Invasion of the Green Machines
High gas prices have drivers chasing after hybrids. Is it a fad or a phenom?
Hybrids, in fact, are a key cog in Toyota's strategy to become the world's biggest and most successful carmaker. In 2003, Toyota surpassed Ford to become the world's second-largest auto manufacturer. And the company's ambition to grab 15 percent of the global auto market sometime after 2010 would put it in a position to overtake GM, which has been No. 1 since 1931. "Ford and GM are going to get smaller," says Mark Oline of Fitch Ratings. "Toyota will get bigger."
Detroit's sliding fortunes have routinely been blamed on insular thinking and a disconnect with consumer tastes. Yet there's sound logic behind a go-slow approach to hybrids. Higher gas mileage may mean fewer stops at the filling station, but that doesn't mean hybrids necessarily save money. The battery pack, extra motor, and other technology that come with a hybrid typically add $3,000 to $4,000 to the base price of the car. Even with gas at more than $2 per gallon, fuel savings may not pay for the premium. According to a savings calculator on Honda's website, for instance, the Accord hybrid, if driven 12,000 miles per year, would net just $1,595 in savings over a decade, compared with a regular V-6 Accord. Byrne figures that at the rate he drives, it will take seven years for the mileage savings to offset the higher price of the Highlander hybrid. That's a year longer than the average American keeps a new car, according to R. L. Polk & Co. Other savings come from a $2,000 federal tax deduction--which President Bush last week proposed raising to $4,000--and state or local incentives.
Still, to many automotive engineers, that kind of math makes the case against hybrids--not for them. They find it perplexing that consumers would pay extra for a feature that adds little to the driving experience and takes so long to pay for itself. And while hybrids get their best mileage in stop-and-go traffic, where the electric motor is doing a lot of the work, the mileage boost is modest on the highway or in the kind of suburban driving many Americans do. "There are applications where it's great and applications where it's not so great," says Dieter Zetsche, chief executive of the Chrysler Group. Failing to quickly recognize the emotional appeal of the technology, he says, is one reason Chrysler doesn't yet have a full hybrid.
Like sports cars and convertibles, hybrids have become popular for reasons that have little to do with practicality. The only noticeable difference on the road is the golf-cart effect: The gas engine shuts down at stops to save gas, then starts up automatically when you press the accelerator. But hybrids also come with dashboard power meters and other funky instrumentation meant to appeal to tech hounds and make the cars seem cutting edge. When Ramsey Brous of Ithaca, N.Y., bought an Accord hybrid last December, he knew that he'd be paying extra to be an "early adopter" of the technology. That was fine with the 38-year-old bakery owner, who's more interested in helping push the development of hybrids than saving a few bucks. "I'm willing to be a guinea pig to get the car industry to pay attention to mpg," he says. Like many other hybrid fanatics, he religiously tracks his mileage in a notebook he keeps on the console between the front seats. His only complaint, ironically, has been . . . low mileage. Brous's Accord has averaged less than 24 mpg, about 30 percent below advertised figures. He blames the cold--a frequent complaint of hybrid owners in northern climates--and says his mileage has risen along with the temperatures.