hybrid

The annual auto shows are usually an opportunity for the world's carmakers to put on the ritz, but these are straitened times. I've seen carmakers set up indoor off-road courses and let thrill-crazed journalists romp through them in mud-splattered Jeeps, but this was not one of those years.

Ford's Fusion Hybrid: a car of the future.

General Motors, whose CEO was in Washington begging for a $25 billion bailout, decided that it would not, after all, introduce its new Buick LaCrosse and Cadillac CTS Coupe at this week's Los Angeles Auto Show. GM is burning through $2 billion in cash a month, and could run out of money early next year. Its sales declined 45 percent in October.

Chrysler, also burning through billions, declined to showcase any new models in Los Angeles or hold the usual gala press conferences.

Ford, with sales down 18 percent this year, could afford to debut new models because it just earned $540 million selling the lion's share of its stake in Mazda. The 2010 Mustang may get the headlines, but probably more important to the future of the company are a pair of hybrid sedans, the Ford Fusion and Mercury Milan.

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President-elect Barack Obama went into the Motor City's lion's den last year, speaking before a sold-out audience convened by the Detroit Economic Club. He told the assembled business and political leaders not what they wanted to hear, but what they needed to hear.

"'For years," he said, "while foreign competitors were investing in more fuel-efficient technology for their vehicles, American automakers were spending their time investing in bigger, faster cars....Here in Detroit, three giants of American industry are hemorrhaging jobs and profits as foreign competitors answer the rising global demand for fuel-efficient cars....The need to drastically change our energy policy is no longer a debatable proposition. It is not a question of whether, but how; not a question of if, but when. For the sake of our security, our economy, our jobs and our planet, the age of oil must end in our time."

Obama then described a plan to subsidize 10 percent of the Big Three's retiree health care costs (as much as $7 billion) if the companies would invest half of that savings in fuel-efficiency research. His alternative idea was $3 billion over 10 years to remake auto plants for a new generation of clean cars.

Obama wants a million plug-in hybrids on the road by 2015, a plan that could be derailed by insufficient lithium-ion battery capacity by then. He has a 10-year, $150 billion renewable energy plan.

Felix Kramer of CalCars.org, an early and consistent voice for plug-in hybrids, thinks the Obama plan is achievable. "Scaling up to produce a million plug-in vehicles in six years is far less challenging than what auto industry achieved after Pearl Harbor, switching in a year from cars and trucks to tanks and planes," he said. "And supplying batteries for those vehicles is attainable, especially since we have good enough technology to get started now."

Kramer also likes Obama's plan to have half of all new federal new car purchases by 2012 all-electric or plug-in. "That firm commitment to purchase 30,000 or more vehicles annually will be welcome to carmakers gearing up to produce plug-ins. It won't be hard to deliver," he said.

All well and good. But none of the proposals Obama has put on the table so far, by themselves, will turn around the increasingly dire situation for American automakers, which have indeed let foreign companies take the lead in fuel efficiency. The automakers need immediate and concentrated help, and they need clear direction. It's hard to see how a GM/Chrysler merger--bringing together two companies with SUV-heavy product lines--is a clear answer.

It's a cliche to say that Obama has a lot on his plate. But he can't defer action on the auto industry for long. He clearly understands the issues, and the imperatives of a quick turnaround. The Senator from Illinois is proving adept at getting his transition team in place. Let's hope that putting the ailing automakers on a green path is a day one priority.

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"All this merger talk is very interesting," said a Chrysler executive who asked not to be identified. "There is certainly always a time when things like that make a lot of sense."

And this is that time. It would have been unthinkable as little as a year ago, but now it's all about the cash. GM, which lost $18.8 billion in the first six months of 2008, has $21 billion of it left on hand. With car sales in the basement, the company could run through that by the end of the second quarter.

Chrysler bid for cool last month was no less than three proposed EVs.

Chrysler's big asset right now is not its SUV-heavy product line: It's $11 billion in cash. GM's share price dipped below $5 in the wild flailings of the last week, and its market capitalization fell to a marginal $3.6 billion.

A billionaire could put the whole U.S. auto industry in his or her back pocket right now. As the Wall Street Journal reported, "At Friday's prices, someone with $8 billion or so lying around could have bought all the public stock in both companies [Ford and GM], and had change left over."

If Chrysler were to be merged with General Motors -- and it looks about 50-50 at this point -- they would create a rather lopsided company. Both entities are like luxury liners that didn't want to turn around when the SUV phenomenon started to go south. And when they did start to move, they both had the same green idea: series hybrids, in which a small gas engine acts as a generator to drive an electric motor (which is what turns the wheels).

GM was first with the ingenious Chevrolet Volt, which is due to be on the market by 2010, but then Chrysler, not to be outdone, said it had two cars just like it (a Jeep Wrangler and a Chrysler Town and Country minivan). As announced in September, the cars had huge lithium-ion battery packs. But the small gas engines are in the let's-look-around phase.

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When the automobile was new in 1900, there was no clear consensus which technology would triumph. Would it be gasoline, steam or electricity? The smart money was on electricity, which shows that the smart money can be wrong.

We're in a similar period now, trying to find what comes after the straightforward, gas-burning internal-combustion engine. There's still a lot of fog, and it's unlikely to clear soon. But from where I sit today, here are eight leading technologies, listed in priority order from most-likely to could-be-a-contender:

1. Plug-In Hybrids. There's no question that plug-in hybrids, with 40-mile all-electric range and the ability to recharge from standard house current, will be on the market in the next two or three years. The leading (and only) mainstream players are General Motors (which plans on introducing a Saturn Vue plug-in hybrid) and Toyota (with an adapted Prius). Ambitious startups (Fisker, BYD) are also planning to field plug-in hybrids. The big challenge for all of them is developing a lithium-ion battery pack that can stand up to repeated discharge and recharge cycles and still demonstrate the longevity that today's nickel-metal-hydride hybrid battery packs have had. GM and Toyota talk about 2010 introductions, but battery development headaches could delay that.

2. Battery Electrics. Again, it's all about the batteries. Lithium-ion is the current leader, but is it ready to carry four passengers in a fully featured, crashworthy sedan more than 200 miles? It's time to be cautiously optimistic. Nissan has plans to bring an electric car to the U.S. by 2010. Chrysler, which has been lagging in green technology, surprised the world by suddenly announcing a concept car known as the Dodge EV, a sports car with a lithium-ion battery pack. It claimed 150-mile range and blistering acceleration of zero to 60 in less than five seconds. Some Chrysler electric is to be on the market by 2010. The sports car was clearly aimed at the Tesla Roadster, a California-built $100,000 exotic which (like the Chrysler) sports a Lotus-designed body.

3. Range Extenders. General Motors is making a big, bold step forward by building the Chevrolet Volt, with production slated for the end of 2010 (as a 2011 model). The Volt is something new: an electric car with a gas motor whose only function (it's not connected to the wheels) is to keep the electric motor spinning after the batteries are depleted. GM had this field (also known as "series hybrids") to itself, but Chrysler has jumped into the fray with range-extender versions of the Town and Country minivan and Jeep Wrangler. As with plug-in hybrids, 40 miles can be enjoyed in battery-only mode, but the gas engine extends that to 400 miles or more.

4. Very Small Cars. It doesn't have to be a hybrid; in fact, some of our current hybrids, based on SUVs, are actually gas guzzlers. High fuel prices have created a strong American market for very small cars, and carmakers such as Ford have been emboldened to start selling in the U.S. tiny, fuel- and space-efficient cars once relegated only to Europe or Asia. Consider the Toyota iQ. The minuscule car is just 118 inches long, but can carry three adults (plus a child)! It reportedly achieves 60/51 mpg fuel economy. The Toyota of 10 years ago would never have contemplated selling iQs in the U.S., but now it is definitely being considered.

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General Motors has some real clunkers for which it waves a green flag. Take the new $71,685 Cadillac Escalade Hybrid, which goes on sale this month. It costs $3,600 more than a standard Escalade, and achieves fuel economy of...20 mpg in town and 21 on the highway. Sure, the conventional Escalade is much worse at 12 and 15 mpg, but even as an innovative dual-mode hybrid, the Sierra Club is not going to be celebrating its release.

The all-new Cruze: 40 mpg?

GM should see waving flags in its sales numbers. The Escalade, for instance, was down more than 40 percent from July 2007 to July 2008. Nobody wants big SUVs.

But GM has some models that do deserve attention, such as the Cobalt Xtra Fuel Economy (XFE). For 2009, that one gets a very impressive 37 highway mpg (one mpg more than in 2008), a feat it achieves via variable valve timing, a new and taller final drive and trick tires with low rolling resistance.

The Cobalt is kind of plain-jane, but it's got bragging rights. When it was introduced last year, the XFE was six percent of Cobalt sales; now it's 15 percent. Through July, the 2008 Cobalt was a whopping 29 percent of total Chevrolet sales. The Cobalt line is only around through the 2010 model year, however, and will be replaced by the all-new Cruze (which rides on GM's compact Delta platform).

Initial reports have said the Cruze, built in Lordstown, Ohio and around the world, will get more than 40 mpg, but there's also news that the car will be larger than the Cobalt -- a danger sign.

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I don't really understand General Motors. The company is totally on the ropes, reporting a three-month loss of $15.5 billion in early August, with North American sales down 20 percent. Some 74,000 workers could lose their jobs in a new round of buyouts and early retirements. And more factories making big SUVs and trucks will close.

The Tahoe XFE: only modest fuel-efficiency gains.

We're still waiting for competitive small cars that would get people excited about going into a GM showroom. Meanwhile, the company's strategy is...to make minuscule improvements to its big Silverados, Sierras, Tahoes and Yukons and paint them PR green.

The new Xtra Fuel Economy (XFE) models (all with two-wheel-drive and the 5.3-liter V-8 engine), deliver a five percent improvement in highway mileage and seven percent in city driving! Wow! A combination of weight loss, aerodynamics and mechanical improvements gets them to 15 city and 21 highway! Standard big boys are at 14/20, so if you do much highway driving you'll hardly notice an improvement.

The same basic problem exists with GM's big hybrids. The '06 Chevy Silverado Hybrid, for instance, delivers 16/19 mpg. Not exactly impressive, and again hardly better than the standard (and cheaper) truck. For '09, GM will put its sophisticated dual-mode hybrid system in the Silverado, for a claimed 25 percent overall fuel economy improvement. But it's still a gas guzzler.

Guess what? GM trotted out its $50,000 dual-mode Yukon and Tahoe hybrids (21 city/22 highway, comparable to a standard four-cylinder Toyota Camry), and sales have been, well, slow. Instead of the projected 10,000 to 15,000 per year, GM has been selling more like 500 a month.

Here's the problem: They're too big! People don't want big cars and trucks anymore! GM argues that it can have more impact on the environment by improving the performance of the big vehicles that "people want to buy" than it can making small, fuel-efficient cars. But that argument is threadbare today.

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It's fascinating to watch Honda's hybrid strategy unfold. I have been, for years, predicting that Honda would "hybridize" its best-selling Fit hatchback. And that's finally likely to happen. But Honda is also planning something rather better: It's finally coming out with a ground-up, clean-sheet-of-paper Prius-killer.

The two generations of the Toyota Prius have sold an incredible 757,000 (630,000 of them 2004 and beyond). Honda has sold only 277,000 hybrids total, despite being first out of the gate in the U.S. (1999) with the two-seater Insight. Although the Insight was a dedicated hybrid like the Prius, its limited seating and bare-bones accommodations turned off many buyers.

But Honda will introduce an all-new model in calendar year 2009 that, according to spokesman Chris Naughton, will be "on a platform not shared with any other model, in other words, not available in non-hybrid form."

As Naughton puts it, the Insight "made a few people very happy." The new model could make a lot of people very happy, and get the company a long way to its goal of 500,000 hybrid sales a year. It will probably be a five-door hatchback smaller than the current Prius, and sell for less-around $18,000, reports Business Week. The U.S., Japan and Europe are targeted.

Honda President Takeo Fukui acknowledged in a recent mea culpa (May 21 in Tokyo) that Toyota has had the better hybrid strategy. But he plans to remedy that aggressively, not only with the new car for 2009 but also the long-denied hybrid version of the Fit (which would get what, 50 mpg?) and even a hybrid sports car, the CR-Z.

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