Hybrid Cars Come of Age

July 11, 2007 — -- With Al Gore III barrelling down a California highway in his Toyota Prius at 105 mph, hybrid gas-electric cars may be at the tipping point of becoming a mainstream item in America.

Hybrids, which operate with gasoline engines coupled with a bank of high-tech batteries and an electric motor, are in hot demand seven years after Toyota's Prius hit the market. More manufacturers are building hybrids, but the supply isn't enough to meet demand and prices are at or above manufacturer's suggested retail price (MSRP).

U.S. hybrid sales advanced 23 percent last year to 253,000 vehicles, and they rose another 55 percent in the first six months of 2007, with analysts expecting a doubling of units sold for the full year. With total hybrid production to date at less than 1 million cars, and Toyota accounting for three-quarters of that, analysts expect that America's appetite for the technology would hardly seem to be satisfied.

A recent check of hybrid inventory in the New York-New Jersey area by ABC News found dealer after dealer with no or few cars available. Many have waiting lists to obtain the most popular models.

Hybrid shoppers can mostly forget about negotiating price. Hard bargaining may win you a few hundred dollars in floormats, but most dealers aren't willing to part with their precious allotment of hybrids for less than MSRP. And more than a few dealers add charges for useless items like pinstriping and rustproofing to the already high sticker price.

Why a Hybrid?

The initial hybrid buyers in the United States tended to be environmentally conscious "tree-huggers," according to CNW Marketing Research in Bandon, Ore. The desire to help the environment has only increased, with 57 percent of Prius drivers saying in an early 2007 survey the car "makes a statement about me," compared with 34 percent who gave that response in a 2004 CNW survey.

Now, as gas prices top $3 a gallon across the country, a new kind of buyer is emerging -- one who likes the idea of a car that pollutes less but that also saves money. This wasn't always the case when hybrids cost $3,000 or more than their conventional (and often more powerful) counterparts. Today more people are considering fuel-saving benefits as the price disparity between hybrids and conventional cars has dropped to as little as $1,500.

Taking into account the extra expense and figuring you'd cut your annual fuel bill by a third, the payback period for a hybrid might be about five years, Consumer Reports said in 2006. But gas prices have risen since then, and the hybrid cost differential has slimmed, so the payback now may be even shorter.

Taking a Tax Credit

The rising demand for hybrids may have been fueled by federal tax credits that are now disappearing. Congress designed a program that allows tax credits of as much as $3,400 for hybrid buyers, but only on up to the first 60,000 vehicles for each manufacturer, with a phase-out period.

Toyota hybrid buyers can currently only get one-fourth of the full credit, with that going to zero for purchases after Oct. 1, 2007. For other carmakers, the credits and phase-outs vary, and it's even possible for the amount of the credit to change between when you buy the car and go to claim your credit at tax time. Dealers will mostly tell you to call an accountant rather than supply wrong or outdated information.

A new breed of hybrids blurs the savings picture further because the technology is being used by some makers for power rather than fuel savings. Honda's Accord Hybrid, for example, doesn't save gas or cut emissions over its conventional sibling, but it essentially offers the power of an eight-cylinder engine with the fuel efficiency of a six-cylinder motor. The same can be said for Toyota's Highlander Hybrid, which supplies the power of an eight cylinders by coupling the hybrid technology with a six-cylinder engine. The Toyota SUV is powerful enough to offer towing capabilities, but green it's not.

One reason the hybrids don't do even better in terms of fuel savings may be the way most were built. The market-leading Prius was designed as a hybrid car from the ground up. All the others, like Ford's Escape Hybrid, are simply the original versions with hybrid technology squeezed in -- the 150 pounds or more of batteries usually take up a good chunk of the trunk, or are located under the rear passenger seat.

And not all hybrids use the technology in the same way. While the Prius and Camry hybrids can run for short bursts or even several miles only on the electric motor, which is recharged from the engine and braking systems, Honda's Civic and Saturn's Vue can't do that. The gas motor must always be employed.

The MPG Game

Hybrid supporters say you can achieve some impressive mileage figures, if you change your driving habits to favor the all-electric mode. But not everyone is convinced.

A Honda Civic Hybrid owner is suing the company, claiming that the car doesn't even come close to meeting the advertised mileage claim of 49 miles per gallon city and 51 mpg on the highway. The California man, who is seeking class-action status for his suit, noted that Honda's ad claimed up to 650 miles on a single tank of gas, or an average of 51 mpg. He says he averaged about 32 mpg after driving 6,000 miles.

This is one reason the U.S. government is changing the way it measures and reports mpg figures for vehicles to make them more "real world." Previously, EPA ratings didn't consider stop-and-go traffic, cold weather or posted speed limits of 65 or 70 mph currently found on today's highways. Starting in the 2008 model year, the figures on the window sticker will drop for hybrids in particular -- the Prius, for example, will fall to 48/45 mpg (city/highway) from 60/51.

Meanwhile, most of the world's top carmakers are planning to roll out hybrid cars by 2010 or so. Lexus will soon introduce the 2008 LS 600h L -- starting MSRP is $104,715, or $33,000 more than the nonhybrid LS460 L on which it's based. It will get 20/22 mpg -- not exactly parsimonious on fuel but not bad for a 438-horsepower car that weighs more than 5,000 pounds.

GM is planning the "Volt," which can go up to 40 miles on a plug-in charge with a small gasoline engine for on-the-go recharging. Plug-in only cars largely failed on the U.S. market because of their range limitations.

So what about Al Gore's son and that 105 mph he achieved in his Prius, according to arresting officers? Toyota says that speed isn't unusual for the car. Toyota tested a Prius on the Bonneville Salt Flats (with wider tires and a change in gearing) at 130.8 miles an hour. The Toyota buff Web sites put the top speed of the stock Prius at a respectable 109 mph.