The Bee's Chris Bowman can be reached at (916) 321-1069 or cbowman@sacbee.com

Panel saves mandate on Zero Emission

Published: April 6, 2003, 06:49:59 AM PDT

An effort to back away from continued production of electric cars -- and a broader commitment to nonpolluting cars -- was turned back last week by the California Air Resources Board.

That's good. Accepting the proposal from the CARB staff would have brought the state's historic Zero Emission Vehicle mandate nearly to an end.

Instead, the board told its staff to revise the proposal to preserve the requirement that at least a few hundred zero-emission vehicles be produced by 2008.

The CARB staff wanted to drop the requirement that 2 percent of all new cars sold in California after 2005 produce no tailpipe emissions. As a substitute, the staff urged that major vehicle manufacturers be required to produce a total of 250 fuel-cell-powered vehicles in the next five years.

Automakers and others -- including the Bush administration -- now argue that fuel-cell technology represents the future. That's the same thing they were saying about electric-powered cars a few years ago.

But many argue that fuel-cell cars powered by hydrogen are still years away from being produced at a practical price. The proposed 250 vehicles would be demonstrator models that currently cost about

$1 million each; they won't exactly be rolling off the showroom floor.

Nor are electric cars the failure that some fuel-cell proponents suggest. About 2,500 battery-powered vehicles such as General Motors' EV-1 and the Honda Insight are on the road today, although their leases are expiring as emphasis shifts to hybrid and fuel-cell cars.

In Stanislaus County, officials would like to incorporate 150 to 200 electric or hybrid vehicles into their 650-vehicle fleet. The demand spurred by the county in turn could entice a private investor to build an electric-car assembly plant here, according to county Chief Executive Officer Reagan Wilson.

The proposal could bring both new jobs and cleaner cars to the pollution-choked Northern San Joaquin Valley. To help counties like Stanislaus achieve such gains, the state should maintain its policy of favoring no specific technology.

Regulators should not dismiss electric cars, any more than fuel cell vehicles should be abandoned because they aren't yet available. When it comes to promoting cleaner-running vehicles, the technology eggs should be distributed among as many baskets as possible
http://www.nytimes.com/2003/04/18/business/18FORD.html?tntemail1

April 18, 2003

By DANNY HAKIM

Executives of the Ford Motor Company yesterday backed away from a pledge to increase the fuel economy of its sport utility vehicles by 25 percent by 2005.

Ford made that pledge three years ago, and General Motors and the Chrysler Group of DaimlerChrysler subsequently said they would at least match Ford's improvements. At the time, environmentalists hailed the plan as offering hope that the nation's swelling appetite for gasoline could be curbed.

Ford is not abandoning the pledge entirely, said one Ford executive, who spoke on the condition of anonymity, but rather is indicating that it does not know whether it can meet the original timetable.

"Are we still trying to get there? Absolutely," this executive said. "Will we get there by that deadline? It's unclear."

The executive attributed Ford's shift in part to technological delays to the company's plan to produce a version of its Escape S.U.V. with a fuel-efficient hybrid system. The company says it is also less bullish on the program because tax credits for such vehicles have not materialized in Congress.

Ford had planned to sell the Escape hybrid, which supplements its gasoline engine with electric power, in earnest this year but now expects to sell only a token number; next year, it expects to sell many fewer than the 30,000 originally planned.

Speculation about Ford's going back on its pledge began to swirl yesterday after Philip R. Martens, the vice president for product creation, told some reporters that the company was scrapping the objective and would instead aim for fuel economy improvements of 20 percent to 30 percent across its entire vehicle fleet by the end of the decade, according to reports by Reuters and Bloomberg News.

Ford later said that Mr. Martens's comments had been misinterpreted. Francine Romine, a company spokeswoman, said the company had not decided to give up on its S.U.V. commitment, but she also declined to reaffirm specifically the pledge and its timetable.

"Some of the technologies we thought would get us there did not materialize," she said, adding that the company was not giving up its efforts to improve the vehicles' fuel economy.

But the top executive who spoke on the condition of anonymity said that the company had hoped the Escape hybrid would play some role in decreasing the company's S.U.V. fuel economy; the vehicle is expected to get 35 to 40 miles a gallon.

Ford engineers have run into developmental problems with the vehicle's regenerative braking system, which traps heat produced by the brakes and converts it into energy.

"We're running behind on the Escape hybrid," the executive conceded. "We'll have some out at the end of the year, but not the kind of numbers we had originally hoped for because of some component problems in the vehicle. We're working them out and they'll be fine."

Other decisions from the company, which is struggling to return to profitability, also hindered progress — a fuel-saving electric starter motor for the Explorer was among the options abandoned as a way to cut costs.

The executive also said that the company was looking at ways to make up for not meeting the 25 percent goal by showing improvements in other areas. But he said there were no big targets to improve the fuel economy of the entire vehicle fleet by the end of the decade.

"We will not improve by 30 percent across the fleet," the executive said.

Environmental groups reacted with a mix of confusion and anger — the pledge had been a hopeful sign for them amid a climate of increasing sales of S.U.V.'s and a complementary surge in gas consumption.

Reports of Ford's reversal have also further complicated the love-hate relationship between environmental groups and William Clay Ford Jr., the Ford family scion who is the company's chairman and chief executive. Before becoming chief executive in 2001, Mr. Ford had been outspoken on environmental issues — certainly from Detroit's view. He even spoke frequently of global warming as an actual problem that needed solving, a view at odds with what other top industry executives have said.

But Mr. Ford has been saddled with trying to revive a company that lost a total of $5.5 billion in its last nine quarters and employs more than 100,000 people in the United States.

Ford's vehicle fleet has been becoming more heavily tilted toward S.U.V.'s like the Explorer and Lincoln Navigator, increasing the country's gasoline consumption. The most recent Environmental Protection Agency data puts the fuel economy of the average new vehicle at its lowest point in two decades as the nation's buying preferences have shifted to light trucks.

Daniel Becker, the top global warming expert at the Sierra Club, said the company's move away from its 25 percent pledge was appalling, adding that "what Ford is doing is telling the American people that we can't trust Ford's commitments; they keep moving the goal posts back when the deadline nears."

"Bill Ford's claims to being an environmentalist ring hollow if Ford repudiates the most important environmental commitment it's made in recent years," he said, adding that he hoped that Mr. Ford would personally reaffirm the company's plan.

Mindy Lubber, the executive director of the Coalition for Environmentally Responsible Economies, another environmental group, said "organizations that have worked with Bill Ford trust him, but we'll be watching carefully to make sure that their overall fleet is more fuel efficient and their carbon emissions are considerably less."

EW YORK NOTES: Goal for hybrids may be lofty

April 17, 2003

BY JOCELYN PARKER AND MARK PHELAN

FREE PRESS BUSINESS WRITERS

NEW YORK -- General Motors Corp. Vice Chairman Robert Lutz says he's doubtful that GM would be able to sell 1 million gasoline-electric hybrid vehicles by 2007 because of the high cost of making the vehicles.

The company said a few months ago that it has the capacity to build a million hybrids by that time. But Lutz said hybrids don't make a lot of sense now because many consumers aren't willing to pay premium prices for them. On average, hybrids are $3,000 to $4,000 more expensive to build than traditional gas-powered vehicles.

"The Japanese have been eating these costs for PR reasons," Lutz said. "But if these become popular, no one can afford to eat $4,000 a car to be environmentally friendly."

Toyota Motor Corp. , the first automaker to sell cars powered by a mix of gasoline and electricity, unveiled a larger, faster Prius hybrid Wednesday, hoping to widen its lead in the market for more fuel-efficient vehicles.

The 2004 model -- which arrives at dealerships late this year -- is a midsize hatchback that will replace the current compact version, and is expected to average combined city and highway fuel economy of about 55 miles per gallon, up from 48 m.p.g. for the current version, Toyota said.

Bloomberg contributed to this report.

By MICHAEL McBRIDE

mmcbride@thestarpress.com

(East Central Indiana)

Maybe you need to be a car nut to buy one of those new-fangled hybrid vehicles.

Maybe you need to be a tree-hugger, and what a good Earth Day month for it.

David and Marsha Jenkins are a little of both

He is the son of an engineer, whose mileage-obsessive dad bought a Henry J, Crosley, Triumph, MG, a 1956 Volkswagen and a 1959 Saab 3-cylinder when he was an only child, "back before gas was even a problem."

She has been clearing an invasive species of Japanese honeysuckle from a 12-acre property north of Muncie for the past 20 years - and planting trees.

"It's my way to give back to the earth," Marsha said about the couple's woods where they recently moved.

For the past 5 weeks, they have been driving a new Honda Civic Hybrid the 5 miles to town, and elsewhere. Equipped with both a gasoline-powered engine and an electric motor, the altered Civic is supposed to get 47 miles a gallon in town or 48 on the highway. So far, the Jenkinses have been two-tenths under predictions, 3 miles over and somewhere in-between.

"I became frustrated with the roller-coaster gas prices earlier this year," said David Jenkins, who retired from the Army Reserves this week. "At one time, the media was saying prices would not go below $1.70 this year.

"That didn't happen, but we're ready if it does."

The couple were also persuaded by a $2,000 income-tax credit for ultra-low emission vehicles and 1.9-percent financing.

Whitney and Hildegard Gordon are a little of both, too, but mainly Whitney is the former.

They traded a Toyota Camry in on a Toyota Prius this week.

"I started with sports cars, a pre-World War II Aston Martin, but driving conditions have changed in 50 years," said Whitney, like his wife, a 70-something retired professor at Ball State University. "Flat and with interstates, this is not sports-car country.

"The Prius is ecologically sensible, comfortable and handles adequately; and it is plenty big enough for two senior citizens."

Days when their blood pressure is elevated, they can still roll out their 1948 MG-TC - a two-seat, British-built, right-hand drive roadster that they had driven most days for the first 35 or so years of the 40 years they have owned it.

The Prius's gas engine might shut off altogether once it is up to speed and coasting, said Steve Smith, a sales representative at Stoops Buick-Toyota-Nissan-BMW. Designed from the ground up with hybrid power in mind, the cars have been sold in the United States for the past 3 years - and in Japan for 3 years before that.

Three years ago, they were a little hard to get, Smith said, but not anymore.

"Prius is Latin for 'go before'," Smith said. "And Toyota feels like it is leading the way into the 21st century."

Neither Toyota's Prius, Honda's new-this-year Civic Hybrids, or Honda's 3-year-old, two-passenger Insight should ever need their batteries charged. The systems charge as the vehicles slow down, recapturing energy from the braking systems and drive-train backlash - energy that was lost before on conventional cars and trucks.

Gabe Greene's sales staff had sold eight of the mainstream 2003 Civic Hybrids at Suzy Morris Honda since last fall, compared to four of the smaller Honda Insights in the past 3 years. Ball State University bought three of the Civic Hybrids, said Greene, the new car sales manager.

"There is no formal program, but BSU's Council on the Environment advocated the purchase," said Kevin S. Kenyon, associate vice president of facilities management and planning at the university. "They are similar in cost to what we have been using, but they are smaller in size. Still, I would like to see more in the fleet."

The 120-passenger car fleet is mostly Ford Tauruses and Chevrolet Malibus right now, Kenyon said. He stressed that the university was not advocating Hondas over any other makers, and said other companies all had versions of the hybrids in the works.

"For a gadget guy like me, there is immediate feedback," Kenyon said of the cars, which the school has had for about 6 months. "It's easy to keep an eye on the gauges, and get the ultimate gas mileage."

Contact business reporter Michael McBride at 213-5826.

Advantages:

High mileage.

Extended warranties on drive-train components.

Disadvantages:

Non-folding, rear-seat back rests (Honda mounts its battery pack on the rear of the vertical seat support in the vehicle's trunk. Toyota mounts its battery pack on the trunk floor, but does not offer the fold-down option to keep lengthy cargo from damaging the expensive nickel-hydride units.)

Compact versions so far, although these and other automakers are planning other options.
http://www.fortune.com/fortune/investing/articles/0,15114,443070,00.html

HYBRID CARS

FORTUNE Monday, April 14, 2003

By Stuart F. Brown

From the Apr. 28, 2003 Issue

Now here's a social dilemma: Say Cameron Diaz calls to ask if she can come over to your house right after the post-Oscars parties. You're tickled, of course. Then you realize in a panic that you don't have an industrial extension cord to plug in her electric car. Just take a deep breath and relax. It's not one of those dumb battery cars. Hers is a gasoline-electric Toyota hybrid that never needs plugging in. Whew! No problem after all.

Diaz is just one of a horde of celebrity types who have helped Toyota achieve a PR coup with its Prius compact hybrid, which can get 52 miles per gallon in city driving. Seinfeld creator Larry David even wrote the Prius into his HBO series Curb Your Enthusiasm. Honda's on the high-fuel-efficiency bandwagon too, with its little two-seater Insight hybrid and a hybrid version of the trusty Civic. And you'll be hearing a lot more about hybrid vehicles soon, as the Detroit automakers begin rolling out their own entries in the nascent market. It's a field full of buzz, though nobody can say yet if there's a real business there.

Americans surprised the auto industry by buying 36,000 Toyota and Honda hybrids last year, a number that's expected to blossom to some 58,000 hybrid sales this year, according to the research firm J.D. Power & Associates. Viewed as a percentage of total U.S. vehicle sales, hybrids so far are trivial, accounting for just 0.2% of the market last year. But growth like that is hard to ignore, so General Motors, Ford, and DaimlerChrysler are hustling to get in on the action, with varying degrees of urgency. Their motivations are legion.

General Motors CEO Rick Wagoner astounded the Detroit auto show earlier this year when he announced that by 2007 the company will be tooled up to produce three types of hybrids in volumes as high as a million per year, if the market wants them. GM's first offerings, hybridized versions of the Chevy Silverado and GMC Sierra pickup trucks, will go into production this year. Next year, hybridized Ford Escape SUVs and Dodge Ram pickup trucks will go on sale.

But as the Detroit automakers labor to get their hybrid offerings into production, they may find themselves feeling--once again--that they are playing catch-up with the Japanese. Toyota's Prius was introduced in the U.S. in 2000, and in Japan in 1997. This month a second-generation version of the compact hybrid will be rolled out at the New York auto show. And in two years, Toyota's Lexus nameplate will introduce a high-performance hybrid version of its new RX330 luxury SUV as part of a hybrid sales push that Toyota president Fujio Cho hopes will reach 300,000 vehicles per year worldwide by mid-decade.

A lot of people aren't quite sure what's different about hybrid vehicles. Their recent adoption by Hollywood trendies might suggest that there's some new sort of magic under a hybrid's hood. Arianna Huffington has proclaimed them to be vehicles of peerless moral standing. Is there some kind of morality amplifier in there? A number of citizens polled unscientifically over dinner in recent months have revealed their fear that hybrid cars need to be plugged in for recharging every night. And so forth.

To clear the air on the hybrid topic, so to speak, here's a primer: They are fueled by gasoline, and nothing else. Hybrids' powertrains, as engineers like to call the engine-and-transmission combination, have a traditional piston engine and incorporate some extra electrical components, including an electric motor-generator, a black box full of high-energy circuitry, and a bigger battery than a regular car's. A hybrid can deliver fuel-economy improvements of 10% to 50% depending on the ambitiousness of its design and the way it's driven. The gains come from capturing normally wasted braking energy in the form of electricity and pumping it back into the battery, and from shutting off the engine briefly at stoplights. Hybrids also use their electric motors to provide some or all of the vehicle's power at speeds at which the gasoline engine is inherently inefficient. Hybrids cost more to manufacture than their traditional piston-engined counterparts, and the ones that have the best fuel efficiency tend to cost the most to build because of their increased engineering complexity and the pricey extra components that they contain.

The amount of engineering effort required to "hybridize" a piston-engined vehicle's powertrain ranges from moderate to gigantic, depending on how enterprising the design is. A lot of the work goes into developing the sophisticated computer controls and "power electronics" in the black box that shuttles electricity between the motor-generator and battery as driving conditions demand. The humble Prius, for example, has no fewer than six chips and zillions of lines of computer code directing its underhood workings, which rival a small town's electric grid. Developing all that stuff and making it work smoothly takes a lot of time and money. Being first out of the gate is an advantage for Toyota and Honda, which have already refined the designs and lined up the component suppliers needed to build their hybrids.

Some automakers will probably never offer hybrids, while others will end up purchasing the components needed to hybridize their vehicles from outside suppliers, to save on development costs. Both Toyota and GM have said their hybrid bits and pieces will be available for sale to other automakers, and Nissan has already agreed to purchase hybrid components from Toyota. GM is expected to announce similar partnerships soon.

Can the automakers make a real business out of hybrids? "If a hybrid costs $3,000 more to build than a conventional powertrain, and the government is going to kick in a $2,000 tax credit, that's probably okay," says David Cole, director of the Center for Automotive Research in Ann Arbor, Mich. "But if the tax credit goes away, is the customer expected to pick up that $3,000 premium?" Cole is referring to the tax credit currently available to hybrid purchasers, which will be phased out by 2006. A bill sponsored by Utah Senator Orrin Hatch would increase the tax break for hybrid buyers to as much as $4,000, but has yet to make its way through Congress.

Like America, Japan has a fledgling hybrid market. But the interest in Europe is almost nil, and you won't be seeing a hybrid Mercedes or Volkswagen in a U.S. show room any time soon. In their quest to squeeze more driving miles from expensive fuel, the Europeans have been buying advanced diesel cars by the millions. These new-generation diesels use electronic controls and new fuel-injection systems to make good power, without clatter and black smoke. The advanced diesels would have a hard time meeting EPA pollution rules in this country, however.

One thing that's certain about hybrids is that they are great for green PR. Toyota and Honda have used their hybrids to nurture reputations for smart engineering and environmental sensitivity. The other manufacturers may look like slightly late arrivals on the scene, but it's hard to see how adopting fuel-conserving technology in some models could hurt their images. Then there's the all-important matter of the corporate average fleet economy, or CAFE, rules. Although it is moving aggressively into full-sized pickup trucks, Toyota has always managed to stay within the CAFE limits. And Honda, which has a very fuel-efficient fleet of products, is in no imminent danger of facing CAFE worries. But at the Detroit Big Three, where fuel-thirsty SUVs and light trucks are the profitmakers, staying on the right side of the CAFE regulations is a worry that significant hybrid sales could mitigate. Makers that exceed the CAFE limits draw fines from the federal government and criticism from environmentalists. "The Big Three have been just sort of skating along, barely making their light-truck CAFE numbers every year," observes Walter McManus, executive director of global forecasting at J.D. Power & Associates. "The mild-hybrid pickups could help them meet the proposed 1.5 mpg increase in the CAFE standard for trucks."

Having pitched the compact Prius to environmentally minded efficiency buffs, Toyota will be taking a different and interesting approach to marketing the Lexus 330 hybrid SUV. "We're going to position it as a V-6 vehicle with the performance of a V-8, and by the way, it has four-cylinder fuel economy," says David Hermance, executive environmental engineer at Toyota Technical Center in Torrance, Calif. "With the upscale vehicle, you've got to sell the customers on performance, and give them the fuel economy." Hermance says it adds more than $2,500 to the production cost of a Corolla-sized compact car to make it into a Prius hybrid. So far, Toyota and Honda haven't fully passed along to customers the added costs of building their hybrids, which sell for about $20,000. But in pursuing the luxury-performance segment, Toyota is trying to make the hybrid feature pay its own way.

Expect confusing claims in the next few years about whose hybrid is the real thing. Every maker adding some electrical propulsion and regenerative braking to its piston-engined vehicles will be calling them hybrids. But some will contain more extensive engineering, and more cost, than others. Engineers talk about hybrid designs ranging from "mild" to "full." The most modest setup is the belt-driven starter-alternator GM will offer on its Chevrolet Equinox and Malibu in 2006 and 2007. It consists of an electrical gadget that replaces the truck's normal alternator and starter motor. Electronic controls switch it from being a generator to being a motor, as needed. The system gathers energy and stores it in a battery when slowing down, and adds some electric power to the truck's piston-engine power when accelerating. It also starts up the piston engine when you turn the key.

The next level up in complexity puts a slim, large-diameter starter-generator where the engine's flywheel normally would be. It is the system used by Honda in its Insight and Civic, by Dodge in the Ram Contractor Special pickup it will sell next year, and by GM in the Chevy Silverado and GMC Sierra pickups it will start building later this year. The Dodge and GM systems will also function as stationary generators when idling in park, letting the truck owner plug in power tools such as saws and drills at remote worksites.

The most complex systems are "parallel" designs that enable a vehicle to move on its own at low speed solely under electric power. These systems trade the cost of additional hardware for the benefit of even greater fuel efficiency. Toyota's Prius, the Ford Escape hybrid that's coming next year, and GM's hybrid Saturn VUE, a small SUV that will go on sale in 2005, use parallel designs.

The technology is here, but will people care enough about fuel economy to make hybrids a real market segment? If geopolitical anxieties once again push fuel efficiency into the calculations of vehicle shoppers, the automakers will have three choices: (1) Start shrinking the size and weight of their products; (2) Solve the emissions hurdles facing advanced diesels; (3) Hybridize, to whatever extent people are willing to pay for.

We're now in a period of high crude-oil prices induced by the war in Iraq, the supply disruption in Venezuela, and a cold winter that drove up demand for heating oil. But once those conditions have passed, America's gasoline prices are likely to return to bargain-basement levels. Ample worldwide oil and gas reserves mean that fuel prices are likely to remain reasonable for at least another decade or two, depending on how heavily governments choose to tax them. Facing $5 per gallon prices at the pump would doubtless transform people's vehicle choices, but it's hard to imagine Congress pushing for heavy gasoline taxation anytime soon.

A wild card that could change the national thinking about hydrocarbon fuels overnight is the weather. If global warming were to produce a giant storm of the sort scientists have warned about--erasing mankind's presence from Florida, say--or if those threatened sea-level increases began noticeably gnawing away at low-lying coastal areas, the policy picture would change quickly.

Over the next few years the manufacturers will learn just how much fuel economy is worth as customers in the show rooms make their own return-on-investment calculations on the added cost of hybrid technology. It's possible that hybrids will turn out to be a case like VW's New Beetle, where most of the people who really wanted updated Beetles bought them in the first few years, and then sales drove off a cliff. If hybrids end up being show room duds, the manufacturers will put the technology on the shelf, to be tried again someday when fuel prices are higher. Remember the caveat GM's Wagoner attached to his newsmaking million-hybrids announcement: if the market wants them.

Looking further down the road, carmakers like Toyota point out that the electric-drive, power-control, and battery systems that hybrids need will also be key building blocks of the fuel-cell cars that could begin getting into volume production in a decade or so. Extract the piston engine and gas tank from a hybrid, and drop in a fuel cell and some sort of hydrogen storage, and you're off into the clean green future, the argument goes. They are right about that. Experience gained from the uncertain hybrid business will be critical to getting into the even more uncertain business of fuel-cell cars. It's just too early to say more.
http://www.fortune.com/fortune/investing/articles/0,15114,443076,00.html\