Toyota Exec: Hybrids don't pay off

Toyota Exec: Hybrids don't pay off
There's a Toyota Highlander Hybrid sitting in my driveway this weekend, and I'm planning to work up a review when I return from vacation later this month for both TheCarConnection.com and for Wired Magazine. Readers of that tech bible may have noticed my own contribution to the April cover story on "The Rise of the Green Machines." I pulled together a comparison of every hybrid on the road. For Wired's upcoming, annual buyer's guide, I can now plug in a review of the new Highlander HEV.

In the original piece, I tried to give as balanced an overview as possible, though I have to admit that I am becoming increasingly frustrated by the technology. My biggest reason is the huge gap between the mileage promised on the window sticker and what is actually delivered. Even Consumer Reports found it difficult to get 40 mpg out of the Toyota Prius, compared with the claimed 51 Highway, 60 City. I averaged around 21 mpg with the Lexus RX400h -- only a slight bit better than a Volvo XC90, and a huge shortfall from the rated 28 City, 30 highway. Worse, I find that it becomes a much harder business case to make for paying the premium for a hybrid with the sort of numbers I have experienced, even at $2.25 a gallon.

This is a running source of debate with Marty Padgett, TCC's Executive Editor -- and the very proud owner of a recent-vintage Prius. Curiously, the latest in our e-mail exchanges coincided with a forwarded copy of an article that ran in this past week's Financial Times. Written by James Mackintosh, and titled, "Toyota Says Hybrid Cars Face US Fuel Barrier," what followed the headline might just as easily have been written by GM's "car czar," Bob Lutz, who is still running around arguing that there's no such thing as global warming. In January, at the Detroit auto show, Lutz insisted there is no business case for hybrids, but that one cannot ignore the emotional value people are placing on being environmentally-friendly. What's strange is that Kazuo Okamoto, the new head of R&D at Toyota -- the top HEV manufacturer -- apparently agrees. A couple excerpts from the FT article:

Kazuo Okamoto, who takes over as head of research and development at Toyota next month, said the extra costs of hybrid cars more than wiped out any financial gains of lower fuel consumption. Buyers in the US would have to want to help the environment, not just save money. In Japan and Europe, the extra costs were approximately balanced by fuel savings.

"When you just use the argument of fuel efficiency, the purchase of a hybrid car is not justified. But this car has other interests, for instance environmental protection."




The $4000 rebate proposed by President Bush last week would help shift the economic equation for HEVs, but I'd personally like to see such a federal giveaway made available to other fuel-efficient technologies, such as diesel. Then we'd have not only an incentive to develop higher-mileage vehicles, but a level playing field. There's a Toyota Highlander Hybrid sitting in my driveway this weekend, and I'm planning to work up a review when I return from vacation later this month for both TheCarConnection.com and for Wired Magazine. Readers of that tech bible may have noticed my own contribution to the April cover story on "The Rise of the Green Machines." I pulled together a comparison of every hybrid on the road. For Wired's upcoming, annual buyer's guide, I can now plug in a review of the new Highlander HEV. In the original piece, I tried to give as balanced an overview as possible, though I have to admit that I am becoming increasingly frustrated by the technology. My biggest reason is the huge gap between the mileage promised on the window sticker and what is actually delivered. Even Consumer Reports found it difficult to get 40 mpg out of the Toyota Prius, compared with the claimed 51 Highway, 60 City. I averaged around 21 mpg with the Lexus RX400h -- only a slight bit better than a Volvo XC90, and a huge shortfall from the rated 28 City, 30 highway. Worse, I find that it becomes a much harder business case to make for paying the premium for a hybrid with the sort of numbers I have experienced, even at $2.25 a gallon. This is a running source of debate with Marty Padgett, TCC's Executive Editor -- and the very proud owner of a recent-vintage Prius. Curiously, the latest in our e-mail exchanges coincided with a forwarded copy of an article that ran in this past week's Financial Times. Written by James Mackintosh, and titled, "Toyota Says Hybrid Cars Face US Fuel Barrier," what followed the headline might just as easily have been written by GM's "car czar," Bob Lutz, who is still running around arguing that there's no such thing as global warming. In January, at the Detroit auto show, Lutz insisted there is no business case for hybrids, but that one cannot ignore the emotional value people are placing on being environmentally-friendly. What's strange is that Kazuo Okamoto, the new head of R&D at Toyota -- the top HEV manufacturer -- apparently agrees. A couple excerpts from the FT article: Kazuo Okamoto, who takes over as head of research and development at Toyota next month, said the extra costs of hybrid cars more than wiped out any financial gains of lower fuel consumption. Buyers in the US would have to want to help the environment, not just save money. In Japan and Europe, the extra costs were approximately balanced by fuel savings. "When you just use the argument of fuel efficiency, the purchase of a hybrid car is not justified. But this car has other interests, for instance environmental protection." The $4000 rebate proposed by President Bush last week would help shift the economic equation for HEVs, but I'd personally like to see such a federal giveaway made available to other fuel-efficient technologies, such as diesel. Then we'd have not only an incentive to develop higher-mileage vehicles, but a level playing field.



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Responses (4 total)

  1. By Noodle #1, Posted: 6/19/2005

    Dude!

    Get real!

    How can you NOT get great fuel economy from a hybrid? (Do you drive like a jerk? -- Ed.)

    I have a 1991 Nissan NX2000 that I drive regularly from/to work. It was EPA rated 23/31; I get 30-32 MPG on my regular 50-mile-round-trip adventure.

    One day my car was in the shop; my dad lent me his 2001 Prius ("classic" model). I averaged 60 MPG on my commute! They say the new one gets even better mileage.

    I see Priuses wizzing by in the fast lane going 80-85 MPH. If you go that fast, you'll get lousy gas mileage. If you race from stoplight to stoplight you'll get lousy gas mileage.

    Do you live where it's cold? I'm in SoCal, so warm-up times really aren't a factor.....

    But you know what? You're right -- the gas prices don't make the deal pencil out. Hybrid's just aren't worth it.

    But they could be in the near future; I expect gas prices (Here in So Cal.) to be $3.00/gal within a year. At those prices (intelligently driven) hybrids start making more sense.

    In the meantime, what's wrong with being green? It's just another form of enthusiasm.

    We have a lot of Porches/BMWs/AMG Mercedes around here; does anyone really need to pay BIG $$ to drive 65? How many of these folks go to a race track where their cars can truly be exercised? Or for that matter, how about the 4WD SUV owners that wouldn't be caught dead off-road?

    As you can probably tell, your posting pissed me off -- not because of what you wrote, but because of STUPID, HEAD IN THE SAND Detroit folks writing off the whole thing. The Prius makes as much of a 'business case' sense as a Corvette. Unfortunately, Chevy has missed out on the 'next big thing'.

    Sigh.....clueless American carmakers deserve to die.......especially GM. If I were a SAE member, I'd be ashamed.

    There's a reason market share for American carmakers has fallen on the West Coast. There are a lot of folks here who think JUST LIKE ME.


    P.S.: I agree with your diesel comment. If we all ran on bio-diesel, maybe we'd have a chance at energy independence. At least we wouldn't be placing our bets on hydrogen, which takes more energy to produce than existing fossil fuels......

    Too bad they can't make diesels clean enough to meet Calif's clean-air standards.

  2. By  Paul #2, Posted: 7/4/2005

    Noodle, you raise some fair points. But let me focus on one in particular: you mention the folks racing by at 80 in a Prius and suggest that, of course they don't get great mileage. The bottom line is, if you want to make a fair comparison, that's precisely how they should drive.
    I did a call-in radio show on Minn. Public Radio recently, discussing my concerns about HEV mileage. One listener bust a gut insisting I was wrong. Then he described how he drove, like the proverbial old man in a hat. In fact, he admitted he spent so much time staring at the video monitor on his Prius I feel he's probably a road menace. Even then, by the way, he barely ever topped 50 mpg. Know what, if I drove a Chrysler 300C that way I'd near 30.
    In an apples-to-apples comparison, where people are driving normally -- meaning how typical drivers operate -- hybrids simply don't come close to delivering what is promised.

  3. By Gow #3, Posted: 4/20/2007

    All the other cars going 80 won't get what the sticker says either. That's kind of an odd argument. A guy next to me averages 52 in his Prius. They do get the mileage. Just don't drive like a boner. All these 'hybrids don't pay off' postings and articles bug me. Does a $3,000 package for leather interior with DVD surround payoff? Diesel engine for an F250 at $4,500 or 4WD for $3000 or more. Does that payoff? Actually I'd make the argument hybrids really do. Ever see the resale values of hybrids on ebay or craigslist? Gas isn't the only factor. I messed up 7 years ago. I bought a Grandam. The Prius, newly introduced, was 21K and the Grandam I could have for 14K. Sticker was 20K, 0 over invoice due to the recent jump in gas to $1.50 was 17K and my GM card rebate got me the car for 14K. I sold it last year and by then it was only worth $4,000. 2001 Priuses are selling for 10 to 15. Combine that with 15,000 miles per year at an average of 2 bucks a gallon gas cost, another $3,600 gas savings would have occurred. People want hybrids and used car prices reflect it. I'd be ahead if I had bought the Prius even factoring opportunity cost of my money.

  4. By Roger Dean #4, Posted: 12/26/2007

    Most vehicle buyers add hundreds to their purchase price by adding extras like: 4WD, rear spoiler, sun roof, rear entertainment system, towing package and a host of other items, some of which never get used and add nothing to boost the vehicle’s fuel economy. But when asked to invest in a hybrid system that can pay back dividends every time they drive it they claim, “No thanks, it costs too much!” The truth of the matter is non-hybrid vehicles provide the bulk of the tax base needed to refurbish roads and bridges. So when millions of drivers volunteer daily to drain their bank accounts to pave hybrid owners’ journeys, we salute you for it.

    FYI: My ’05 Prius repeatedly averages between 50-61 MPG on Interstate trips.

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