Big 3 play catch-up in the hybrid game

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But automakers have different approaches

By Richard Truett
Automotive News / April 11, 2005

There’s no polite way around it: Detroit’s automakers misjudged the consumer appeal of gasoline-electric hybrid vehicles. The Big 3 now are working to overcome what some view as a major strategy blunder and a public relations misstep.

General Motors, Ford Motor Co. and the Chrysler group are favorite targets for environmentalists and others for building gas-guzzling vehicles – and for the lack of hybrids in their lineups.

Honda Motor Co. and Toyota Motor Corp. will sell about 200,000 gasoline-electric hybrids in the United States in 2005. Honda offers the Insight, Civic and Accord hybrids.

Toyota has the top-selling hybrid, the Prius. It adds the Lexus RX 400h SUV on Friday, April 15, and, in June, a Highlander SUV hybrid. Toyota is poised to sell at least 100,000 Prius hybrids in the United States this year, double sales in 2004.

By comparison, the Big 3 combined will sell only about 22,000 hybrids in the United States this year. Most of those – 20,000 units – will be the 2005 Ford Escape Hybrid.

Of those built by the Big 3, only the Escape Hybrid is a full hybrid, meaning that it can drive on either electric or gasoline power. The others – the Chevrolet Silverado and GMC Sierra pickups and Dodge Ram pickup – are mild hybrids. Mild hybrids use an electric motor to assist the gasoline-powered engine, but the motor alone does not drive the vehicle.

Important technology

Ford will boost the number of hybrid models it offers beginning in the 2007 model year.

"It’s a very important future technology," says Dave Szczupak, Ford Motor’s vice president of powertrain operations.

While that may be true, Ford has not given volume projections for its upcoming hybrids, which will include the Mercury Milan and Ford Fusion mid-sized cars and Mercury Mariner and Mazda Tribute SUVs. But Szczupak hints that they will most likely be low-volume niche vehicles.

"Relative to the volume, (integrating hybrid powertrains) takes up a disproportionate amount of my time. But it’s an emerging technology, and we need to drive that stuff forward," he says.

Szczupak’s counterpart at General Motors, Thomas Stephens, group vice president of powertrain, is not thinking about hybrids in the same way.

GM, under pressure to improve its bottom line as well as boost it corporate average fuel economy numbers, aims to make money from hybrid sales.

Ford does not make money on the Escape Hybrid but hopes to turn hybrids into a profitable business.

Toyota and Honda say their hybrids make money. But because of the high cost of battery packs, proprietary technology and low volumes, many engineers and analysts say they don’t believe either company’s claim.

While Ford has developed its technology in-house, GM and DaimlerChrysler signed a deal late last year that calls for both automakers to split the cost of developing and producing a hybrid powertrain tailored to specific GM or Chrysler group vehicles.

‘Not enough’

Stephens says the key to profitable hybrids is in high-volume production, more than 100,000 units per year.

"One goal always is to deliver higher levels of power, torque and fuel economy using cutting-edge technology," Stephens says. "But that’s not enough. You need to have cutting edge, cost-effective technologies that you can get into very high volume. If you don’t do something in high volume, you really aren’t doing that much for the environment."

GM and Chrysler plan to use the Two-Mode hybrid system they co-developed in trucks. They say it achieves a gain in fuel economy of about 25 percent while improving acceleration.

Two-Mode uses a pair of electric motors to drive the vehicle, Stephens says. One motor is used at low speeds, such as stop-and-go city traffic, while the other helps drive the vehicle at highway cruising speeds. For example, in a Prius, the electric motor does nothing at highway speeds. Only the gasoline engine sends power to the wheels.

"These technologies can have no tradeoffs," Stephens says. "It used to be that if you got better performance you didn’t get high fuel economy, or vice versa."

In late 2007, GM plans to roll out its hybrids in the Chevrolet Tahoe and GMC Yukon. If the system works as planned, GM’s biggest SUVs will get nearly 20 mpg in the city and around 24 on the highway.

Bob Lee, Chrysler group’s vice president of powertrain product engineering, says he is working on integrating the hybrid powertrain into the 2008 Dodge Durango.

Getting the Two-Mode system built and working perfectly on time and on budget is a huge job, Lee says. But he says both company’s engineers have found a lot of common ground, and the project is moving smoothly.

"It’s a very large challenge technically and from a business standpoint," Lee says.

GM and Chrysler are negotiating with a third partner on the project, which would further spread costs and bring more engineers into the project.

Ford, whose Escape Hybrid is selling briskly, already has made big strides to get in the game. If the GM-Chrysler hybrid powertrain comes to market and lives up to expectations, both companies have a real shot at closing the gap with Toyota and Honda.

Then the race will be on.