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Catching up looks like a bumpy road for other automakers. Even Honda, probably Toyota’s most advanced hybrid competitor, has its work cut out, according to industry experts. “When it comes to engineering the system as a whole, I think Toyota has three, four years’ advantage over the others, even compared to Honda,” says Koji Endo, a Tokyo-based auto analyst for Credit Suisse First Boston. Honda’s models-which include a hybrid Insight and Civic, and an Accord due this year-have less electrical power and are more expensive to produce than Toyota’s, Endo says.

Detroit’s Big Three are farther behind. Over the last two years, GM, Ford, and DaimlerChrysler have scrapped or delayed half a dozen ambitious hybrid projects. “What they’re learning is that making this transition to electric drive technology is not going to be a piece of cake,” says Dan Sperling, director of the Institute of Transportation Studies at the University of California, Davis. “You can’t just say, ‘Okay, I’m going to build a hybrid car,’ buy the technology, and put it out there next year.”

Last year, Ford delayed the release of its debut hybrid: a version of its Escape SUV. John Kassakian, director of MIT’s Laboratory for Electromagnetic and Electronic Systems, which researches automotive electronics, says Ford is paying the price for its early attempts to shoehorn hybrid technology into existing vehicles. Unlike Toyota’s hybrid SUVs, for example, Ford’s four-wheel-drive Escape hybrids will not have electric motors on each axle, which Ford says would require costly retooling. “Modifying an existing vehicle looks on the surface to be the most efficient way of getting from point A to point B, but you don’t end up with a solution that’s optimized for cost and performance,” says Kassakian. Ford now says it will sell the SUV this year.

Still, the Big Three and other automakers’ decision to finally pursue gas-electric hybrids is itself notable. Until recently, GM considered its money better spent on fuel cell technology. It invested hundreds of millions of dollars in fuel cell R&D and rolled out a radical prototype fuel cell car that it has promised to mass-produce by 2010. “More-efficient petroleum-based vehicles alone will not solve our petroleum dependence problem. We believe long term you’ve got to get to energy sources beyond petroleum, and that’s why hydrogen is so attractive,” says Larry Burns, GM’s R&D vice president. But even Burns acknowledges that automakers need to master hybrids, too, if only for competitive reasons. “We don’t know for sure how big the hybrid segment will be-I don’t think anyone can predict that right now-but we want to give our customers the choice,” he says.

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