Toyota Prius (First Generation)

knieser · July 2000

How does a Japanese crash test rating of 'B'
translate into US number-of-stars?

Does the Prius have EPA MPG ratings yet?

Being from Ohio, how can I find out if I'm one
of the 900 lucky ones in the first order?

So in Japan they do not have CD players within
their Prius's? (OR) Is the US Prius so different
that the Japanese Prius CD players will not work
in this car?

Drove a White Prius yesterday. Very nice.
Placed two car seats with kids in the back
and either me or my wife could squeeze in the middle. The engine power seems similar to the
Prizm we had 2 years ago. The display is cool!

davidfs · July 2000

Is it possible that Sheine and gibran might work as salesmen at a Honda Dealership? Just a thought...

shaddad · July 2000

People interested in adding Cruise Control may want to check out the explanation from Toyota's "Priusman" on the Yahoo prius discussion:
http://clubs.yahoo.com/clubs/toyotaprius

In summary, it would be prohibitively expensive/difficult.

The 900 cars referred to is actually one month of non-fleet production for the nation.
As I mentioned in #148, If your dealer got your order in on June 29-30 (the first two days of orders), then you will get one of the July production/August delivery units. The next couple weeks of orders were filled with Aug. production/Sept. delivery.

gckorn · July 2000

The following is a compilation of posts by the Prius program director, who is posting on the Yahoo/Prius message board. He calls himself "Priusman," and has answered quite a few questions:

In very general terms, orders accepted from 6/30-7/1 are likely to be July production/late july-August deliveries. Orders received Sunday on are likely to be August production. Our production capacity is approx. 1,000/month. Regarding options, your delivering dealer can install the mats and cd. PM

The car is in fact a 2001 model. At the time of launch and for the first few months of production only the white, silver, aqua and green colors are available. Cruise control, as you are aware, is also not currently available. If customer demand is strong we will evaluate adding the feature, but due to production and order scheduling its unlikely before Oct/Nov.

Toyota provides five complimentary maintenance services for our Prius to be performed at the first five 7,500 mile/6 month intervals. If you drive your Prius under special operating conditions, you are responsible for the cost of additional required maintenance. The maintenance includes oil and filter changes, tire rotations, air conditioning filter change, air filter change, coolant replacement, etc at the appropriate intervals. Hope that this helps..PM

The Japanese spec numbers are not that relevant. The 2nd generation car is significantly improved. It is faster, quicker, cleaner, and a little heavier with lighter and more powerful batteries. Additionally from a straight test to test comparison, the U.S. EPA city cycle or LA4 as it is known operates at higher speeds compared to the Japan city cycle. The japan city cycle is at much slower speeds (I think 17 mph vs. 22 mph - but i'll have to check with the regulatory engineers)and more stopping to replicate the more congested conditions found in Japan. Apples and Oranges. U.S Spec Prius EPA rated at 52 city/45 highway/48 combined. Priusman

An individual consumer purchaser of a Prius may be entitled to a federal tax deduction of up to $2,000 for Prius purchases completed on or before December 31, 2001. This deduction is not available to a consumer lessee of a Prius. The overall federal tax benefit will depend on your individual tax situation, particularly if you claim depreciation deductions on your Prius. Contact your individual tax adviror for further information on how you can take advantage of this important federal tax benefit for qualified clean fule vehicles like Prius (Internal Revenue Code Section 179A). Priusman

Based on what my engineers advise, it will be nearly impossible to add cruise after the fact due to a unique wiring harness. And with the sophistication of the 13 on-board ECUs I don't think there will be any aftermarket applications anytime soon. It will be extremely difficult if not impossible to add this feature (cruise control) after production. Major components which would require replacement or adds would include ECU, actuator, stalk and potentially a wire harness.

On the cruise control, as I have stated to other concerned consumers, it will be very difficult if not impossible and potentially expensive to attempt to add after production. Several components will need to be added or replacement.
The Factory Navigation system cannot be added after production since it requires a unique wiring harness. As for the center screen, after the ignition switch is turned on "Toyota" and our logo appear for a few seconds before the "Energy" monitor appears. This screen with the illustration of engine, motor, battery and wheels describes how the hybrid system is currently operating, energy flow and battery capacity. It updates every 2 seconds. Behind that is a fuel consumption screen which displays average fuel consumption and energy recovery in five minute increments over the past 30 minutes and current fuel consumption. Both these screens feature outside temperature at the top. When the display button is pushed the screen will show the six radio station pre-sets plus contrast and brightness controls. A day mode for screen brightness when the lights are on is also found here. Your AM/FM pre-sets and tuning is found here as well as bass, treble, balance and fade adjustments. Cassette controls also appear on the screen. Priusman

Under U.S. DOE guidelines the Prius is not considered an AFV (Alt fuel vehicle) since the primary energy source is the gas powered ICE. It will not qualify for fed and state fleets to meet their EPACT requirements because the majority of operation is in ICE mode. As a broad description I usually describe it the way you refer to the Insight as a ICE with electric assist. Just stretching a gallon of gas with the electric power. Both Insight and Prius are HEVs but the way that the systems operate does differ dramatically...resulting in an emissions rating 75% cleaner than the Insight. SULEV vs ULEV. PM

The warranty for the Hybrid battery pack and select HEV components is 8 yrs/100,000 miles. Battery life is expected to exceed this, at least 10-12 years. When the powertrain warranty of a conventional car expires after 5 yrs/60,000 miles you can expect considerable operation life beyond that. The same holds true for the Prius battery pack. Currently there is no need for a consumer to worry. The only parties likely to have to purchase a battery pack would be an insurance company in an accident repair. But this is very unlikely due to the location of the battery pack. It would have to be a significant accident to require such and in that situation the car would likely be totalled before repair. Full battery pack MSRP is published in excess o $4,500. But as you indicate, we do expect the price to decrease over time as more economy of scales are met. We don't see this as a big issue for consumers. If there is that concern, we provided a very competitive lease program for those consumers who do not want to make a long term commitment. PM

The engine will remain on during initial start up until the two inputs are met: coolant temp and battery SOC. Once these two level are attained the engine shuts off automatically, but the car is still ON. So at rest, the car can actually be on (with the key in the IG switch ON position). And will turn itself on to run the AC for example.....Priusman

This is the reason why the newest generation of Prius has a rear spoiler. I too was surprised a year ago during final model review to see that the Chief Engineer had added a spoiler. We felt that it didn't fit with the personality of the car. But chief engineers are very practical types and equipment is never added on impulse. We probed. Many of you may have heard these old proverbs over the years that rear spoilers don't kick in on impact until you start approaching very high speeds. I too was of this understanding.
Then we were presented with the data. The rear spoiler apparently really cleans up the air flow at the rear of the vehicle and significantly contributes to its CD (coefficient of drag) which is .29, equal to our new Celica. The front tire fairing, rear tire fairing, rear spoiler and flat under body all contribute. Big deal. So what if its slippery. How does the CD translate in practical terms for Prius. The impact came through when he revealed that with the rear spoiler, the highway mpg test results were 2-3mpg better than without. Styling is always in the eye of the beholder, but in this case the addition of the spec does indeed provide some benefit. Priusman

There is a din or standard sized space for an audio component directly below the 3 HVAC dial controls. Standard spec is a storage space with a door (CDs, glasses, etc). This is the location where we mount the factory/port or dealer CD player. The door remains intact after our installation so the unit is out of sight when out of use.

(This is posted 7/24): 11 retail units were delivered last week, primarily in the Northwest but I think in NY/Boston as well. A couple of contest winners will get there cars last week/this week due to contractual obligations(National Science Teachers Assoc. winner and Earth Day 2000 sweepstakes winner)The balance are those customers who got their orders in the first day based on color match. Priusman

ewmetzer · July 2000

Town Hall members/guests may want to check out these other Prius discussion groups:

Egroups:
http://www.egroups.com/group/toyota-prius
(Founded 5/1/00--home page includes images and reviews)

Yahoo:
http://clubs.yahoo.com/clubs/toyotaprius

Enjoy!

Eric W Metzler, Enfield, Maine, USA
Hybrid Car coveter

dan1036 · July 2000

I see that the AZ Dept of Commerce has not placed a hybrid (like Prius) into the new rebate/incentive program. I test drove the Prius here in Mesa, AZ yesterday and was really surprised by its performance and lack of engine noise. I am wondering if the Prius qualifies for the alternate fuel vehicle plates, the one time registration fee, and of course the HOV privileges? Have already sent inquires to the local dealer, the MVD, and my state senator without response. Any help would be appreciated.

stirrat · July 2000

I just ordered a Prius here in Tucson and plan to try to help convince our lawmakers and executives that they need to not exclude this very clean running vehicle from our laws as well.

stirrat · July 2000

Here's links to a Car and Driver road test

http://www.caranddriver.com/FrameSet/0,1350,_sl_NewArticle_sl_0_cm_1633_cm_993_1_17_cm_00,00.html

and a MotorTrend road test

http://www.motortrend.com/jan00/prius/1.html

Both magazines tested the Japanese market versions of the car.

MJS

stirrat · July 2000

I had an ordering experience at my local dealer that met my expectations for dealing with an auto dealership, in other words, it was very frustrating. I couldn't get an answer on the availability of the CD player other than, "You take the car how it comes." I'm pretty sure it got ordered with one but I'm not sure. Anyone know how find out the real scoop on order process and status?

The on-line chat feature is outsourced and the anwswer to most of my questions was call 1800gotoyota. They did say that only CD player available was the single disc player not the 6-disc changer. I wonder if that's true. . .

MJS

benjaminyoung · July 2000

The CD player is available as a dealer-installed option (the only one, other than floor mats). However, some "drop" models arrive with a CD player factory-installed (see other PRIUS groups for further details). Your dealer should have given you the option to select a CD player when you ordered... but you should be able to request it when the car arrives, since it is a port option.

As far as the "Live Help" on the Prius site is concerned, I too have found that the PeopleSupport reps only know what you can find on the site for yourself. It's a neat feature but of little use for complicated questions. I think it is mostly there to reassure for novice Internet users and to make the whole experience more user-friendly. If you email PeopleSupport, they can forward your comments to Toyota reps, who can give you a more comprehensive response.

bucbucbuc · July 2000

I have also been researching the details of SB1504 (AZ Enactment which provides incentive for use of low/no emmission vehicles) and have written my state Reps to urge their immediate action on the "hybrid electric vehicle" exclusion. Am also forwarding some of the technical articles (like Gary's one from the ACEEE Ranking Toyota Prius as Number One).

AZ buyers (Gary; Michael; Dan; and others) please email me direct so we can co-ordinate efforts/share responses (I've had none). I have switched my email address to public (in Profiles) for a week or so to facilitate this contact.
I have also written my US congress persons to urge support of H.R.4270 "The Advanced Technology Motor Vehicle Fuel Economy Act".

Buyers from other states: send your representative a copy of Maryland's effort (Post 162). Refer them to Arizona's very generous provision (but make sure they get the electric hybrid in there): http://www.azcommerce.com/energy2/
new%20incentives.htm#Alternative

cliffy1 · July 2000

Dealers are still having problems understanding some of the intricacies of this product. I consider myself one of the more informed salesmen and I am still a bit shaky on the issue of CD players.

The problem stems from the unusual ordering system. Normally, when we have a car allocated from Japan, we can add things like the CD and security system at the port. We generally have a 3 week lead time to make changes like that. With the Prius, we don't yet know how long of a lead time we will have. We just got our first Prius for retail delivery today and only had two days notice and did not have the opportunity to add a CD. I am sure we could add one here but it costs us more to do that.

This first retail car had some unusual problems (friend of the owner and I think some strings were pulled to rush it through) and I hope we can add various port options but I just don't know yet. I'll let you all know when I find out.

shaddad · August 2000

Hi - I work for Toyota in Northern CA region.
Sorry about the last minute notice on CD players and floor mats.
They are available as Port-installed options.
MSRPs are $70 for mats (CF), $335 for in-dash single CD deck (P5).
We are planning to add these options to the internet order site Aug. 10.
For now, dealers need to let regional offices know whether customers desire these options.
All customers will be contacted by regional offices when their Prius arrives in the US to confirm delivery. The port installed options can be added up until the time delivery is scheduled.

I don't have an answer for when future options will be available, but they will include
P6 6-disc in-dash CD player $550
GN Cargo Net $45
Cruise Control
Navigation
Daytime Running lights

Hope this helps

gibran · August 2000

I just wanted to mention that I received an e-mail from Toyota after inquiring about the lack of cruise control. I was told it would be available on the 2002 model year which would be available for purchase next year sometime(2001). When I went for my test drive, the Salesperson said he thought the cruise control would be a retrofit for current cars though I have my doubts about this given the technology. I think its interesting to note the various experiences while driving at highway speeds. While my experience was less than acceptable to me, we have others merily crusising down the highway at 80mph and seemingly drag racing onto the interstate. My experience was more akin to the long test report where the tester mentioned taking 10 Seconds to pass a Semi and thought the car was struggleing at 65mph. Either there is a huge variance in these individual cars OR perhaps these test drives simply reflect our different expectations. With my current car(Volvo 240) taking something like 15 seconds to get up to 75mph, I find it hard to beleive my expectations are that great. I test drove a VW TDI which only has 90 hp and found it very quick and fast at highway speeds. Perhaps the Prius I drove was not fully charged. In any case, A very lengthy test drive is highly recommended for the Pius to anyone considering this vehicle.

davidfs · August 2000

Agreed.

wenyue · August 2000

a depleted battery means the car is running minus 40 horse power. Since passing power is directly in proportion to the horse power, you can see it can make a big difference. I can almost imagine the difference between a Prius with depleted battery (73 hp) and a fullying charged battery (>100 hp).

stirrat · August 2000

I just received a call from a Service and Parts Rep for the Denver region verifying that I wanted a Prius. I tried to get some more information from him but no one really seems to know. He did tell me that I made it into the first order of 3000 and that that is a good thing. I asked him about the CD player and Mats and he did not know if I would be able to get them.

To recap the process so far:

Dealer put in my internet request on 7/28/00
I received an e-mail from an automated server at Toyota verifying this.
Dealer put my order into the system on 7/29/00
I receiver another e-mail verifying this.
Toyota called on 7/30/00 and left a message and called again today (7/31/00) and we verified that we do want the car.

According to the dealer, the car will be here in 90-120 days. So I wait.

MJS

mlg61 · August 2000

I have been hearing different stories on the daytime running lights. I have asked Toyota twice now whether daytime running lights are standard or not and both times they have said that they are standard and not an option. It is also implied on their web site that they are standard.
http://prius.toyota.com/peace/safety.html

Does anyone know for sure?

gckorn · August 2000

Here is the word from Toyota's western regional offices:

I've been informed that I'm about the 55th order that was received and that I should see delivery by the end of August.

As for orders generally, I'm told that so far 3800 have been ordered (only 3000 of them will be delivered by the end of 2000). Therefore, Toyota is sold out on calendar year 2000 deliveries.

I'm also told that there will be a total of 7000 available through the end of 2001. When those are gone, Toyota will probably modify its web site to let people know they will be waiting quite a while for delivery. Those last buyers
(of the 7000) will be told to expect delivery in December 2001. There will, in any event, be 2002 models available after the 7000 go. (Anyone care to venture a guess as to how many more weeks before the first 7,000 are ordered?)

davidfs · August 2000

After gkorn's info on only 7k available, I now understand why Toyota is not advertising on TV!

cliffy1 · August 2000

I think Toyota has really underestimated the demand for this vehicle. They have done this before but with the way they are allocating them (over the Internet), I think it will slap them pretty hard. I would suspect that since Toyota has such a direct hand on the pulse of the consumer now, they may end up modifying their projections and build plans.

Maybe I'm wrong but I can't see them getting multiple hits on the prius order page and not doing something about it.

wenyue · August 2000

Toyota is purposely trying to keep the sales low.

After all, the car is priced at BELOW the manufacturing cost. So they lose money selling them.

Wow, you don't see that everyday.

cliffy1 · August 2000

But, as they sell more of them, they begin to recoupe the R&D expenses. I think those costs are why people say they are spending so much on the cars right now and volume will take care of that. It depends on how long they amortize the development costs. Also, the more battery packs they sell, the lower the overall costs will be.

If I were a Toyota exec, I would be very happy right now. They were hoping for a good launch and widespread acceptance so they can introduce an SUV in the next few years with this system. It looks to me like America is ready for this.

gckorn · August 2000

Question for the thread: Let's say we take delivery on a 2001 model. This will be limited to 2 options: (1) floor mats and (2) a 1 disc CD player (I confirmed this today with the western region).

However, 2002 models should have things like cruise control, side air bags, a 6 disc CD changer, etc.

So, if one wanted to sell a 2001 car (with, say, 5,000 miles on it) and then purchase a 2002 model, what do you think one could get by way of a resale price on the 2001 model? What I mean to say is, do you think there will be typical depreciation, or do you think that, given the limited production and high demand, perhaps we can get back what we put into it (or more)?

Incidentally, Toyota will sell 450,000 Camrys this year, but just 7,000 Prius.

bucbucbuc · August 2000

Re: post #185-
This is the first I've read of someone getting info on their "place in line"- what order number they are.
Is this info coming thru your dealer, or do you have a phone number/email for that office? I'd like that kind of info myself!

shaddad · August 2000

Hello-
Northern Cal Regional office here.
There are a few misperceptions in some earlier posts that I would like to correct so that everyone interested in Prius will be satisfied with their purchase decision.

Daytime Running lights are not standard on Prius for now. Go take a test drive and look at the front of the car if you don't believe me.

Production of Prius scheduled for the US is currently 1000 per month, minus 100
per month reserved for fleet accounts. Total for 2000 Calendar year is over 7500. Total for 2001 calendar year is approx. 12,000. However, as Cliffy has pointed out, Toyota
may modify the production schedule, or the amount allocated to the US, depending on demand.

Contrary to the above statement, Toyota will only accept orders for 3 months of production (3000 units) before telling customers that the order bank is full.
Currently there are close to 2800 orders so far in the US.

It is true that the only options currently available are single-CD and floormats.
While the timing of additional options has not been determined, it does not depend on model year. Of the 8 Priuses we have here at the regional office, a couple do have cruise control and navigation.

Prius will be advertised on TV in the near future. (Our dealers have already seen the spots)

The regional office is responsible for contacting customers when their Prius arrives at the port to confirm delivery. Other than that contact, customers should get info from their dealers. The dealers can contact the regional office to determine which month of production a particular order is coming from.

Please be patient. Both the product and order process are new and we are working as quickly as we can to get your vehicles to you.
Thanks for everyone's interest in Prius!

gckorn · August 2000

for the corrections. I sent your post on to the Denver regional office and have asked them to comment (as they had given me somewhat different information yesterday). I'll report anything I hear back.

As for the TV advts, I agree they will be coming soon (as I previously posted). Here is one such advt: http://www.ecomtracker.com/downloads/download.asp?cid=183&mid=26004

wenyue · August 2000

After just one month on the market, there are already 2800 orders backed up. If like what's been stated here, Toyota is only taking orders up to 3 months of production, and production is 1000 a month, doesn't that mean they will stop taking order very soon?

cliffy1 · August 2000

Bingo

cliffy1 · August 2000

If you're ever in the CATD region, look me up. Its good to have a factory voice here. If you know of anybody in the service department, you may want to have them take a look at what is happening in the Sienna topic. A civil disturbance is about to take place over torque converters.

theboothsdad · August 2000

Of the eight Prius in your regional office, please look at the stickers on the two which have cruise control and navigation and tell us what the ordering codes and MSRPs are for those two options.

gckorn · August 2000

Edmunds is selling $150 certificates good towards the purchase of any new Toyota. The certificate costs $50, so the net savings is $100.

I ordered a certificate and it came by regular mail within 1 week. It is clearly a bearer certificate (meaning anyone can use it).

Bottom line: It's a free $100.

gckorn · August 2000

I just posted terms of the $150 certificate on Yahoo. Here is the post:Edmunds is selling $150 certificates good towards
the purchase of any new Toyota. The certificate
costs $50, so the net savings is $100.

I ordered a certificate and it came by regular
mail within 1 week. It is clearly a bearer
certificate (meaning anyone can use it).

Bottom line: It's a free $100.

cliffy1 · August 2000

they are real but they are running out of them. In fact, it is my understanding that they are out of them for the Washington/Baltimore region. These things are regionally sensitive and only a certain number were printed for each media market area.

gckorn · August 2000

8/4/00 Knight-Ridder Trib. Bus. News - KRTBN (Pg. Unavail. Online) 2000 WL 24911000

KRTBN Knight-Ridder Tribune Business News: Fort Worth Star-Telegram - Texas

Copyright (C) 2000 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM)

Friday, August 4, 2000

Toyota Shows Off Its New Fuel-Efficient, Hybrid Sedan in the Dallas Area

Bob Cox

DALLAS--It's billed as the commuter's solution to high fuel costs and air pollution.

With an electric motor as its primary power source, augmented by a small 1.5-liter, four-cylinder gasoline engine, Toyota's Prius gets an
estimated 52 miles per gallon of gas in city driving conditions and 48 on the highway.

Toyota showed off the new fuel-efficient, hybrid sedan in Fort Worth-Dallas for the first time yesterday. Company representatives said the car is tailor-made for urban driving conditions.

The Toyota Hybrid System, which powers the Prius, is certified as a Super Low Emission Vehicle and exceeds strict pollution requirements that California will put into effect in 2004.

Honda has already hit the U.S. market with its own highly economical hybrid-powered car, the Insight. But the Prius differs from it -- and
hybrids planned by the Big Three U.S. automakers -- in one significant respect.

The Prius is primarily an electric-powered car, one that uses the gasoline engine only to provide additional power. Other hybrids get their primary boost from the gasoline engine and reinforcement from the electric motor.

"It works best at lower speeds in the city and not as well in highway driving," said Craig Marckwardt, a representative of Gulf States Toyota, an independent distributor for Toyota products in Texas. In a test drive on Dallas streets and Interstate 35, the Prius had plenty of acceleration and power, handled nimbly and stopped on a dime with its power-assisted front brakes.

For the most part, the Prius felt like any other small car. The only exception was at low speeds, below 30 mph, when the driver asked for a sudden burst of acceleration. A few moments passed before the gasoline engine could boost the power. But at higher freeway speeds, between 30 and 60 mph, acceleration response was more than adequate.

Sophisticated electronic systems -- "it's software everywhere," Marckwardt said -- monitor and control the Prius powertrain system.

At low speeds, and with the air conditioning switched off, the car is powered by the 30-kilowatt electric motor alone. Once the Prius reaches 10 mph, the gasoline engine kicks in and an engine-management mechanism determines what proportion of gasoline and electric power the throttle requires. The engine automatically shuts off when the vehicle is at a standstill to reduce energy loss.

The electric motor runs off sealed nickel-metal hydride batteries, which are continually recharged during the Prius operation. The gasoline engine automatically powers a generator as needed, and kinetic energy, from braking and deceleration, is regenerated into electrical energy and funneled back to the batteries.

A strong air-conditioning system cools the Prius. But because the engine, which is automatically controlled, is required to run the air
conditioning, the Prius fuel economy suffers a bit during the summer months.

Toyota is putting a five-year, 100,000-mile warranty on the Toyota Hybrid System, with a 60,000-mile warranty on the gasoline engine. The
company will also provide free roadside assistance to Prius buyers should they become stranded.

Right now the Prius comes in just one model, a four-door sedan, with four available colors. The manufacturer's suggested retail price is $19,995 plus freight.

Marckwardt said dealers can charge more or less, but added that Toyota has tried to discourage them from adding premiums to the MSRP as often happens with popular new models that are in short supply.

But consumers can't run down to a local Toyota dealer and buy one. In fact, Toyota dealers have to qualify even to sell the Prius, Marckwardt
said, by sending their top mechanics, service managers and salesmen to special training sessions.

Once the requirements are met, they will receive a demonstration Prius to let customers drive.

Marckwardt said all orders have to be placed through the Toyota Web site (www.Toyota.com/prius). A dealer will then work out the terms of the sale, including the price and delivery schedule.

Toyota is shipping only 1,000 a month for the entire U.S. market, and buyers placing orders now will probably have to wait about 90 days to
get their car.

---- INDEX REFERENCES ----

COMPANY (TICKER): Toyota Motor Corp.; Toyota Motor Corp. (Ads) (J.TYM TM)

mvaldivi · August 2000

...beginning. Toyota's partner in Japan, Hino trucks, is already working on a hybrid diesel-engine (http://www.hino.co.jp/mono/tech/hntech2_e.html). If the Prius is a success here, i'm sure Toyota will consider selling the Tundra and the LC with this technology. This would create havoc on the American truck makers...I hope they're also working on a similar technology. Good luck everyone!

gckorn · August 2000

8/3/00 Knight-Ridder Trib. Bus. News - KRTBN (Pg. Unavail. Online) 2000 WL 24910528

KRTBN Knight-Ridder Tribune Business News: The Indianapolis Star and News - Indiana

Thursday, August 3, 2000

GM Says It Will Build Hybrid Engine, Boost Mileage in Its Full-Size Trucks
Ted Evanoff

PONTIAC, Mich.--After making a ton of money selling gas-guzzling trucks in the 1990s, Detroit automakers are gearing up models that promise far better fuel economy.

General Motors Corp. joined the environmental parade Wednesday, saying its Chevrolet Silverado full-size pickup will have an electric hybrid
power plant available as an option in 2005.

The hybrid unites an electric motor and eight-cylinder gasoline engine and would go about 21 miles on a gallon of gasoline. That's 17 percent
farther than the current 18 miles-per-gallon pickup. Aerodynamic styling and lighter parts could boost the hybrid's mileage another 5 percent to 10 percent.

Detroit's automakers fought hard throughout the 1990s to keep Washington from mandating better mileage for trucks. No wonder: The bulk of the Big Three's $70 billion in global profits back then came from full-size pickups and sport-utility vehicles. With Japanese competitors
now unveiling high-mileage sedans, and Washington appearing serious about truck fuel economy, Detroit is making a lot of colorful boasts
about improving truck mileage without a push by the government.

The effort could pay off for Indiana, where auto parts makers in Anderson, Indianapolis and Kokomo are busy developing hybrid components.

Delphi Automotive Systems engineers in Kokomo have a hand in the hybrid system, though the big winner -- if the hybrid sells -- could be Delco Remy International, based in Anderson. Delco Remy will make the electric motor for the GM hybrid trucks near Munich, Germany, at a joint venture plant with German auto parts maker Continental AG.

Not only could motor production help stabilize Delco Remy financially, but motor assembly could shift to Indiana, industry analysts say, if the
hybrid ever reaches high-volume production.

The Anderson area would be a likely place for a U.S. motor plant because GM assembles Silverados near Fort Wayne. Also, Indiana is reasonably close for delivery trucks going to other Silverado plants in Canada and Michigan.

"The key number is 30,000 to 40,000 units. If GM sells fewer Silverados with those hybrids, it's talking about it might have to end up subsidizing the cost. Anything above that number, it's getting the kind of economies scale where it can start making money," said Michael Robinet, managing director of CSM Worldwide of Northville, Mich., which forecasts vehicle production for auto parts suppliers.

GM is the first automaker to make a hybrid available for a high-volume truck. GM's Allison Transmission Division in Indianapolis also is
developing a hybrid city bus for sale worldwide.

GM officials declined to talk about hybrid production volumes or prices Wednesday, although they were happy to boast about the technology
after being beaten to the microphone by rival Ford Motor Co. Last week, Ford chief executive Jacques Nasser promised Ford would boost the
mileage of all its cars and trucks by an overall average of 25 percent by 2005.

Much of the increase rests with the untried Ford Escape, a compact and lightweight sport-utility vehicle that will appear by 2003. About a quarter of them will have optional 40-mpg hybrid systems. Ford showed off a version of the new truck to the media Tuesday.

GM executives summoned reporters to the company's truck engineering center in Pontiac to announce the hybrid Silverado at a hastily assembled news conference.

Obviously irked by Nasser's speech, which honed Ford's already green image with environmentalists, GM Vice Chairman Harry Pearce chided Ford.

"GM leads Ford today in truck fuel economy and will still be the leader in five years, or for that matter, in 10 years or in 15 years. "End of story," boasted Pearce, a former trial lawyer whose duties include overseeing advanced technology and public relations for GM.

Ford spokeswoman Sara Tatchio shrugged off Pearce's claim of GM having better fuel efficiency.

"We don't want to get into any kind of back-and-forth thing with them," Tatchio said, adding better fuel economy is "what we think customers want and demand. Ford does want to be a different kind of company. We take safety and the environment very seriously."

Detroit automakers have been developing hybrid technology for more than a decade and are just now ready to commit to production models, so
industry analysts sensed some theatrics in Pearce's and Nasser's remarks.

"I think a lot of what they have to say is mainly political," Robinet said. "I can't help but notice we're only a couple of months from the
November elections."

Under federal rules, automakers currently must average 20.7 miles per gallon on all their truck models. Because the big pickups and SUVs do no
better than 18 mpg, manufacturers have gotten around the rules in a variety of ways.

They've begun to build cars that look like trucks and are classified as trucks for mileage standards -- such as DaimlerChrysler's PT
Cruiser.

Or they've built trucks so large they are outside the fuel economy mandates required on passenger vehicles. Ford's jumbo Excursion, which appeared this year as the largest SUV on the highway, is such a vehicle.

In the Silverado hybrid, the V8 turns off each time the vehicle stops at a traffic light or creeps slowly in traffic. Then the electric motor
kicks in. Friction produced by braking recharges the motor's battery.

Toyota Motor Co. and Honda Motor Co. each have hybrid-powered sedans -- the Toyota Prius debuts this fall and the Honda Insight is in dealer
showrooms now. Those models rely on electric motors 80 percent of the time and subsequently obtain 50 to 70 mpg.

GM's Silverado hybrid would rely on the electric motor 20 percent of the time, analysts estimated.

Delco Remy chief engineer Bill Wylam said electric propulsion systems are in development that will carry more of the burden of powering
vehicles. These would allow for the use of smaller gas or diesel engines and consequently improve fuel economy.

"We are very excited about the potential represented in these programs with our partners and General Motors," Wylam said.

GM's is the world's largest automaker, and its best-selling vehicles are the Silverado and its twin, the GMC Sierra. GM sold 852,000 of the
big trucks last year, along with another 600,000 full-size sport-utilities that use the same engines, transmissions and chassis.

---- INDEX REFERENCES ----

COMPANY (TICKER): General Motors Corp. (GM)

allphin · August 2000

I just took my second test drive. I have a 6/29 order confirmation, but have heard nothing yet. My very friendly dealer let me see all his Prius stuff including the guide to salesmen, the owners manual, the service schedule, and the mechanics manual called:

Prius New Car Features, May, 2000, Pub # NCF 182U which covers all the features, including, cruise control and GPS. Incidentally, the Prius has 2 motor-generators, which was news to me. It also covers the planetary drive in some detail and shows the valve timing for the Atkinson-cycle engine at various power demands.

The salesmen's guide targets people 40 - 52 years old, if I remember correctly. I should cancel because I am 66.

dianne4toyota · August 2000

Has anyone here ordered one? Just a curious question, because I am a CA dealer with a waiting list 19 people (orders) long, but that doesn't matter because we all get every car ordered -- it's just a matter of time til they get built.

What, if you have ordered a car, are you paying for them? I am taking orders right now for *under* window sticker (no car til late November, early December)... what's the going rate for these in other regions??

-Dianne
dianne@earthlink.net

tollhouse · August 2000

Does anyone have any insight on the effects of what a two way radio (amateur radio) will have on the Prius. Toyota said it cannot be installed, but will not say why?

scott142 · August 2000

I ordered my car 6/30 and was told I'd have delivery mid-August. Now the dealer has no idea when I'll have the car though I do have one reserved.
Needless to say I'm a bit frustrated. I wish Toyota had a better handle on when these cars will be delivered. I like to give Toyota the benefit of the doubt however, hoping they're expediting delivery.

dianne4toyota · August 2000

I think that at a production cost loss of $7000 a car (and that includes the no-cost maintainance for 36 months), Toyota isn't hurrying to lose $7000 a copy. They are tempering the demand themselves.

gckorn · August 2000

I ordered on 6/29 and confirmed on 6/30. Delivery is may be in late August per my place in line. I paid MSRP. Less than that was not an option.

knieser · August 2000

I am confused. I thought the price was negotiated when the Prius was delivered? That is my situation. Maybe because I have a trade-in and the delivery date is unknown...

wmhpowell · August 2000

tollhouse,

I called the League on Friday to get a contact in Japan but got no real info. They said they'd try to find a contact and E-Mail me the info. I'm not holding my breath.
In the meantime, what happens if a state cop with a 150 watt transmitter pulls up beside a Prius and keys the mic?
Can't wait till my Prius comes in to see what happens...
Bill Powell (WB1GOT)

tollhouse · August 2000

Bill WB1GOT: Thanks for you input, will be looking for the response you get from Japan, if any! You bring up a good point about the state cop or anyone else transmitting next to the Prius. Think I'll bring that up to the dealer. Are you planning to install a radio in the car?
73, Al W6JNU

wmhpowell · August 2000

Al,
Since I have recently "inherited" a 75 mile RT commute, I'll need something to do while sitting in stalled traffic. :-)
I am considering a 25-60 watt 2M/440 rig and, who knows, something on low bands although the Prius is going to look REAL funny with a "bugcatcher" on the back!
I can assume that since the HCU is described as using "switching" transistors to "control" the 3 phase motor, that there is going to be a LOT of hash but I just can't see how a puny VHF signal is going to interfere with 285V control signals.
I'll be sure to spread any info I get to all 3 groups I'm active in.
Bill - WB1GOT

gckorn · August 2000

8/7/00 PR Newswire 07:43:00
PR Newswire
Copyright (c) 2000, PR Newswire

Monday, August 7, 2000

Steel is Material of Choice for Hybrid Electric Vehicles (HEVs), Reports American Iron and Steel Institute

Affordable, Efficient Steel Structures Hasten
Breakthrough Vehicles' Availability

Toyota Prius will Debut This Summer; Ford Escape SUV Due in 2003; Others to Follow

TRAVERSE CITY, Mich., Aug. 7 /PRNewswire/ -- As the global automotive industry launches an all-out effort to increase fuel economy and reduce tail-pipe emissions by using hybrid gasoline/electric engines, it is relying on a
dependable ally -- the steel industry. Vehicle manufacturers will use safe, affordable, fully recyclable steel to build a number of hybrid electric vehicles (HEVs) that will go on the market over the next several years, reports
American Iron and Steel Institute.

Ford has announced that beginning in 2003, it will build a high-volume hybrid electric version of its family-sized vehicle, the Escape, which uses an all-steel body structure. General Motors will produce hybrid-powered trucks, cars and buses, targeting as much as a 20 percent improvement in gas mileage for the full-sized trucks. DaimlerChrysler intends to apply hybrid engine technology to its highly popular Dodge Durango sport utility vehicle to gain at least 20
percent in fuel efficiency.

The all-steel unibody, five-passenger hybrid-powered Toyota Prius will appear in the United States this summer. Nissan, PSA (Peugeot Citroen) and Fiat also have concepts using hybrid powertrains in all-steel-bodied vehicles.

"We commend the auto companies for their vision in selecting steel as the environmental material of choice for these vehicles," said Darryl Martin, senior director, Automotive Applications, American Iron and Steel Institute (AISI). "As we have been saying and demonstrating with our ULSAB (UltraLight Steel Auto Body) series of lightweighting initiatives, a reduced-mass,
efficient steel design, coupled with a clean, highly fuel-efficient power source, such as the hybrid-electric concept, is the quickest, most effective way to deliver significantly higher mileage vehicles to buyers. In addition to EP{2} its high-performance characteristics, including those related to safety and recyclability, steel's cost advantages are virtually unassailable."

The Toyota Prius is a steel structure vehicle, powered by a hybrid gasoline engine and electric motor. It boasts 52 highway miles per gallon (mpg) and 45 mpg city fuel efficiency, according to the U.S. EPA. During testing, the Prius
showed a 50 percent reduction in carbon dioxide emissions and 90 percent reduction in carbon dioxide, hydrocarbons and nitrous oxides.

Honda is making an HEV version of its steel-bodied Civic available to customers in the United States later this year. Additionally, Honda says its 2001 line-ups for Japan, Europe and the United States will include hybrid electric versions of its Accord, which features a steel body structure. Honda estimates the VTEC-I engine in its hybrid vehicles is capable of achieving 30 to 50 percent more miles per gallon than traditional gasoline-powered vehicles.

Nissan is also entering the HEV market with its Tino. The steel-bodied Tino, also derived from an existing vehicle, combines a gas engine with two electric motors and a lithium ion battery pack. Nissan has made about 100 of the HEV
Tinos available, only in Japan.

Ford expects its HEV Escape to achieve about 40 mpg even in stop-and-go urban driving, while delivering acceleration comparable to the V-6 Escape, which has an EPA rating of 24 mpg highway and 20 mpg in city driving. The Escape features a strong, structurally efficient steel unibody structure that contributes to its superior fuel economy, driving dynamics and safety.

John Rintamaki, group vice president and chief of staff, Ford Motor Company, said recently, "We aren't just waiting for these 'supercars' of tomorrow. We are taking what we're learning along the way and applying these new learnings
to today's high-volume cars and trucks. Ford is committed to developing high-volume solutions to societal concerns. We're aiming to develop no-compromise, high-fuel-economy vehicles with mass appeal and affordability."

Neil Ressler, vice president, Research and Vehicle Technology at Ford said, "We're applying advanced hybrid-electric technology to the heart of the American market: the highly popular sport utility vehicle. We'll also sell this hybrid-electric SUV in Europe, under the Maverick name. Its nimble driving characteristics and clean, fuel-efficient operation should make it
especially appealing to customers."

Vice President Al Gore, on the occasion of a press briefing March 30 associated with the Partnership for a New Generation of Vehicles (PNGV), endorsed the work of the carmakers, praising the "significant improvements" in
fuel economy that the HEVs will achieve.

The American Iron and Steel Institute (AISI) is a non-profit association of North American companies engaged in the iron and steel industry. The Institute comprises 47 member companies, including integrated and electric furnace steelmakers, and 174 associate and affiliate members who are suppliers to or
customers of the steel industry.

For more news about steel and its applications, view American Iron and Steel Institute's website at http://www.steel.org .

07:27 EDT

gckorn · August 2000

BUSINESSWEEK ONLINE
AUGUST 14, 2000 ISSUE

SPECIAL REPORT

The Eco-Cars: As Detroit stalls, Japan drives in with appealing new hybrid models

It was a scene that could have served as a heartwarming advertisement for clean-air consciousness. A nervous young customer picks up her new car: a sleek, 65-mile-per-gallon, ultra-low-emission Honda Insight. As she glides away from the dealership, a throng of onlookers gathers to wish her well and applaud her noble intentions.

But Jennie Sharf, 29, is the first to admit that helping out the environment was far down the list when she made the big decision to plunk down 20 grand for her new wheels. Sure, as one of the first generation of so-called hybrid cars powered by both a tiny gasoline engine and an electric motor, the Insight uses technology that promises to help clean the environment and revolutionize the auto industry. Sharf's motivation, however, was far less lofty: She loves the look and feel of the curvy car. As for helping the environment, ''that's a bonus, but it takes a backseat to the coolness factor,'' says Sharf, a wireless-phone designer. ''I was looking for something that I could find in a parking lot without having a Styrofoam ball on the antenna.''

Cool and environmentally correct? Now, consumers can have both. With Japanese auto makers leading the push, the auto industry has launched its first alternative-fuel vehicles to the mass market. The timing couldn't be better. As gas prices surge past $2 per gallon in some parts of the U.S., the Insight, and Toyota Motor Corp.'s $20,000, five-passenger Prius--making its American debut this month--promise to save about $500 a year on fuel, compared with, say, a Honda Civic. Plus, the hybrids' advanced engines easily beat stringent emissions ratings in smog-conscious California. An Insight, for example, generates roughly half the carbon dioxide and other greenhouse gases of small cars such as the Toyota Corolla or Ford Focus.

PLAYING CATCH-UP. In the next couple of years, the Japanese auto makers plan to kick their eco-car effort into high gear by selling adaptations of current-model cars and sport-utility vehicles equipped with hybrid power trains. Honda Motor Co. plans to sell a hybrid Civic in Japan next year, followed by a U.S. launch probably in 2002. Toyota is considering a minivan and an SUV within three years.

Where's Detroit? Playing catch-up again. For years, U.S. car executives fought environmentalists' efforts to toughen federal gas-mileage rules and resisted California regulators' attempts to mandate cleaner cars. Now, thanks to their increasing tilt toward big SUVs and pickup trucks, U.S. manufacturers are being squeezed by regulations and by competitors who have found a way to sell environmentalism. After borrowing from future allowances to meet federal fuel-economy standards, Ford Motor Co. now must boost mileage in its fleet if it's to avoid millions of dollars in fines. That's a big reason why Ford recently trumpeted plans to boost by 25% the fuel economy of its SUVs, mostly by improving the efficiency of their gas engines and making new models lighter and more aerodynamic. ''By volunteering to get ahead of potential legislation, we've done more for the environment than having 600,000 hybrid electric vehicles on the road every year,'' says Ford CEO Jacques A. Nasser.

HYBRID PICKUPS. Still, Ford, GM, and DaimlerChrysler are all scrambling to match Honda and Toyota. In 2003, Ford plans to introduce a gas-and-electric version of its new Escape SUV that would get 40 mpg, nearly twice the mileage of the gas-powered model. A Ford insider says the company hopes eventually to sell as many as 20,000 of the hybrid version annually. General Motors Corp., after devoting much of its clean-car efforts to its EV1 electric car, just announced it will sell a 20-mpg hybrid version of its hot-selling Chevrolet Silverado and GMC Sierra pickup trucks in 2004. And DaimlerChrysler is working on a hybrid Durango SUV.

American car executives mostly view hybrids as an interim technology that will capture only a small slice of the overall car market. GM says gas engines can still be squeezed for a 30% boost in fuel efficiency. Executives point out that Honda and Toyota lose money on each Insight or Prius they sell. Detroit is betting that by the time its hybrids arrive, the technology will be more popular and Washington will push it with tax incentives. DaimlerChrysler says it could sell 80,000 hybrid Durangos if the government turbo-charges the market with tax incentives.

That seems a distant prospect in today's political climate (page 70). Meanwhile, critics say, the popularity of the Honda and Toyota cars makes it seem that U.S. auto makers are fumbling a huge opportunity. ''Detroit has missed the American auto market in the past, and there's a good possibility they can miss it on this one,'' says Robert F. Bennett (R-Utah), chair of the Senate high-technology task force. Adds Bennett, who recently bought an Insight: ''I would much have preferred to buy an American car if there'd been one.''

Hybrids may turn out to be much more than just a stop-gap solution. Ultimately, the goal is to make cars that run on fuel cells requiring not one drop of gas, only hydrogen. But carmakers are learning valuable lessons with hybrid cars' electric systems, which will likely find their way into those next-generation vehicles. ''Any company that doesn't have a hybrid misses out on learning the technology as well as consumer reaction,'' says Firoz Rasul, CEO and president of Ballard Power Systems Inc., a Burnaby, B.C., company that's working on fuel cells with Ford and DaimlerChrysler.

The first thing consumers find out when they test-drive the new eco-cars is that they're not overpriced experiments, as are the high-maintenance electric cars the industry has sold in tiny numbers over the past five years (page 68). The humbling experience with electrics taught car marketers that if they want to sell alternative-fuel cars in big numbers, they can't just appeal to affluent Sierra Club members eager to make a green statement. ''The Prius is a real car,'' says James Hall, managing director of AutoPacific, an auto consulting firm in Tustin, Calif.

NO PLUG. Since most hybrids use an electric motor to assist a small traditional gasoline engine, they come close to matching the pickup and power of conventional cars. They have a striking high-tech look. Batteries are shrinking to take up less space. And drivers don't have to find a special plug to recharge, since hybrids refill their batteries by drawing power off the gas engine or from the energy of forward motion that's transferred to the battery as the car slows down.

Already, sales are off to a strong start. Honda sold 1,600 Insight two-seaters in the U.S. from January through June--four times more than the total sales of GM'S EV1 in its three years on the market. Honda expects to sell 7,000 to 8,000 Insights this year, twice its original estimate. Toyota has sold 35,000 Priuses in Japan since 1997. ''They'll sell 12,000 [in the U.S.], no problem,'' says Rod Lache, auto-industry analyst with Deutsche Bank Securities Inc. in New York.

That's still tiny compared with overall U.S. car and truck sales, which should hit about 17 million this year. And for now, there is no sign that consumers are ditching SUVs for compact hybrid cars. But if hybrid technology can be applied to existing and new models in a way that gives them ''mass appeal in a variety of vehicles,'' they could make up 20% of the market in 10 years, says Christopher W. Cedergren, an analyst with Nextrend in Thousand Oaks, Calif. Gloats Robert Bienenfeld, Honda's marketing manager for the Insight: ''When our competition comes out with their first hybrid, we'll be coming out with our second or third.''

The Insight, with its distinctive low-slung rear end, already is drawing attention on the road. Its sleek lines, no doubt, are a big part of what lures prospective buyers eager for a test drive. But it's the surprising performance and convenience that persuades them to pull out the checkbook. ''A lot of people don't understand that you don't have to plug in the car,'' says Ernest Bastien, vehicle operations manager for Toyota Motor Sales USA Inc. The Insight can go 700 miles on a tank of gas, and the Prius can make it 500 miles. That sure beats GM's EV1, which has to spend hours hooked up to a special device after just 130 miles. ''These cars work, and electrics don't,'' says Insight owner John E. Johnson of Ann Arbor, Mich. Chris Jenkins of Ypsilanti, Mich., has a vanity license plate on his Insight that reads: ''NO PLUG.''

It's no surprise that Japanese auto companies jumped on eco technology so eagerly. High gas prices and choking smog in their home market provide stronger consumer demand. Now, Honda and Toyota want to move beyond showcase cars. They plan to offer hybrid options with several high-volume models within five years. Already, Toyota has designed the Corolla compact and Camry midsize cars to carry such systems. ''We'll get to the point where, in the same way that you choose a 4-cylinder engine, a 6-cylinder, and a V8, you can choose between an internal-combustion engine, an eco-car, and eventually fuel cells,'' says James E. Press, president of Toyota Motor Sales USA.

AT A LOSS. In the U.S., meanwhile, a love of burly trucks, mega-horsepower, and fully loaded luxury have made alternative drive systems less attractive to customers--so far. Delivering that kind of performance with hybrid engines still comes at a huge expense: With their specialized batteries and electrical systems, hybrids sell at a loss in the U.S. Analysts estimate that Honda loses $8,000 every time it sells an Insight. A spokesman says Honda expects to break even ''in a couple of years'' on the Insight, possibly by leveraging its development costs with a hybrid Civic. Toyota has admitted that it is losing money on the Prius, and Ford claims its hybrid Escape will break even only by selling at a $3,000 premium to gas-only models. ''At some point, these things have to be economically viable,'' says Bernard Robertson, senior vice-president of engineering technologies at Chrysler.

That day may arrive sooner than U.S. execs expected. True, the industry has succeeded for six years in holding off any changes to the federal fuel-economy standards for cars and trucks--20.7 mpg for minivans and light trucks and 27 mpg for cars. But with every SUV that replaces a small car, auto makers' fuel-economy averages slip closer to the red zone. The Big Three already would be paying millions in fines if not for loopholes. Starting in 2004, the federal Clean Air Act will require across-the-board improvements in emissions. California appears to be moving forward with tough requirements that 10% of a manufacturer's sales be zero-emission vehicles in three years. For now, four hybrids count as one zero-emissions vehicle.

That's why Detroit is suddenly trying to clean up its big bruisers. Ford's plan would lift its SUV fuel-economy average to 23 mpg. About a third of the improvement comes from the 22-mpg Escape that will soon hit the market. Three years later, the hybrid Escape will offer the same interior space and acceleration as the V6-powered model, while getting 40 mpg in the city. DaimlerChrysler says a hybrid Durango would get 20% better fuel economy and be just as brawny as the gas-powered V8 version. And GM's hybrid Silverado and Sierra pickups will boost mileage by an estimated 15%. Says GM Vice-Chairman Harry J. Pearce: ''Because full-size pickups are significant fuel users, you get the biggest bang for your buck.''

Detroit has lobbied heavily for federal incentives to boost development of alternative-fuel technologies, but it can't rely on a handout. If anything, the mood in Washington has swung the other way. Take the ''super car'' project, for instance. Five years and $1.25 billion after Vice-President Al Gore and Big Three auto chiefs committed to developing clean-burning cars capable of 80 mpg, the program has little to show. The House and Senate recently voted to cut funding in half. Representative John E. Sununu (R-N.H.), who led the charge to slash the project, says the success of the Insight and Prius demonstrates why subsidies won't work. ''It may well be precisely because the federal government has been subsidizing certain areas of innovation that we're behind the Japanese,'' he says.

Carmakers did learn one valuable marketing lesson with electrics: Only the most committed environmentalists were willing to pay extra or give up driving conveniences to make a clean-air statement. That's backed up by recent studies. Most of the 28,000 car buyers surveyed by AutoPacific said they wouldn't alter driving habits until gas hits at least $2.10 per gallon. ''Very few people would be willing to pay even $500 extra for a clean vehicle,'' says George C. Peterson, president of AutoPacific.

ALUMINUM FOIL. Price hasn't been the only problem with electric cars. Although GM quickly attracted a hard-core group of enthusiasts with its launch of the EV1 in 1996, that entire first generation was recalled last fall because of problems with the charging socket. The owners were given leases on new EV1s. Honda pulled its EV-Plus from the market last year but still has more than 300 on the road.

Executives admit they never intended to sell many electrics. GM offered its EV1 only for lease at some Saturn dealerships, and customers had to submit to two days of interviews and instruction before driving off with a car. A spokesman says GM wanted to make sure lessees knew what they were getting into. Margaret Cheng, a 53-year-old systems planner for a Southern California power company, recalls an hour-long interview in which an EV1 specialist stressed all the drawbacks before letting her drive off. ''It's amazing that some of us were persistent enough to get the car,'' Cheng says.

Hybrids are far from perfect. To boost performance, the Insight relies on an all-aluminum body that weighs just 1,800 pounds, half the bulk of the average family sedan. The car holds up in crash testing but makes for an expensive trip to the body shop. Some Insight owners say they live in fear of not just collisions but also door dings and hail. Anna Eley of Atlanta says her husband got in a parking-lot accident with a Cadillac DeVille while driving her silver Insight. Both cars were going slower than 15 mph. The DeVille drove off with a busted grille while the Insight was totaled, says Eley.

New as they are, Hybrids may be replaced by a far more promising technology. The industry has pumped billions into developing fuel cells, which extract electrons from the chemical reaction between hydrogen and oxygen. The exhaust is clean water, and the electric power results in a quieter ride than any gasoline engine.

Fuel cells appear much closer than they were five years ago--but don't hold your breath. Most execs don't expect mass-market vehicles for 10 years. DaimlerChrysler is probably furthest along. It committed $1 billion to fuel-cell development and has a working version of its Mercedes A
BUSINESSWEEK ONLINE
AUGUST 14, 2000 ISSUE

SPECIAL REPORT

The Eco-Cars: As Detroit stalls, Japan drives in with appealing new hybrid models

It was a scene that could have served as a heartwarming advertisement for clean-air consciousness. A nervous young customer picks up her new car: a sleek, 65-mile-per-gallon, ultra-low-emission Honda Insight. As she glides away from the dealership, a throng of onlookers gathers to wish her well and applaud her noble intentions.

But Jennie Sharf, 29, is the first to admit that helping out the environment was far down the list when she made the big decision to plunk down 20 grand for her new wheels. Sure, as one of the first generation of so-called hybrid cars powered by both a tiny gasoline engine and an electric motor, the Insight uses technology that promises to help clean the environment and revolutionize the auto industry. Sharf's motivation, however, was far less lofty: She loves the look and feel of the curvy car. As for helping the environment, ''that's a bonus, but it takes a backseat to the coolness factor,'' says Sharf, a wireless-phone designer. ''I was looking for something that I could find in a parking lot without having a Styrofoam ball on the antenna.''

Cool and environmentally correct? Now, consumers can have both. With Japanese auto makers leading the push, the auto industry has launched its first alternative-fuel vehicles to the mass market. The timing couldn't be better. As gas prices surge past $2 per gallon in some parts of the U.S., the Insight, and Toyota Motor Corp.'s $20,000, five-passenger Prius--making its American debut this month--promise to save about $500 a year on fuel, compared with, say, a Honda Civic. Plus, the hybrids' advanced engines easily beat stringent emissions ratings in smog-conscious California. An Insight, for example, generates roughly half the carbon dioxide and other greenhouse gases of small cars such as the Toyota Corolla or Ford Focus.

PLAYING CATCH-UP. In the next couple of years, the Japanese auto makers plan to kick their eco-car effort into high gear by selling adaptations of current-model cars and sport-utility vehicles equipped with hybrid power trains. Honda Motor Co. plans to sell a hybrid Civic in Japan next year, followed by a U.S. launch probably in 2002. Toyota is considering a minivan and an SUV within three years.

Where's Detroit? Playing catch-up again. For years, U.S. car executives fought environmentalists' efforts to toughen federal gas-mileage rules and resisted California regulators' attempts to mandate cleaner cars. Now, thanks to their increasing tilt toward big SUVs and pickup trucks, U.S. manufacturers are being squeezed by regulations and by competitors who have found a way to sell environmentalism. After borrowing from future allowances to meet federal fuel-economy standards, Ford Motor Co. now must boost mileage in its fleet if it's to avoid millions of dollars in fines. That's a big reason why Ford recently trumpeted plans to boost by 25% the fuel economy of its SUVs, mostly by improving the efficiency of their gas engines and making new models lighter and more aerodynamic. ''By volunteering to get ahead of potential legislation, we've done more for the environment than having 600,000 hybrid electric vehicles on the road every year,'' says Ford CEO Jacques A. Nasser.

HYBRID PICKUPS. Still, Ford, GM, and DaimlerChrysler are all scrambling to match Honda and Toyota. In 2003, Ford plans to introduce a gas-and-electric version of its new Escape SUV that would get 40 mpg, nearly twice the mileage of the gas-powered model. A Ford insider says the company hopes eventually to sell as many as 20,000 of the hybrid version annually. General Motors Corp., after devoting much of its clean-car efforts to its EV1 electric car, just announced it will sell a 20-mpg hybrid version of its hot-selling Chevrolet Silverado and GMC Sierra pickup trucks in 2004. And DaimlerChrysler is working on a hybrid Durango SUV.

American car executives mostly view hybrids as an interim technology that will capture only a small slice of the overall car market. GM says gas engines can still be squeezed for a 30% boost in fuel efficiency. Executives point out that Honda and Toyota lose money on each Insight or Prius they sell. Detroit is betting that by the time its hybrids arrive, the technology will be more popular and Washington will push it with tax incentives. DaimlerChrysler says it could sell 80,000 hybrid Durangos if the government turbo-charges the market with tax incentives.

That seems a distant prospect in today's political climate (page 70). Meanwhile, critics say, the popularity of the Honda and Toyota cars makes it seem that U.S. auto makers are fumbling a huge opportunity. ''Detroit has missed the American auto market in the past, and there's a good possibility they can miss it on this one,'' says Robert F. Bennett (R-Utah), chair of the Senate high-technology task force. Adds Bennett, who recently bought an Insight: ''I would much have preferred to buy an American car if there'd been one.''

Hybrids may turn out to be much more than just a stop-gap solution. Ultimately, the goal is to make cars that run on fuel cells requiring not one drop of gas, only hydrogen. But carmakers are learning valuable lessons with hybrid cars' electric systems, which will likely find their way into those next-generation vehicles. ''Any company that doesn't have a hybrid misses out on learning the technology as well as consumer reaction,'' says Firoz Rasul, CEO and president of Ballard Power Systems Inc., a Burnaby, B.C., company that's working on fuel cells with Ford and DaimlerChrysler.

The first thing consumers find out when they test-drive the new eco-cars is that they're not overpriced experiments, as are the high-maintenance electric cars the industry has sold in tiny numbers over the past five years (page 68). The humbling experience with electrics taught car marketers that if they want to sell alternative-fuel cars in big numbers, they can't just appeal to affluent Sierra Club members eager to make a green statement. ''The Prius is a real car,'' says James Hall, managing director of AutoPacific, an auto consulting firm in Tustin, Calif.

NO PLUG. Since most hybrids use an electric motor to assist a small traditional gasoline engine, they come close to matching the pickup and power of conventional cars. They have a striking high-tech look. Batteries are shrinking to take up less space. And drivers don't have to find a special plug to recharge, since hybrids refill their batteries by drawing power off the gas engine or from the energy of forward motion that's transferred to the battery as the car slows down.

Already, sales are off to a strong start. Honda sold 1,600 Insight two-seaters in the U.S. from January through June--four times more than the total sales of GM'S EV1 in its three years on the market. Honda expects to sell 7,000 to 8,000 Insights this year, twice its original estimate. Toyota has sold 35,000 Priuses in Japan since 1997. ''They'll sell 12,000 [in the U.S.], no problem,'' says Rod Lache, auto-industry analyst with Deutsche Bank Securities Inc. in New York.

That's still tiny compared with overall U.S. car and truck sales, which should hit about 17 million this year. And for now, there is no sign that consumers are ditching SUVs for compact hybrid cars. But if hybrid technology can be applied to existing and new models in a way that-Class subcompact that it plans to start selling in Europe in four years. Honda has spent $500 million to develop fuel-cell cars and wants to have them ready in three years. But it has no current plans to go to market. Ditto for Toyota and GM. ''I really don't see significant volumes--in the hundreds of thousands of cars--until the end of the decade,'' says Lawrence D. Burns, GM's vice-president for research and development.

Even that assumes steady progress on a whole range of daunting technical issues. Supplying hydrogen fuel, for instance, is no easy trick. The two preferred methods are to store methanol aboard the car and draw hydrogen from the methanol or to store the hydrogen itself. Methanol can be pumped from existing gas stations. But the onboard hardware to strip out hydrogen from methanol would add $1,500 in vehicle costs and create maintenance challenges. And hydrogen has to be stored under heavy pressure or at very low temperatures.

Still, if hybrids really catch on--if the technology becomes just another option, such as antilock brakes--they could speed the day that the industry ditches fossil fuels altogether. ''As we pursue the Holy Grail, existing technology is getting cleaner,'' says Ford Chairman William C. Ford Jr. The trick is to put clean technology into the cool cars and trucks that buyers crave. If auto makers can do that, more buyers like Jennie Sharf will take an interest in green vehicles without ever thinking about what is or isn't sputtering out the tailpipe.

By David Welch in Detroit, with Lorraine Woellert in Washington, D.C.

gckorn · August 2000

BUSINESSWEEK ONLINE:
AUGUST 14, 2000 ISSUE

SPECIAL REPORT

46 Miles Per Gallon... 47... 48...

Rarely do I worry about how much gas I'm burning while lead-footing it through town. But after a few days in Toyota Motor Corp.'s (TM) new Prius, I became fixated, like a kid staring at a video game, on the fuel-economy numbers flickering at the top of my dashboard. Soon I was poking along at 55 in a 65-mph zone, sweltering with my air-conditioning purposely shut off and the windows rolled up (it cuts down wind resistance). All that so I could nudge my mileage up to the government-rated 48 miles per gallon.

Life in the slow lane has never been so thrilling. Sliding behind the wheel of a fuel-sipping gas-and-electric powered Prius or its only rival, Honda Motor Co.'s (HMC) Insight, can be habit-forming. The Prius, just now hitting U.S. showrooms, displays average fuel economy in real time through a video screen. The Insight, which has been on sale in the U.S. for six months, also tracks mileage on a dashboard display. Owners strive for the best fuel-economy stats, then brag about them in Internet chat rooms.

THE REAL DEAL. But whereas the Insight is a hip two-seater, the Prius delivers high efficiency with real-car performance and convenience. Its 1.5-liter, four-cylinder gas engine and 33-kilowatt electric motor combine for 114 horsepower, vs. 73 for the Insight. That's no hot rod, but it matches many compacts on the road. And the $20,000 Prius comfortably seats five, so long as the three people in the back aren't too lanky. The trunk is roomy, offering 12 cubic feet of cargo space.

The most noticeable difference in driving a hybrid is the interaction of the electric and gas power plants. In the Prius, the electric motor gets you started smoothly, with a ghostly silence. The gas engine shuts down when you're stopped. At about 10 miles an hour, you can feel the gas engine subtly start up without the grind and shudder of an ignition start. That recharges the batteries while giving the Prius a fairly peppy acceleration. It helps that the all-steel body is a lightweight 2,765 pounds--more than the 1,800-pound aluminum Insight but a lot less than the typical 3,200-pound small car. There are a few downsides. Once you're up to highway speeds, the Prius does broadcast a fair amount of road noise. And it took me three days to get used to the tight brakes.

Still, no one buys a hybrid expecting muscle. They're falling for the high-tech gadgetry and great gas mileage. For many, the Insight has the same funky fashion appeal as Volkswagen's (VLKAY) New Beetle. That look--especially the distinctive ''skirt'' that extends halfway down the rear wheels--is not for everyone. When I took the Insight for a spin, one driver stopped me to call it a computer mouse on wheels. While the Prius has a more conventional exterior, its interior is decidedly modern. The touch-sensitive video screen toggles between the fuel-use monitor and a fun schematic showing how energy flows between the wheels, electric motor, gas engine, and battery.

Next up: Ford (F) and GM (GM) are promising hybrid versions of their hulking SUVs and pickups. If the car companies can transplant this technology into their most popular models, we'll really have something to honk about.

By David Welch in Detroit

Toyota Prius (First Generation)

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