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Hybrids versus Electric Cars

GM is on the hybrid bandwagon while other automakers continue to argue against it.
October 25, 2007

According to the Wall Street Journal, Honda, Nissan, and Renault are making the same arguments against hybrid vehicles that General Motors made several years ago to predict that hybrids would fail. (See “Hybrid or Electric: Car Makers Take Sides” and “Honda Won’t Pursue Plug-in Hybrids.”) The difference now is that the arguments are right this time–at least for some markets.

In the 1990s, U.S. automakers such as GM led the development of hybrid-vehicle technology. But GM elected to drop hybrids in favor of a much longer-term technology–hydrogen fuel-cell vehicles–arguing that hybrids were too expensive and didn’t provide enough environmental benefit to be successful. Then Toyota’s Prius proved GM wrong. And recently, GM has become a big promoter of hybrid technology, especially next-generation plug-in hybrids.

Not so Honda, Nissan, and Renault. According to the Journal report, Carlos Ghosn, the CEO of Renault and Nissan, complains that hybrids don’t really do much to reduce petroleum consumption and pollution, arguing that it’s better to build all-electric vehicles that have zero emissions. U.S. automakers such as GM made the same arguments, although they pushed for fuel-cell vehicles, not battery-powered vehicles. (GM, of course, already had a battery-electric vehicle, the EV1, which it scrapped.)

Honda currently sells hybrid vehicles, but the company’s president and CEO, Takeo Fukui, is skeptical of next-generation plug-in hybrids. Such cars would still have both electric motors and a gasoline engine, but they could go much farther on electricity alone than today’s hybrids can. GM has been touting its Volt concept, which would go 40 miles on electricity stored in lithium-ion batteries. For longer trips, a gas generator would kick on to recharge the battery, providing an additional 600 miles of range. Fukui’s argument is that the gas engine in the Volt is unnecessary. Presumably, he is suggesting that it would be better, and cheaper, to use batteries alone, or to stick with gasoline.

His argument doesn’t make sense in the United States, where there’s probably not much of a market for a car that can only go 40 miles on a charge. But a couple of trends suggest that there may indeed be a growing market for relatively short-range electric cars. London has a congestion tax on vehicles driving in the city–and other cities are considering imposing similar fees–from which zero-emission vehicles are exempt. It’s not unlikely that such regulations could evolve to keep non-zero-emission vehicles out of city centers entirely, Ghosn suggests. Meanwhile, the taxes make it more expensive to drive gas-powered cars. Climate-change legislation could also make it more expensive to drive conventional vehicles. As these costs rise, the people who will feel the pressure most are those who are likely unable to afford a car with both an engine and an electric motor. For them, a 40-mile, zero-emission, all-electric commuter could be appealing, especially considering the fact that (in the United States) most people drive less than 40 miles a day.

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