Toyota Prius

When Monique Cronin, a Pennsylvania radio producer went to buy a new Toyota Prius, she knew it was not going to be easy getting her hands on one of the most popular cars on the market. Indeed, she was prepared to sell out $29,539 – well above sticker price – and was told she’d have to wait at least four months to take delivery, if she was lucky.

But just before New Year, Cronin had a hunch she might be able to change the balance of power between herself and her dealer. She gave a call to another dealer across town and found them willing to deliver a Prius for significantly less money and with a lot more equipments. Best of all, they were ready to deliver it whenever she came in and signed on the dotted line. In the end, she went back to her original dealer and got them to renegotiate.

How times can change, especially when fuel prices have fallen to less than half their mid-Summer peak. With pump prices around the country averaging below $2 a gallon – and with the worsening economic slump devastating virtually every automaker – hybrid sales are gone into a tailspin.

For all of 2008, Toyota sold 241,000 gasoline-electric vehicles, the vast majority of those in the form of the awkwardly endearing Prius sedan – which last year became the Japanese automaker’s third-best-selling model. But in the final months of ’08, Prius and the rest of the nation’s growing hybrid fleet saw sales slump a collective 50 percent, and there’s little indication of a turnaround, as 2009 begins, even with the addition of an assortment of new models.

Indeed, visitors to this month’s North American International Auto Show will be seeing more hybrid-electric vehicles, or HEVs, than ever before – along with a variety of other battery-powered and electric-enhanced products.

Despite the current hybrid slump, “I think batteries are the future,” asserts Don Esmond, sales and marketing chief for Toyota Motor Sales, USA, which staged what it confidently proclaimed “the most important event” at this year’s auto show – the introduction of the third-generation Prius. The automaker remains confident it can significantly expand demand with the 2010 remake, and an assortment of other hybrids, including a so-called plug-in Prius that it will bring to market by the end of this year.

Consumers will be able to connect that model to an electric outlet, in their garage, significantly increasing the distance it can drive on battery power alone. It’s an approach that experts like David Cole, of the Center for Automotive Research, in Ann Arbor, Michigan, believe will significantly expand the “electrification” of the automobile. Like many experts, Cole cautions that there is no “silver bullet” when it comes to the greening of the automotive industry. In the coming years, he expects to see an array of alternatives to conventional, petrol power, including clean diesel, bio-fuels, and perhaps, ultimately, hydrogen power. But electric propulsion has the chance to become a dominant force.

The term, electrification, covers a variety of alternatives. At one end of the spectrum are products like the new Kia cee’d ISG – short for Idle Stop & Go – which shut off their internal combustion engines, when stopped or idling, then automatically restart when you’re ready to move again. Then there are “mild” hybrids, like the all-new Honda Insight, making its North American debut in Detroit. The vehicle recaptures power normally lost during braking or coasting, later using it to boost acceleration, reducing fuel consumption in the process.

“Full” hybrids, like Prius, also can use energy stored in a battery pack to run in pure electric mode for short distances, while plug-ins, add a bit of grid current to extend that range. One of General Motors’ much-anticipated offerings, at the NAIAS was the preview of the production-ready version of its 2011 Chevrolet Volt. GM prefers the term, “extended-range electric vehicle,” for Volt because while it also relies on both petrol and electric power, the sedan’s internal combustion engine is used solely as a generator. The wheels are always driven by an electric motor.
The ultimate solution, some experts contend, is the pure electric vehicle, and there were plenty in Detroit, from both well-established Western manufacturers, such as Mercedes-Benz – with its Concept Blue Zero E-Cell, as well as ambitious start-ups, such as Silicon Valley-based Tesla Motors, and the Chinese upstart, BYD. That maker, which started out as a battery supplier, and only begin building cars seven years ago, claims it could overcome some of the biggest obstacles to taking electric power from niche to mainstream.

In the 1980s, California lawmakers tried to mandate battery power into the market through a zero-emission vehicle program, but consumers weren’t charged up by the limited range, long charging times and high costs of the EVs of that era. Even now, manufacturers are talking about early electrics that will require up to eight hours charge to get a bit more than 100 miles range.

But BYD claims its new Lithium Ferrous Phosphate battery will deliver 250 miles on a charge of as little as three hours. Better yet – at least if the technology delivers, as promised – BYD’s battery comes in at $500 per kilowatt hour, roughly half what other automakers are targeting for other lithium-ion formulations. “No bloody way,” asserted Elon Musk, founder of battery car rival, Tesla. But BYD’s technology is enticing enough that mega-investor Warren Buffet has invested $230 million in the Chinese firm – garnering about 10 percent of its stock.

There are plenty of uncertainties in the brave new world of electric propulsion, cautioned Susan Cischke, who oversees environmental and safety efforts at Ford Motor Co. Range and cost are only some of the issues to be addressed. There need to be a network of public charging stations, though there are signals from the incoming Obama Administration that this could be a high-priority program garnering federal support through incentives and tax credits. Even then, it’s unclear where the energy will come from to charge up millions of EVs. “If everyone comes to work and plugs in, that’ll be difficult on the grid,” said Cischke.

Industry leaders are exploring a variety of ways to soften the impact on both the energy grid and consumer wallets. Nissan, for example, plans to introduce a new EV in 2010 for fleet buyers, with retail sales to launch two years later. The Japanese maker intends to sell the car but lease the battery, according to CEO Carlos Ghosn, charging customers a monthly fee equal to what they would expect to pay for gasoline. Eventually, the EV equation could become favorable, if battery prices come down, as predicted. At European fuel prices, the electricity needed to charge up a vehicle like the Mercedes E-Cell would cost less than ten percent as much as petrol on a per-mile basis.

The push into electric power is forcing manufacturers to form some unusual alliances. GM, Chrysler, Daimler and BMW have partnered on the development of an advanced “two-mode” hybrid system. The U.S. makers recently introduced several products using the technology, while the Germans will follow shortly, on models like a hybrid version of the flagship Mercedes S-Class. Daimler also revealed, this week, that it has turned to little Tesla to provide the electric drivetrain, including batteries, for its new Smart ED electric two-seater.

And GM used the Detroit show to reveal that it will buy the batteries from Volt from the Korean battery maker, LG Chem Ltd. Between them, they expect to make what could be over $1 billion in investments, in programs that will include setting up a battery facility in Michigan. Noting that battery technology needs to become a “core” strategic asset, GM CEO Rick Wagoner also announced plans to fund a battery studies program at the University of Michigan.

For his part, Toyota’s Esmond remains confident that the hybrid slump is just a temporary aberration. And the recent rise in fuel prices suggests that the petroleum market remains volatile and certain to once again head skyward. Add the likely effect of the incoming Obama Administration – which intends to address global warming and encourage a switch to greener and more efficient fuels.

“We’re becoming a society  today that’s more interested in conservation than consumption,” contends Dave Schembri, who runs the Smart operation in the U.S. “You see the trend moving in that direction and it’s unstoppable.”