From: Dee-Ann Durbin, Associated Press
Published September 15, 2005 12:00 AM

More Automakers Embrace Hybrids as Gas Prices Rise

FRANKFURT, Germany — After some initial skepticism, the world's automakers are embracing hybrid vehicles in an effort to match Toyota's success and give customers more options to combat high gas prices.


At the Frankfurt auto show this week, German automakers Volkswagen AG, Audi AG and Porsche AG said they were forming an alliance to develop hybrid engines. Last week, BMW AG joined General Motors Corp. and DaimlerChrysler AG in a similar partnership.


French automaker PSA Peugeot-Citroen also wants to develop hybrid technology and may join forces with another company to share costs, Chairman and Chief Executive Jean-Martin Folz said.


Audi unveiled the first gas-electric hybrid vehicle from a European automaker at the show, a version of its new Q7 sport-utility vehicle that will go on sale in 2008.


DaimlerChrysler also said it will release its first hybrid Mercedes before the next Frankfurt auto show, which will be held in 2007.


Toyota Motor Corp. remains the runaway leader in the field. The Japanese company was the first to begin mass-producing hybrids with its Prius in 1997. Toyota sold 53,761 Prius cars in the United States last year, and Prius sales were up 133 percent in the first eight months of this year, according to the company.


GM Vice Chairman Bob Lutz said that kind of success has caused other automakers to take notice. In particular, he said, some companies that have been betting on pollution-free hydrogen fuel cell vehicles have decided to produce hybrids in the near-term, since hydrogen likely won't be a viable alternative for another decade.


"I think what happened was the manifest success of the Prius caused a rethink on everybody's part," Lutz said. GM plans to debut a hybrid system on the Tahoe and Yukon trucks in 2007.


Companies are developing different kinds of hybrids. But generally, a hybrid vehicle is powered either by an electric motor or by the combustion engine, or the systems can be used simultaneously.


Hybrid engines have been touted as a way to make automobiles more fuel efficient, but at a cost. Current hybrids tend to cost between $4,000 and $9,000 more than counterparts with regular engines under the hood, a premium that carmakers hope to reduce through the partnerships. The fuel savings vary depending on how the vehicle is driven. The Prius gets up to 60 miles per gallon in the city and 51 mpg on the highway, according to the U.S. Environmental Protection Agency.


Despite the success of the Prius and other hybrid models from Honda Motor Co. and Ford Motor Co., hybrids still represent less than 1 percent of the U.S. market. Some analysts have said that could grow to as much as 35 percent by 2015, although others have been more conservative.


Hybrids have made even less of a dent in Europe. GM Europe Chairman Fritz Henderson said they account for far less than 1 percent of the market. Toyota's European vice president of marketing, Ludo Vandervelden, said the company will sell around 10,000 Prius cars in Europe this year and 4,500 hybrid versions of the Lexus RX 400h utility vehicle.


European buyers have traditionally chosen diesel engines, which can cut fuel costs as much as some hybrids but emit more pollutants. They also cost automakers less than hybrids.


Diesels accounted for 45 percent of the Western European market in 2004, up from 22 percent 10 years ago, according to the European Automobile Manufacturers Association.


But that could change as more automakers introduce hybrid technology in the European market. Henderson and GM Europe President Carl-Peter Forster said customers typically aren't willing to pay more for hybrid technology, so the company is exploring how to market hybrids in Europe.


"I think customers, as they learn more about hybrids, are going to want them," Henderson said.


Vandervelden said that's good news for hybrid proponents.


"Today in Frankfurt all the Germans admit they missed the train. For us, this is very satisfying," Vandervelden said. "It gives an enormous boost to the credibility of this technology."


Source: Associated Press


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