What’s Big and Roomy and Green All Over?

Being green no longer means being cramped.

After several years of asking environmentally conscious motorists to sacrifice hip, head and elbow room to drive a car with high mileage and low emissions, automakers finally are moving into the mainstream with larger hybrid gasoline-electric models -- including sport utility vehicles.

Toyota Motor Corp., the first to market a hybrid car when it introduced the Prius compact sedan in Japan in 1997, will be the first to hit the streets with a heftier hybrid when it launches a bigger, second-generation Prius later this year. The new model, announced at the New York Auto Show this month, is a five-passenger, mid-size hatchback aimed at the same segment as conventional family cars such as Honda Motor Co.’s Accord and Ford Motor Co.’s Taurus.

So far, the biggest hybrid in the market is Honda’s Civic hybrid, a five-seat compact that is a bit larger than the current Prius in exterior and front seating dimensions. Those two sedans and Honda’s two-seat Insight sports coupe are the only hybrids available today.

But that’s about to change -- in a big way. New hybrids are expected to stream steadily into showrooms in the next few years, spurred in part by the California Air Resources Board’s decision last week to push for tens of thousands of new hybrids as part of the state’s controversial zero-emission vehicle rules.

The Prius mid-size will be followed next year by hybrid versions of two current sport utilities: Ford’s Escape compact SUV and the Lexus RX 330 from Toyota’s luxury brand.

Japan’s No. 1 automaker will follow the Lexus with a mainstream Toyota version about a year later, said Don Esmond, senior vice president of Toyota Motor Sales USA in Torrance and general manager of the importer’s Toyota division.

Systems Will Vary

General Motors Corp., which once partnered with Toyota to develop new powertrain technologies but decided to go its own way in the hybrid segment, says it soon will have three types of hybrid systems applicable to cars, SUVs and pickup trucks.

Hybrids use two or more power sources, usually a gasoline engine augmented by one or more electric motors. Some, called “mild” or “weak” hybrids, use the electric motors for auxiliary power and to restart the gas engines, which shut down when the vehicle stops.

Beefier “full” hybrids also use the electric drive to provide extra power when climbing hills or passing other vehicles. Toyota’s system also can provide low-speed propulsion in an all-electric mode -- a feature Ford says its system will offer.

Dodge, a division of German-American carmaker DaimlerChrysler, plans to release a mild-hybrid version of its full-size Ram pickup next year as a 2005 model. The truck will shut down its turbocharged diesel engine when it comes to a stop -- at red lights, for instance -- to reduce emissions and boost fuel economy by 10% to 15%. It will be able to generate electricity for auxiliary use by campers and contractors and will use the electric motor to assist the diesel when accelerating, but otherwise it will operate as a conventional internal-combustion vehicle.

Other automakers have said little about their plans to compete in the small but growing hybrid niche, but industry watchers believe that unless some- thing happens to derail the movement, most major brands are expected to go green by the end of the decade.

They’ll have to if they wish to remain competitive.

Although Toyota’s and Honda’s combined hybrid sales last year barely registered -- 36,000 cars out of 16.8 million passenger vehicles sold -- analysts figure the total will hit nearly 60,000 this year and about 100,000 in 2004. Toyota alone says it expects to be able to sell 36,000 of the new Prius sedans in the United States in 2004. GM has said that it would have the capability to put various types of hybrid systems into 1 million vehicles a year by the end of the decade if consumer demand proves sufficient.

Although there is a lot of talk about a zero-emission future with cars and trucks running on hydrogen-powered fuel cells, most in the industry say widespread retail sales of such vehicles remain more than a decade away, and will depend heavily on development of a nationwide hydrogen fueling system that experts say could cost as much as $400 billion.

In the interim, “hybrids are the transitional vehicle,” said Frank Khoshnoud, a Detroit-based auto industry specialist with accounting and consulting firm Cap Gemini Ernst & Young. “They give us that transition where we can get the fuel economy and emissions reductions that we need and provide a platform for testing a lot of the electric drive and control equipment that fuel cell cars will require.”

Not everyone is sure that hybrids have a bright future. David Cole, director of the Center for Automotive Research in Ann Arbor, Mich., said he hasn’t been persuaded that the industry can overcome the $4,000 to $6,000 additional cost of packaging two power and drive systems in a single vehicle.

But there seems to be general agreement that Toyota’s decision to beef up its hybrid package and move it into the broad-selling mid-size sedan category at a competitive price is a giant step forward.

Even environmentalists are excited.

Jason Mark, director of the Union of Concerned Scientists’ Clean Vehicle Program, called the new Prius “a shining example of the gains possible with advanced technology.”

Said Roland Hwang, senior policy analyst with the Natural Resources Defense Council: “The new Prius proves our case that through better technology, drivers do not have to sacrifice to get a low-polluting, fuel-efficient car. For about the same price and size as a conventional mid-sized sedan, drivers get half the pollution and half the gasoline bill. That’s a good deal for drivers and the environment.”

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Cost Will Be Key

Price is crucial.

A recent survey by J.D. Power & Associates, the Westlake Village automotive marketing consultants, showed that although most American car buyers are willing to consider hybrids now -- especially if gasoline prices remain at or near $2 a gallon -- few are willing to pay a premium of more than $1,000 to $1,500 to own one.

Toyota, which has sold about 50,000 Prius models in the United States since introducing the hybrid here in mid-2000, says it is making a profit on the car and is not subsidizing its $19,995 base price.

But Esmond acknowledges that the bigger 2004 model will cost more to manufacture. Not only does it use more sheet metal, but it will come standard with additional technologies such as key-less ignition and electronic throttle and transmission controls.

Still, even if Toyota must underwrite increased Prius manufacturing costs for a few years until volumes bring profitability, Esmond said, “whatever we spend won’t be as much as the $3,000-per-car incentives” companies such as General Motors are offering to get buyers interested in their conventional models.

Toyota says the new model will be priced well below $25,000 to compete with other mid-size sedans.

One way Toyota hopes to offset its hybrid development costs is by licensing its technologies to others. The new Prius has 370 patents, Esmond said, “and we aren’t afraid to share that technology with others.”

Nissan Motor Co. already has announced a pact with Toyota in which Nissan probably will combine its gasoline engines with Toyota’s electric drive systems for upcoming Nissan-branded hybrids.

GM, which has its own proprietary hybrid systems, also has said it would market its technologies to other automakers. Ford and Honda are keeping quiet about plans for their systems.

GM, the world’s No. 1 automaker, will be the first domestic manufacturer to hit the U.S. retail market, with mild-hybrid models of its GMC Sierra and Chevrolet Silverado pickups available late this year as 2004 models.

The automaker plans to launch a full-hybrid version of its Saturn Vue compact SUV in 2005. It will feature a dual electric motor system designed to improve mileage by 50% to about 40 miles per gallon, GM research chief Larry Burns said.

GM also will include a mild-hybrid option with about 15% fuel savings on its forthcoming Chevy Equinox SUV in 2006 and its Chevy Malibu sedan in 2007.

The proliferation of large trucks and SUVs in the last decade has increased average fuel consumption, and that, in turn, has created demand from politicians and environmentalists for the auto industry to improve fuel efficiency while continuing to reduce emissions.

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Prius Sets the Pace

Industry watchers say the new Toyota system -- which will give the 2004 Prius a larger interior, 50% more power, 15% better fuel economy, 30% fewer emissions and nearly 50% more trunk space than the compact it replaces -- is the gold standard for hybrids.

The Prius mid-size sedan will get about 55 miles per gallon in combined city and highway driving, versus 48 mpg in the compact sedan version, yet will accelerate from zero to 60 mph in about 10.5 seconds, compared with 12.8 seconds for the smaller, lighter compact model.

“They are clearly throwing down the gauntlet for Detroit,” said Joseph Phillippi, a former Wall Street auto industry analyst who now runs New Jersey-based AutoTrends Consulting. “Here they are, on their second generation, and most don’t even have a first-generation product out. And Toyota has a whole portfolio of vehicles they’ll be able to use the hybrid system on. They are at least one notch, and possibly a whole generation, ahead of Detroit.”

Representatives of GM and Ford won’t yet provide competitive data, but they say that when their hybrids are launched, the offerings will level the playing field.

“I’d love to be proven wrong,” Phillippi said. “But it’s hard to see how GM can lap Toyota at this point.”