

“People talk about the cost of fuel. And the cost of fuel is what? Cheaper than (bottled) water,” Press says.

“But that isn't the real cost of fuel,” he adds. “The real cost of fuel is: You have to add a war in the Middle East. You have to add the cost of pollution and what effect it's going to have. You have to add the fact that in 75 years we're out of oil reserves that are known right now. So we've got to become responsible. The hybrid system allows you to give high-level performance and capability and exceptional gas mileage and emissions performance.”

Despite such impassioned arguments, Toyota's much-ballyhooed 2005 sales target of 300,000 hybrid vehicles is not attainable and probably will not be realized until 2007 or 2008, according to the auto maker's leading hybrid component supplier.

The prediction, made by a senior research executive at Denso Corp., echoes Toyota's own revised forecast reported by Bloomberg News last October.

The executive, who asked not to be named, cites battery cost as the main impediment to bringing down overall hybrid system cost, still estimated at around ¥500,000 ($4,167) in the case of the Toyota Prius. He says other system components such as integrated starter-generators, battery ECUs, inverters, DC/DC converters and electric-current sensors will come down steadily in price as production volume increases.

In 2002, Toyota sold an estimated 42,000 hybrids globally, including 28,000 Prius and 12,000 Estima models. Honda, which launched the hybrid Civic in April, sold around 22,000 Civics and Insights.

Combined, global hybrid sales by the two auto makers are not expected to reach 65,000 units. Moreover, Tokyo analysts do not expect them to reach the 100,000 plateau in 2003 as had previously been suggested.

HEVs also are failing to uniformly deliver world-class emissions reductions.

Consider the emissions/air pollution scores for '03 vehicles in the Environmental Protection Agency's Green Vehicle Guide, which ranks 60 vehicles ahead of Civic Hybrid. That's excluding the Honda Insight and Toyota Prius — “true” hybrids because their designs allow for exclusive propulsion by electric motors.

And all rely solely on gasoline-fueled internal combustion engines. These toppers are not just the plausible vehicles such as Ford Focus and Honda Accord. They include the unlikely Volvo XC90 CUV and the decadent (in relative terms) BMW 325i Sport Wagon.

Viewed by purists as a “mild hybrid” or “mybrid” because it never runs solely on its electric motor, the new Civic rates a seven score out of a possible 10 because EPA rules suggest it has the potential to spew 7.9 to 11.8 lbs. (3.6 to 5.9 kg) of pollutants per 15,000 miles (24,139 km).

Batteries pose yet more issues that could have HEV advocates reaching for the antacid tablets. As the sales numbers of HEVs grow into the millions, batteries could impact residual values, warranty costs and customer satisfaction — and pose disposal issues, considering today's HEVs typically carry around about 110 lbs. (50 kg) of batteries to power their electric motors.

Toyota warrants the expensive nickel-metal hydride (NiMH) Prius batteries for 10 years and 100,000 miles (160,930 km), and Honda warrants the batteries on the Civic Hybrid for eight years and 80,000 miles (128,744 km). But in today's marketplace, vehicles typically last far longer than that while batteries don't. Will the value of older HEVs be destroyed by battery replacement costs?

That's not likely, say most industry experts. Instead, they say eight or 10 years from now the price and size of the batteries likely will come down, and manufacturers — or the government — may devise a way to replace them at minimal cost.

GM's Burns says the majority of GM's hybrids will use conventional low-cost lead-acid batteries, which are easy to recycle and will limit the auto maker's cost and warranty exposure.

Officials at Troy, MI-based Texaco Ovonic Battery Systems, a supplier of NiMH battery technology for HEVs, say disposing of used NiMH batteries won't be a problem. They are not toxic and have a high scrap value because of their high nickel content. Texaco Ovonic also is developing other innovative applications for used HEV batteries, such as power sources in remote areas, particularly for developing countries, says Jim Greiwe, vice president of product development.

That all sounds nice. But even if all the technical limitations surrounding hybrids are solved, it still is difficult to quarrel with the European logic that favors diesels.

Here's an example: Toyota's European Yaris compact car gets better fuel economy from its conventional 1.4L turbodiesel powertrain than does the highly touted (and more expensive) Prius hybrid-electric vehicle sold in the U.S. Yet the two are built on the same platform and are essentially the same vehicle.

The diesel Yaris is rated at 56 mpg (4.2 L/100 km) in the combined Euro test cycle, while the Prius HEV is rated at 52 mpg (4.5 L/100 km) city and 45 mpg (5.2 L/100 km) highway.

The comparison suggests that a vehicle with a modern diesel powertrain — at least in Europe — has the advantage over HEVs in the areas of fuel economy, cost, weight, lifetime service needs, expected resale value and certain aspects of performance.

Without direct competition from diesels, HEVs should have an easier time gaining a foothold in the U.S. But unless fuel prices skyrocket, the price of the technology drops, or tax incentives are increased, the future of HEVs seems far from assured.
— with Katherine Zachary, Roger Schreffler, Bob Brooks and Eric Mayne