Hybrid Autos May Proliferate

By JEFFREY BALL

Staff Reporter of THE WALL STREET JOURNAL

A lot more hybrid gasoline-and-electric vehicles are likely to hit showrooms in coming years as a result of a legal settlement announced last week between California clean-air regulators and two big auto makers. But those hybrids may not curb U.S. fuel consumption as much as many people expect.

Not all hybrid vehicles are created equal. The only hybrids currently on sale in the U.S. -- small cars from Toyota Motor Corp. and Honda Motor Co. -- average 45 to 60 miles per gallon, but their size deters many buyers. In the next few years, several auto makers say they plan to roll out hybrid versions of sport-utility vehicles or pickup trucks. Those models are expected to prove more popular with average consumers. But that's because they'll use their electric power to boost acceleration -- not just fuel economy.

These performance-oriented models, while friendlier to the planet than today's conventional SUVs and pickups, may not be the ecological panaceas that Americans envision when they hear the word hybrid. "With this nascent technology, the public still will be grappling to understand how that [automotive] category is defined," says Alan Lloyd, chairman of the California Air Resources Board, the clean-air agency whose settlement with General Motors Corp. and DaimlerChrysler AG's Chrysler unit is likely to significantly increase the number of hybrids sold nationwide.

The confusion extends beyond California, the nation's biggest auto market. Several Northeastern states are likely to adopt California's rules once the state finalizes them. In Washington, Congress is considering differing proposals for tax credits intended to encourage Americans to buy hybrids by defraying the extra cost -- often several thousand dollars -- of those vehicles in the showroom.

The changing profile of the hybrid is exemplified by Toyota. In October, the company will roll out a new version of its Prius hybrid car it says will average 55 miles per gallon, about double the fuel economy of what Toyota says is the comparable gasoline-powered car, the Camry. Late next year, Toyota plans to roll out in the U.S. a hybrid SUV, a version of its Lexus RX 330, that will pair the SUV's six-cylinder gasoline engine with an electric motor. The hybrid version will average about 30 mpg -- about 50% better than the conventional model -- but will deliver more power. "The vehicle becomes focused on something consumers will pay for, which is performance," says Dave Hermance, Toyota's chief spokesman for its hybrid programs. "We're going to sell them performance and give them fuel economy."

So far, hybrids remain a tiny niche in the U.S., accounting for well under 0.5% of the nation's new-vehicle sales. Although hybrid sales spike a bit when gasoline prices rise, suggesting that some Americans are choosing the cars for fuel economy, most Americans buying them today appear either infatuated with technology or particularly committed to the environment.

In June, John August, a 33-year-old screenwriter in Los Angeles, traded in his BMW and paid cash for a Toyota Prius, which retails for about $20,500. Mr. August says he drives about 60 miles per week and has had to fill up his Prius only once since he bought it. "I bought it mostly because I didn't need a car that could race down the street. I live in Los Angeles, where you're lucky if you can go 30 miles per hour," he says, joking about the city's traffic congestion.

California legal settlement stemmed from a state program designed more than a decade ago to put thousands of nonpolluting battery-powered electric cars on the state's roads. The auto industry called the state's so-called zero-emission-vehicle mandate misguided, pointing out that battery-powered cars remained too expensive and cumbersome to attract many buyers. Acknowledging the criticism, the air board in 2001 told auto makers they could get credit toward the mandate by building hybrids that were especially fuel efficient.

That announcement prompted the suit from GM and Chrysler. The two argued that though California had created its zero-emission-vehicle program to fight the state's notorious smog problem, it now was trying to turn the program into an effort to attack a separate environmental issue: fuel economy, a surrogate for global warming. By doing so, the suit argued, California transgressed a legal line, because federal law says that only Washington can set fuel-economy policy.

Rather than continue to duke out the issue in court, California settled, removing the reference to fuel economy from its rules and giving the auto industry more leeway to comply using a variety of hybrids.

The rules, hugely complicated, give auto makers various options to comply. But California officials estimate that auto makers are likeliest to pick a scenario in which collectively they will have to sell about 430,000 hybrid vehicles in the state from 2005 through 2010 -- more than double the number envisioned before the state made its changes this spring.

Why did auto makers agree to that change? One reason is that their suit against California was giving GM and Chrysler a public black eye. Environmentalists frequently were lambasting both companies -- particularly GM, the world's largest auto maker -- for trying to thwart what the activists praised as the most aggressive attempt in the world to get the auto industry to build environmentally friendlier cars.

Another reason: California's latest changes reduce the amount of electric power that a hybrid needs to have to earn its manufacturer credit toward meeting the California mandate.

Both GM and Chrysler have said they plan to roll out versions of their full-size pickup trucks in the next year. Chrysler won't say how much of a fuel-economy improvement its hybrid will have over a conventional pickup, and the company says an even bigger factor in its decision to settle the California suit was that the state ensured that the auto maker could get credit for small electric vehicles it has been selling there. GM says its hybrid pickups will get about 10% better fuel economy than conventional models.

That's a far smaller percentage of fuel-economy improvement than Toyota's and Honda's hybrids offer. But GM and Chrysler officials say their strategy will do more to reduce U.S. reliance on foreign oil and global-warming emissions, because it's these big pickup trucks that are consuming so much gasoline.

The California air board's Mr. Lloyd makes no apologies for the settlement with GM and Chrysler. For the rules to have any environmental effect, he says, they have to be at least somewhat palatable to the auto industry. "This way we get cleaner air faster," he says. "We can't produce cars. They have to be convinced that there is a market out there."
http://online.wsj.com/article/0,,SB106323048544113300,00.html

September 11, 2003

PERSONAL JOURNAL

Toyota's Prius: No Plug Required

By SHOLNN FREEMAN

Staff Reporter of THE WALL STREET JOURNAL

Write to Sholnn Freeman at sholnn.freeman@wsj.com 1

DETROIT -- In a new push to expand sales of the Prius gas-electric hybrid car, Toyota Motor Corp. wants to get one thing straight: No, you don't have to plug it in.

Toyota hopes to expand sales of the hybrid vehicle by 70% next year -- from 21,000 projected this year to 36,000 in 2004. But the auto maker concedes that most consumers are still puzzled by hybrids, which combine an electric motor with a gasoline engine to get much better fuel economy than traditional cars. In surveys, Toyota has found that about half of all consumers either wrongly believe that you have to plug in hybrids or say they don't know enough to answer the question.

With more hybrids coming, auto makers badly need consumers to grasp the technology.

Toyota will begin selling its redesigned 2004 Prius hybrid to U.S. customers in October and will launch a broad marketing campaign to fuel sales.

In October, Toyota dealers will begin selling the 2004 model of the Prius, which has been redesigned. The new model has more interior room and gets about 55 miles per gallon, a 15% increase over the previous model. The base price of the Prius is $20,000. Later this year, Toyota also plans to begin selling a hybrid version of the full-size Tundra pickup truck and the Lexus RX 330.

Old notions have to die first, though. Consumers haven't forgotten that early versions of fuel-efficient electric cars needed to be plugged in for power. Fuel-efficient cars were also tagged as impractical because they couldn't fit many passengers or people's stuff. Honda Motor Co.'s four-year-old Insight, which only has seats for two, never became popular. But Honda's hybrid version of the Civic, which consumers think of as a normal-size car has sold well. Toyota dealers say they have sold out of their 2003 Prius inventory and are predicting strong demand for the 2004 model.

Toyota hasn't given up on celebrities. In July, Toyota organized a private showing of the Prius to movie stars, producers and directors in Los Angeles. Toyota said it has 1,200 preorders of the 2004 Prius, including 24 orders from the Hollywood event.

Some of the glitterati were also looking for more than a showing. "Everyone wants a free one," Ms. Meyer said. "But we're not giving away free ones."

http://online.wsj.com/article/0,,SB106330989634538600,00.html

U.S. BUSINESS NEWS

September 11, 2003

 

Toyota Plans to Sell Hybrid Lexus Model

By NORIHIKO SHIROUZU

Staff Reporter of THE WALL STREET JOURNAL

NAGOYA, Japan – Toyota Motor Corp., which is expected to start selling a gasoline-electric sport-utility vehicle in the U.S. next year, also will likely add a hybrid version of its premium sedan, or the Lexus LS430, to its expanding lineup of alternative-fuel vehicles.

A senior Toyota executive, who spoke on condition of anonymity, said he has test-driven the hybrid LS430 sedan and found it to be "balanced" between performance and environmental gains a hybrid system provides. A hybrid car combines an electric motor with a gasoline engine to get much better fuel economy and performance than traditional cars.

As in the hybrid version of the Lexus RX330 called the Lexus RX400h, which is expected to hit dealer showrooms in the fall of 2004, the hybrid LS430 uses its hybrid system in part as a super charger to help accelerate the vehicle. The hybrid sedan also will provide improved fuel economy, the executive said.

The focus on performance is part of Toyota's effort to make hybrid technology appeal to mainstream customers, and not just tree-huggers. Initially, Toyota focused on fuel-economy gains with hybrid technology, but that approach has limited hybrid vehicles' appeal more or less to tech-savvy or environmentally conscious consumers.

Toyota has said it hopes by the middle of the decade to sell 300,000 hybrids a year world-wide, most of them in the U.S.

Toyota's redesigned Prius hybrid car is expected to start arriving in dealers next month. The Japanese auto maker wants to expand sales of the new Prius to 36,000 in 2004 from 21,000 this year – an increase of about 70%.

The Prius will be followed by the Lexus RX400h and a hybrid version of the Toyota Highlander. A Toyota executive in Torrance, Calif., said the hybrid Highlander's launch will very closely follow that of the RX400h.

In addition to the two hybrid SUVs, the American Toyota executive, who also declined to be named, said the auto maker is "exploring" the possibility of offering a hybrid version of the full-size Tundra pickup truck.

The executive said he believes even pickup-truck drivers who typically pay premiums for big horsepower and towing capacity will care enough about fuel economy that there should be enough demand to justify turning Toyota's next-generation Tundra into a full-fledged hybrid vehicle. The hybrid Tundra pickup likely would arrive in showrooms after Toyota launches the redesigned Tundra pickup in a few years, he said.

Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com 1
http://www.nytimes.com/2003/09/19/automobiles/19ELEC.html

September 19, 2003 NY Times/Escapes/DRIVING

By CHRIS DIXON

.K., you hit this button," says Alan Cocconi, pointing to a control on a little G-force meter attached to his dashboard. "Then hold down the brake really hard. Push on it with all your might. When it says
Go,' let off the brake and hold on."

With that he steps out of the car. A flat, straight half-mile of asphalt is dead ahead; alongside stretches the runway of Brackett Field Airport east of Los Angeles. With the throttle and brake pedals fully pressed, the bright yellow sports car shudders with power — but rather than the roar of a caged Lamborghini, the only sound is a muffled whine. Though the whine becomes only marginally louder when the brakes are released, everything else changes as the car lunges forward in a jaw-dropping, stomach-clenching and near-terrifying blur. In 3.7 seconds, it's all over. That's the time it has taken for this little electric sports car, the Tzero by AC Propulsion, to reach 60 miles per hour. And its only power is from a simple array of lithium-ion laptop computer batteries.

Few street-legal automobiles are capable of running to 60 m.p.h. in under four seconds, and it's a safe bet that the Tzero is the only electric-powered car that can. The founders of AC Propulsion, based in San Dimas in the suburbs east of Los Angeles, seem to think that the lithium-ion batteries have led them to the holy grail of electric motoring: range and performance in one package. This is, however, after the major automakers have cast aside ideas of all-electric vehicles and turned their attention to hybrids and fuel cells.

Thunderously fast but whisper quiet, the rear-wheel-drive Tzero began life in the late 1990's as a showcase for AC Propulsion's high-revving AC 150 drive system. A 220-horsepower street-legal racer, the car was powered by a series of deep-cycle automotive lead acid batteries. With 1,250 pounds of batteries on board, the original car was good for 4.1-second zero-to-60 times with a top speed of 90 m.p.h. and a range of 80 to 90 miles.

Last month, however, AC Propulsion unveiled the latest version of the car, now powered by 6,800 lightweight lithium-ion laptop computer batteries. With these batteries — and an increased top speed — the Tzero weighs 700 pounds less and the company says it will run up to 300 miles on a single charge — which requires a few hours plugged into a 220-volt outlet like the ones many households have for clothes dryers. It can also be recharged at a 110-volt outlet, but it takes about three times as long.

The car, priced at $220,000, is available only directly from AC Propulsion and has not yet met federal safety regulations. The company says, though, that it is legal for street use when registered as a "special construction vehicle," which is the way homemade and kit-built cars are registered. The Tzero at the speedway had a California license plate and had been driven to the track. So far, the company said, deposits have been made for eight cars with the lithium-ion system. (Two earlier versions, with lead acid batteries, were sold for private use.)

What will a Tzero buyer get?

A car that, from zero to 100 and through the quarter mile, will run with, or beat, the $281,000 Lamborghini Murciélago, the $224,000 Ferrari 575M Maranello or the $440,000 Porsche Carrera GT. And do it cleanly and quietly. However, with the single-gear Tzero's engine limited to just over 100 m.p.h. at 13,300 r.p.m.'s, it will never win an oval-track race against those supercars. But its developers are betting that the car's power and range will generate renewed interest not only in their company's offerings, but in electric cars in general.

The Tzero is the brainchild of Mr. Cocconi, an engineer, and Tom Gage, a former race car driver and an engineer. Mr. Coccini founded AC Propulsion just over a decade ago after having worked for General Motors as a founding engineer on the company's Saturn EV1 electric car project. Mr. Cocconi said he decided to go out on his own after G.M. decided to build the car. "I didn't want to be a part of the big G.M. machine," he said. "About a month afterward, I thought about upgraded chargers and what techniques were possible and I started AC Propulsion." With that, he ripped the engine and transmission out of a Honda CRX, and set to work devising his own drive system. Today, 160,000 miles later, he said, that Honda is still humming.

Mr. Gage met Mr. Cocconi while working as an automotive industry consultant on electric vehicles in the early 90's. "When I interviewed Alan," Mr. Gage said, "it became obvious that not only did he clearly know what he was talking about, but he was doing something about it. I drove a prototype of his and was blown away." A year later, he said, the consulting work dried up and he joined AC Propulsion.

The company's early days coincided with California's Zero Emissions Vehicle or Z.E.V. mandate. When it appeared that automakers would be required to sell a substantial number of Z.E.V.'s, manufacturers were a primary customer for AC Propulsion's systems for testing and evaluation. When the mandate was challenged by manufacturers in 2001, Mr. Cocconi said, sales dried up. Today the company sells its $25,000 E.V. conversions to private enthusiasts and to bus companies. Mr. Gage said that the lithium-ion setup, and plans to offer a conversion system for Toyota's Scion xB, could chart a new course for a company that today has only 12 full-time employees.

MR. GAGE said that he and Mr. Cocconi realized that they could never produce a car with the economies of scale of a Honda or a Toyota. "That's how the Tzero was born; it's a niche," Mr. Gage said. "We knew it would be expensive because it was hand-built in-house, but it would justify its price because it would have outstanding performance." The Tzero was based on a mid-90's car called the Sportech that was designed by several Detroit engineers and powered by a motorcycle engine. According to Mr. Cocconi, only five were made. AC Propulsion modified the Sportech's bare-bones design with a beefier frame, doors, windows and a roof.

A few weeks ago, AC Propulsion took the revamped Tzero to the California Speedway in Fontana, 20 miles east of Los Angeles. Under the baking sun, the first tests were run alongside a Chrysler Crossfire and a Scion xA that Mark Vaughn, a senior editor of AutoWeek magazine, had brought to track test. Also on hand was Tony Shalhoub, the star of the USA Network series "Monk." Mr. Shalhoub, who described himself as the avid owner of a Toyota RAV4 EV and was tipped off to the demonstration by a Toyota dealer, said that he wanted to see what the Tzero would do.

On the first day of testing the new lithium-ion system, the Tzero's traction control and handling were not calibrated to the car's 700-pound lighter weight. Thus the Tzero could only muster a 4.1-second zero-to-60 time because its rear tires kept breaking free. In the slalom, the Tzero ran only slightly faster than the Mercedes-engineered Crossfire, but Mr. Vaughn said that with the suspension properly calibrated and stickier tires, it could have run faster.

"It's pretty cool," Mr. Vaughn said. "With a gas car you have to play around with engine power and adjust where you engage the clutch. With this thing, you just step on the pedal, light the fuse and keep steering."

Next, the Tzero and Mr. Shalhoub disappeared up the test track, with an occasional smoking of the tires. He came back, zigzagging on the way, and compared the car's acceleration to a ride he had taken in a Navy Blue Angel jet. "I thought I was at the top end," he said. "Then I stepped on it a little more and it doubled in speed. It's terrifying, but it actually handles beautifully."

Mr. Vaughn, who described AC Propulsion as "the most legitimate of all electric-auto makers," said that the company faced an uphill battle even with the Tzero's 300-mile range and a promised 190-mile range in a converted Scion xB, a small, boxy four-door wagon that is considerably heavier than the Tzero. "For AC Propulsion," he said, "the Tzero alone might not be the secret. Even if they get a sugar daddy, that's not enough. They need to get a Honda or Toyota to say,
Yeah, we want it.' If they're going to offer conversions for xB's, which makes sense, that would offer a lot."

Last week, in preparation for a pending clean-car challenge called the Michelin Challenge Bibendum, next Tuesday to Thursday in Sonoma, Mr. Cocconi was again ready to put the Tzero through its paces. With suspension and traction bugs ironed out, the Tzero ran the 0-60 test that yielded 3.7 seconds. It was also ready for a drive along the stunning Glendora Mountain road in the Angeles National Forest. With ample opportunity to run in the real world, the car was a wonder to behold. Because the car recharges its batteries when the throttle is released — slowing sharply as energy is recaptured — it can be driven hard using only the accelerator pedal. Also, if the car detects a turn with more than half a G-force, it eases the rear-wheel regenerative braking to prevent slides. After a driver has had a few minutes to get used to the system, there comes a wonderful sense of limitless, fluid power as the car quietly wails, dodges, thrusts and parries on the mountain road.

"That's unique with an electric," Mr. Cocconi said. "Whether you accelerate or decelerate, you're always in the right gear." He said that no traditional stick shift could do that.

In between the beautiful vistas and the twisting road, it was fascinating to catch glimpses of the ammeter, the gauge that shows the power being consumed. While it goes into negative territory on uphill acceleration, it flies the other way on downhills, charging the batteries. Mr. Cocconi said that because of the up-and-down nature of mountain roads, and relatively slow speeds, this is where the car is most efficient. Still, he said, he drove it 250 miles last week on the freeway, and the car's computer indicated it could have gone at least another 40.

At the end of a hard drive, including five scorching zero-to-60 runs, the car had traveled 57 miles and used only 9,900 of the 50,000 watt-hours in its batteries, costing less than the price of two gallons of gasoline. "These batteries," Mr. Cocconi said, "they're really pretty magical."
http://news.mysanantonio.com/story.cfm?xla=saen&xlb=110&xlc=1051640

Dave Beck: Testing by the customers might pay off

Web Posted : 09/08/2003 12:00 AM

Let's say the company releases the product for free, allowing the customer to use it and test it in the real world.

In some industries, such as medicine, this might not work out so well. I'd want hospital equipment or medications, for example, to be put through rigorous clinical trials before being cleared for medical use.

But in some industries, asking customers to test products has actually become the norm. Just ask Bill Gates.

Companies like Microsoft routinely make beta versions of new software available to anyone wanting to download and test the programs. For the computer industry, in which having the latest version of a product is at a higher premium than most other industries, this is a great strategy.

Companies build loyalty by giving good customers new versions of software before they hit the stores, and companies get to fine-tune their programs based on input from these loyal customers.

And if the company does make changes, it's not an admission that it put out something flawed; it's the result of a collaborative effort between the company and the customers most likely to use those products.

To me, there's a valuable lesson here that applies to more than just software companies.

It's a lesson that runs counter to what you may have learned about the competitive business world. The lesson is this: You don't have to be perfect.

To clarify, you don't have to get a product or service 100 percent right before you make it available and announce this news to the world. Obviously, you want to ensure that you're not launching your first version of a product with a broad national distribution. But neither do you want to hold on to your latest creation just so you can fine-tune it one more time.

That's a hard concept for many business people to embrace because we live in a society where we often expect perfection of ourselves and hold others to that standard as well. Besides, because everyone has a different standard of perfection, your "ideal" product may not meet the same standard the users of that product are expecting.

But we also live in a competitive world. Americans are able to take advantage of the choices given to them by a global market and are more aware of these choices than ever before through advanced technologies. Companies are finding quicker and more cost-efficient means to produce things.

Quality still is at a premium but so is simple availability.

We're also not as much of a "built to last" society as we once were. We're getting so good at production that it's almost as cost-effective — and usually a lot easier — to replace certain items rather than repair them. If you've ever had a cell phone, computer or VCR go out on you, you know exactly what I mean.

All these factors, especially the desire to get products to market quickly, means we're more likely to forgive little imperfections, especially if they can be corrected along the way. When we roll out a new account type or product, we have a team that meets regularly during the initial launch period to review customer feedback and adjust the product until it's as close to what our customers want as we can make it.

For example, software companies make new version updates available to their customers, typically addressing flaws that have surfaced through customer use. Cell phone networks are routinely improved, which in turn helps the reception and performance of each phone. Retail stores will change their layout and inventory to meet customer demand.

In each of these cases, you're seeing the company adjust to the needs of its customers. A customer notes that a product or service isn't 100 percent right, and the company, in an effort to make it so, adjusts to address the concern.

In some cases, the impulse to improve a product comes from the company figuring out a better way to do something. The customer won't notice anything wrong if it's not changed but would definitely favor the improvement if old and new were put side by side.

That's why, for example, you're currently seeing car manufacturers talking up their new 2004 models. Some of the cars are being changed cosmetically, while others are being completely revamped. Some of the changes come from customer concerns; others are just fine-tuning.

The 2004 Toyota Prius, a gas/electric hybrid, for instance, is significantly changed from the 2003 version. Given the relatively new technology the Prius employs, you would expect hybrids to evolve and improve over time. Honda boasts two hybrid models, as well as a prototype fuel cell car, and most other automakers have one in the works.

But give Toyota credit. They recognized a market hungry for such a car, did the research and put it into production. Was the 2003 Prius the best hybrid car Toyota will ever make? Of course not — the company acknowledges the 2004 model represents "just the start" of this new breed of cars.

But consumers who buy a hybrid vehicle are buying more than just a car. They're buying something they believe will help the environment. Customers such as this, who display a loyalty to ideals your products embody, will be ready to make the journey with you and help you make your products better.

What does that mean for your company? It means you can surge forward with making new products and services available — with a few important caveats.

First off, you have to be reasonably sure of what you're bringing to the sales floor. Your reputation still hinges on quality, and you want word-of-mouth about your company to lead with positives rather than negatives.

Also, you have to be ready to get customer feedback. In fact, you should be encouraging it. After all, you're asking customers to make the journey with you as you fine-tune a product in the real world. That means they have to act, to a certain degree, as partners in development. Without an outlet to comment on what could be improved, your customers will feel left out of the loop. And you've lost your positive word-of-mouth.

Remember: By beta testing your business, you're not letting your company off the hook. You're merely expanding the size and scope of your R & D department.

dbeck@express-news.net; Dave Beck is president of business banking administration at Frost Bank.
http://www.siliconvalley.com/mld/siliconvalley/6713548.htm

Posted on Sun, Sep. 07, 2003