A hybrid below $20,000? Keep dreaming?
Material costs of next generation vehicles too expensive?This morning on MotorTrend, Angus MacKenzie asks, "Are you ready for the bare-bones, 1.6-liter, four cylinder, $25,000 mid-sized car?" Because of high steel, platinum, copper and chemical prices, coupled with increased CAFE regulations, the cost of automobiles is going to go much higher, Angus argues. And the additional costs of hybrid cars just might mean that a base Toyota Prius will start at $28,000.
A next generation hybrid below $20,000? In a couple of years you might be lucky to find a hybrid below $30,000. Maybe that $3000.00 markup on the Prius isn't so bad after all.
Labels: Hybrid Vehicles
posted by Dahcredyns at
8:37 AM
16 Comments:
Thanks big 3! Thanks gas-guzzler buyers! Your stupidity has screwed us all! TINSTAFL - there is no such thing as a free lunch. Your gas-guzzling was always blood oil! Idiots!
I'll just stay that I don't fully agree with Angus. While he makes great points, I think the auto industry is finally ready for version 2.0, or an entirely new way of doing business.
Automakers have to become more nimble, they have to change almost everything about their business, and in times such as this, innovation is bred.
The old gas-guzzling auto industry is over, and good-riddance.
Sure, costs are going up. Can't argue with Angus there.
But Honda recently announced that it plans to keep the cost of it's new small hybrid for 2009 under $2 million yet ($19290).
http://news.yahoo.com/s/nm/20080521/bs_nm/honda_dc
That's true about Honda, but I'm not sure they anticipated the run up in material costs that is occurring right now. Perhaps they did, they are probably the smartest automaker around, so if anyone planned for it, they did.
Still, even if prices do go up, if Honda can offer the cheapest, quality hybrid, that would still be great, as it would all be relative.
What many do not realize is that once EVs / Hybrids really catch on, the parts will start becoming cheaper because of economies of scale. Also, electric motors have far fewer moving parts than its ICE counterpart. Having said that, if consumers are willing to pay the higher prices, the manufacturers will be willing to charge them :) We interviewed the CEO from AMP (the company turning Saturns into all electric) and he gave a good summary of the costs involved in making an EV. This can be found at http://www.evcast.com .
I think people realize that, but you're still probably talking tens of millions of vehicles before economies of scale bring prices down significantly. Likewise, regardless of the costs, smart hybrids, such as the Prius, prove that even with higher up front costs, those costs are recovered in fuel savings, and, usually, less maintenance.
Still, the larger point isn't specific to hybrids, but all vehicles, are we on the verge of huge increases in the prices of auto technology?
My previous comment to this thread argues that innovation will breed better electric motors, better batteries, better everything. Once the focus is on efficiency and cost-effectiveness, I believe we'll find new ways of doing thing - Auto 2.0.
We might actually finder being smarter is actually - sit down - cheaper.
Well... I'm sure Honda *wanted* to sell a hybrid Fit for under $20k. But in addition to the guzzler-fiends jacking up fuel prices, we have the Bush to thank for the American currency falling through the basement.
currency issues are a problem, however, material costs are a problem affecting the entire world, not just the US. even if the dollar gains in strength, those costs will still be high, although not as high (then again, a stronger dollar might only serve to increase demand and thus cost).
just as with oil, global demand for many crucial materials is growing quickly across the world and it appears that demand is only going to grow.
If GM is going to price the Volt at 35 or 40K, this will be another GM failure. Why pay 40 for a 40mpg hybrid when I can buy a Prius for 23000. The big 3 will never learn. Its past time to get off of foreign oil. I'll stick with the Prius, 2 years old and getting 52 mpg. Love my Prius
resoh02-
well, i think the prius is the smartest vehicle available today, and it probably will be for many more years. still, i think the Volt is a great idea. will it be cost-effective? is it a bit ahead of its time?
there are a lot of questions regarding the volt, but its a worthy effort.
i think the big 3 have finally learned. can they react and survive? that's the real question.
Increased CAFÉ standards alone won’t increase the price of cars, but they will increase the price differential between large gas guzzlers and small efficient cars. Guzzlers are bought as a status symbol and many people willing to pay $50,000 for status will be willing to pay $60,000 to maintain their status. The price of small cars might even go down. Manufacturers make very little money, if any, on a stripped down small car. Their profits come from large vehicles and high-end options. The standards won’t be met by spending the money to make mid-size cars more efficient. They’ll be met by selling smaller cars and charging an even greater premium on large vehicles that lower the fleet average.
Higher material costs will increase the cost of all cars but that’s unavoidable. Higher fuel costs will have a greater impact on efficiency than hybrids. It definitely hurts the U.S. manufacturers but helps companies like Honda and Hyundai and certainly doesn’t hurt Toyota. I doubt that hybrids are economically viable for several reasons. Toyota, the clear leader in hybrids, lobbied against higher CAFÉ standards. It is said Toyota doesn’t make money on the hybrids so they are not eager to sell a lot more of them. Also, about 75% of all hybrids made are being sold in North America where gasoline is relatively cheap. Many countries in Europe and Asia have been paying from $5-$10/gallon for gas for some time but there seems to be little demand for hybrids. Another reason is that hybrids use more light weight, high cost, materials than standard cars. Cars with less efficient drives would benefit more by the weight reductions than cars with efficient drives. So I think manufacturers know the hybrid market consists of people wanting to make a green statement so they concentrate the efficient technology on the hybrid even if it doesn’t make economic sense.
Since the 70s the U.S. government has spent billions of dollars on advanced vehicle research and have nothing to show for it. What’s most notable about the effort is the lack of innovation. Hybrids are not the result of innovation, they are the result of higher fuel prices. For hybrids to be economically viable energy costs will have to increase enough to cause economic turmoil, more than offset the energy savings so that even more money will go into oil companies and regions of the world with unstable governments, and continue unsustainable trade deficits in the U.S. I don’t know why the government needs to be so inept but they certainly are.
Nobody, other than Toyota, knows how much money they are making off hybrid cars, and Toyota claims they make money off every hybrid and the more the sell, the more they make.
Hybrid technology wasn't driven by high fuel prices. The Insight and the first generation Prius were developed when gas prices were relatively low. These vehicles were developed because Toyota forecasted higher energy costs coming. Moreover, the Hybrid Synergy Drive began the electrification of the automobile, which is good for either pure electric vehicles, or fuel cell vehicles, something the Japanese government and Japanese automakers are very bullish upon.. Currently, much of the hybrid synergy drive also exists in Toyota's fuel cell hybrid vehicles.
as for the cost-effectiveness of hybrids. if you live in the city there isn't a question, for example, if the prius is cost-effective. my wife can average 60 mpg on her urban la commute. that's not cost-effective?
the european car market is very different. for instance, the japanese have had a hard time penetrating europe, so europe wasn't the focus of japan when it started with hybrids. however, hybrid interest in europe has grown significantly in the last few years and numerous hybrid, both diesel and gasoline, are just a couple of years from hitting the market.
I do, however, agree 100 percent that the us government is "inept". i couldn't have said that any better!
In ’93 the U.S. government started a consortium to develop the “super car” and my understanding is that Toyota asked for but was denied inclusion. At that point, it is speculated, Toyota was concerned the US might come up with a viable design so they began serious development of the hybrid. Toyota did not innovate, they resurrected the hybrid design from the 70’s. There have been advances in magnetic materials, power switches and batteries since the 70’s but these came from outside the auto industry. There has been disappointingly little innovation in the auto industry. They have concentrated their efforts on refining their design and the manufacture of it rather than innovating the technology needed to reduce our dependence on oil. Hybrids are a new application of existing technology, an application that was advocated at least 30 years ago, not a new technology suddenly allowing the production of more efficient vehicles. I think the U.S. government should at least get credit for prodding the Japanese into producing hybrids.
My understanding is that Toyota made the Prius available in North America, UK, Europe and Australia in the second half of 2000. If Toyota is having trouble penetrating the European market I would think a technically superior vehicle that had a clear economic advantage would be a great way to get buyers into their showrooms. I’ve read nothing about Toyota concentrating on the North America but that is where the Prius sales have taken off. Gasoline prices, adjusted for today’s dollar, in the US peaked about 1980 at $3.40-$3.80/gallon(probably depends on the inflation index used), declined until 86 and stayed steady until late 90s. Then have climbed steadily since then except for a brief period after 9/11. The climb in gas prices pretty much corresponds with hybrid sales. I think there would be hybrids sold if the Saudis were still selling oil at $20/barrel but I don’t think many people would argue that hybrid sales are not being driven by the price of gas. But I’m not sure where the breakeven point would be for any particular driving pattern. Certainly at $4/gallon high use vehicles like taxis and delivery vehicles would benefit and perhaps some commutes. I know when we were paying about $2.50/gallon gas was $5.50/gallon in Japan but Prius sales here seem to be stronger in Japan even though they’ve been sold in Japan longer. If they could sell the Prius here for $6-$10 thousand more than the Corrolla, and it was based on economics, why wouldn’t Toyota save the shipping and sell the Prius in Japan for $6-$10 thousand more than in the US since gas was more than twice as high. That would certainly give them a healthy profit margin. Also, why did Toyota lobby against the CAFÉ standards. I think 60mpg would exceed any of the proposed standards and Toyota is the clear hybrid leader. Jan 08 sales shows that 10.9% of Toyota light duty vehicle sales in N. America were hybrids. Their closest competitor was Honda with 1.8% of their sales hybrids. So if hybrids were an economically viable solution to increasing mileage, why wouldn’t Toyota welcome increased standards.
I don’t think hybrids are the needed solution. I think hybrids may be more of a placebo to make us think we’re doing something about our dependence on oil. The gas prices needed to make hybrids economically viable across the board will more than offset any reductions in oil consumption so that even more money will flow into the oil industry. What was needed more than a decade ago was a plug-in vehicle that could use something as inexpensive as lead-acid batteries, capture all the braking energy (not the 25%-50% that hybrids achieve), without costing significantly more than a standard car. This would provide better efficiency than hybrids and a 20-40 mile range from plug-in energy would displace a large part of our oil consumption. Auto manufacturers aren’t inclined to innovate so it is a situation in need of government guidance but DOE seems more inclined to protect oil company profits. An innovative solution would quickly take over the market, without sharp price increases. The Prius has been sold in the US for 8 years and the Insight started a couple years before and sales of hybrids have just reached 3% of light duty vehicles as gas prices hit $4/gallon. To me this looks like a formula for serious economic problems.
driver,
i respectfully disagree with you.
hybrids are a huge part of the solution. to think electric vehicles are the complete solution is very overly optimistic in my opinion. i think plug-in hybrid vehicles are far more fungible than just pure electric vehicles.
also, innovation just doesn't come out of the blue, it is ALWAYS built on previous innovations. the innovators are the ones that see what others don't, and that is exactly what Toyota did. toyota took an idea that gm, self-admittedly, thought was a complete joke, as did almost EVERY other automaker.
the innovators of the internet, for example, didn't turn the internet into what is it today. Many other companies took that innovation and turned into something not seen or fully realized by others. that is always the nature of technology and technological innovation - just ask any developer or programmer. and the Hybrid Synergy Drive has become far more of a program than mechanics, so please don't tell me there is no innovation there. toyota has made huge gains in the efficiency of its hybrids vis SOFTWARE gains, proprietary software gains..
ultimately, toyota envisioned a hybrid car based on current technology that could adapt, evolve and scale costs as hybrid technology became ever more electrified. the Hybrid Synergy Drive that powers both Toyota hybrids and Toyota fuel cell hybrids is an innovation in automotive software and programming without ANY doubt.
still, i don't disagree that automakers could have done much more in the past with electric vehicles, but with cheap gas, what else could be expected? maybe if the government made consumers pay the costs of foreign oil security at the pump, rather as hidden in military taxes, electric cars, hybrids and other efficient technologies would have emerged sooner, but it is what it is.
as for europe, c'mon.
europe hasn't been very open to japanese automobiles ever. its taken years for us automakers to penetrate Europe with pure american brands, so this idea that europe would embrace an emerging technology from an automaker they don't trust seems pretty unrealistic.
likewise, gasoline hybrids wouldn't resonate in much of europe either at first. if they had been diesel hybrids, as every european automaker is now aggressively moving towards, they might have had some luck. still, while diesel might be more efficient for the end user, it's NOT more efficient at the well. diesel doesn't help end foreign oil dependency. still, europeans, like americans, are pretty set in their ways.
I apologize for being unclear, I didn’t mean to suggest all electric vehicles should be available at this time. Battery and/or capacitor technology isn’t yet available to produce a cost effective, general purpose electric vehicle. I think the ICE will be with us for some time. But we could and should have plug-in vehicles available that can displace 20-40 miles of gasoline use each day. This would have a significant impact on oil consumption. I think that to make such a vehicle cost effective would require the use of Pb-acid batteries. Toyota’s HSD cannot work effectively with Pba batteries, especially batteries with thick plates needed for repeated deep discharge cycles. The HSD doesn’t seem innovative to me because I spent time analyzing the basic concept for college classes back in the 80s, we called it a differential drive at the time. Yes, HSD does use software and I expect much of the software is dedicated to determining what the engine and sun gear generator/motor speeds should be for the particular output speed and load. The efficiencies of the engine and generator/motor vary considerably over the torque-speed range. The engine and generator/motor are at a fixed torque ratio so the designer must choose a speed ratio that will minimize engine and generator losses. This allows more flexibility in moderating engine load than a fixed gear but it doesn’t fully moderate engine load and doesn’t allow the engine and generator to operate at their individual peak efficiencies, so it is far from the best that can be done. Getting such a system to work well would take a lot of good work from capable people and may contain a lot of innovative details, but I don’t see it as being big picture innovative. I think a small German company had an earlier patent on it that Toyota had invalidated or tied up in court and they came to a patent sharing agreement with Ford. I don’t know details of the patents or court cases but I think the corporate subversion of the patent process may be partly responsible for lack of innovation.
Technology doesn’t come out of the blue but applying technology you know how to do but doesn’t solve the problem isn’t innovation. What I see as the problem is the outflow of money to import oil. Since hybrids have been on the market, the expenditures for imported oil have soared. So I don’t see the as hybrid solving the problem. What is needed is a drive that is less costly, more efficient, and has plug-in capability so that it can displace a significant quantity of oil. This would provide a clear advantage and could quickly replace standard drives, even if gas were under $2/gallon. You may say that this is just an improved hybrid, and it is, but it will require a significant departure from the current drive architectures. Innovative drive designs can extract energy from Pba batteries in such a way as to achieve effective usable energy densities similar to lithium batteries at a fraction of the cost. The innovative design circumvents problems caused by the Peukert Effect and the high internal resistance to allow high-power output without heating the batteries so that it will be more efficient than lithium batteries, especially in severe stop-and-go driving. In my opinion, the HSD is doing the obvious well but it is not solving the problem. To me this is like dropping a quarter on a dark street but looking for it under the street lamp because you can see the ground better.
I believe last year Toyota sold 2.6 million vehicles in the US and 1.2 million in Europe. They do have less sales in Europe but the European sales don’t sound insignificant. The point is, Toyota sold 9.66 million vehicles last year so the US market was less than 27% of their sales. Yet 61% of the Prius’ were sold in the US last year where gas is relatively cheap. I suspect some of the difference in demand is due to usage. Many of the payback calculations don’t seem to include the cost of capital, but car loans should be more expensive than mortgages. So if interest on the premium is $500/ year and if you don’t drive a lot so you realize less than $500/year in gas savings, you never recover the capital. I still think a lot of hybrids are being bought by socially conscientious individuals, and under some usage patterns they are economically viable, but are not generally economically viable. I think to be generally economically viable will require even higher oil prices and the reduction in oil consumption created by hybrids will be more than offset by the increase in prices. I think the increase in oil prices will do more to decrease oil consumption by changing life styles and disrupting economic activity. It can be argued that this isn’t the responsibility of the auto manufacturers but certainly it would be in their interest to solve it. I think mass production has resulted in all the major auto manufacturers producing very high quality products at a very reasonable price. But I also think mass production increases the risk involved with change so there is an inherent reluctance to change. Because of this reluctance, the national interest not to be dependent on imported oil, and the national interest in not allowing oil prices to cause major economic disruptions, I think it is a case where the government should have a major role in increasing vehicle efficiency. The government has spent enough money on vehicle research but they are amazingly lame when it comes to advanced technology
driver-
i respectfully agree with you.
i never meant to imply that toyota was some major innovator. when toyota launched the sequoia at the last LA auto show, i was never so disappointed. nonetheless, i would argue, toyota has made consumers believe that change is possible - that hybrids can make sense, particularly in heavily congested areas. more important, i'd argue, whether toyota likes it or not, that toyota made the idea of plug-in hybrids seem plausible to the general public.
intentional or not, that has helped drive all automakers to start innovating. thus, i call toyota an innovator because toyota has helped changed american consumer psychology.
yet, as you clearly point out, america was ahead of the curve on 'hybrid' technology, yet we accomplished nothing with it - except that we helped a company like toyota to help us with a problem we should already have solved on our own.
sadly, that seems to be somewhat of an american trend. american corporations, academia, etc come up with tremendous innovations, yet somehow we often miss capitalizing upon those innovations.
that's disappointing, especially in this case because that problem can almost certainly be traced to the maintainence - at almost all costs - of cheap foreign oil for americans.
it almost makes me ask if we, as citizens, exist to make money for the military, or if the military exists for us.
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