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Hi everyone, happy summer to you all. As we head into vacation season, those summer trips are getting quite pricey with gas zooming over $4.00 a gallon. But with all the market trends pointing toward efficiency, why were hybrid sales actually down in May? Let’s talk about that, and a few other interesting tidbits, including some folks in the government lowballing the new fuel economy standards because they are basing them on the assumption that gas is going to be only about $2.50 a gallon over the next few decades. Do they know something our pocketbooks don’t? (Don’t bet on it!)
And away we go,
Scott Nathanson
UCS National Field Organizer &
HybridCenter.org Administrator
In this issue:
 So gas prices are sailing their merry way toward $5.00 a gallon. General Motors is doubling shifts at their small car plants while slashing truck and SUV production jobs (even in their Oshawa, Ontario plant that is going to make hybrid pickups). A whopping 72 percent of Americans now say they’d be interested in a hybrid for their next car, according to a new survey from JD Power and Associates. Yet, in May, Prius sales actually dropped 37 percent, as opposed to a 61 percent jump in April.
So what the heck is going on?
Well, as you might surmise, they’re simply running out of hybrids to sell. For a while, we backed off from telling folks about the hybrid buyer’s tips on HybridCenter, because the era of the waiting lists for hybrids seemed to be over. But no more. The stories of wait-lists are back. And it’s not just for the Prius. The Toyota Camry Hybrid is now outpacing the sales of the conventional V6 model. Escape Hybrid dealers from Florida to Illinois are having trouble getting enough models to meet demand. And the used hybrid market, especially for the ultra-efficient Honda Insight and Toyota Prius, is burgeoning.
So, again, what the heck is going on?
It’s all about the batteries—there just aren’t enough of them to go around. This article from Time Magazine gives a good overview of the issue. GM’s battery delays are especially troublesome because of battery recalls for older vehicles and plans to expand their Green Line vehicle series. Indeed, their battery supplier woes are forcing GM to consider purchasing their primary batter supplier, Cobasys.
Toyota is also working to expand access to batteries with a new battery plant in the works, but it won’t come online until 2010. And with GM saying they want eight new hybrid models on the road in the next couple of years, and Ford planning on finally rolling out its Fusion Hybrid, among many others, it’s quite the sellers market for anyone in the hybrid battery biz, as the price of cobalt, a key ingredient of hybrid batteries, indicates.
I think we can learn a couple of important lessons from the current situation. First is that hybrid demand, like high gas prices, is here to stay. How the automakers choose to respond to that demand is crucial. The modest interest in the Tahoe/Yukon Hybrid SUVs should be a strong indicator that, even with hybrid technology, the era of big SUVs and trucks is over. As our fuel economy report Setting the Standard showed, with a modest 25 percent hybrid market share in 2020, a fleet average fuel economy of 42 mpg could be achieved by 2020, while increased sales of fuel-efficient hybrids could lift the average even higher.
 It is also clear that automakers need to take a longer term view on high fuel economy hybrids and electric vehicles. There is some encouraging news here with plans from Ford, GM, and Toyota to move forward with plug-ins and continuing efforts on fuel cell and battery-electric vehicles. Many automakers were clearly caught behind the curve on fuel economy and hybrids, so hopefully this means they are learning their lesson and working to get out in front.
Finally, I think the current situation should be a reminder that while the future might be bright for plug-in hybrid and other electric vehicle technology, there is still much we can do with current hybrid and conventional technology to make today’s vehicles more efficient. So while we praise the promise of the Chevy Volt and other plug-ins to come, we can’t let that leading edge morph into a silver bullet that distracts consumers, policy makers, and automakers, from the task, and potential, at hand.
So, as I’ve trumpeted ad nauseam in this newsletter, last year we succeeded in passing a landmark bill that significantly strengthened fuel economy standards for vehicles, with the new standards setting a minimum fleetwide average requirement of 35 mpg by 2020. As I noted above, those standards could help us get much higher, to above 40 mpg, given the availability of more efficient conventional and hybrid technologies and the cost of gas.
 The cost of gas is actually a key issue for the implementation of the new fuel economy standards, as the Department of Transportation (DOT) can only require fuel economy improvements if they pay for themselves through fuel savings. Of course, with gas prices over $4.00 a gallon and climbing, moving forward with more aggressive standards should be a snap. Unfortunately, in their proposed rulemaking to implement the new standards, the DOT has decided to use gas price estimates that project we will be paying between $2.25 to $2.60 per gallon over the next 20 years. Using these laughable estimates in effect creates a loophole that will allow automakers to shave three to four miles per gallon off of their requirements over the next decade.
The push-pull of consumer demand and strong fuel economy standards is absolutely crucial to ensure that all the technologies available to automakers, be it hybrid drivetrains or proven gasoline technology (such as cylinder deactivation), are used as thoroughly as possible for all vehicle options. Relying solely on the market gives rise to the potential to “greenwash” and service only the bottom line. Demand backed by standards ensures that that demand is fully met and the country can get out ahead of the next gas price crisis. This loophole serves no one’s long-term best interests, as history has shown that automakers that lag on fuel economy subsequently hemorrhage U.S. jobs.
Luckily, this rulemaking is still just a proposal, and you have the opportunity to weigh in. Head over to the UCS Action Center and send the DOT your public comment on their gas price fantasy, and what it will cost all of us in the long run.
- Could the Domestics Finally Be Making Hybrid Cars?: We have Escapes, Yukons, Tahoes, and Aspens, but the only thing resembling a hybrid car coming from the Big 3 in Detroit has been the hollow hybrid Green Line Chevy Malibu. It finally looks like the Ford Fusion/Mercury Milan may break Detroit into the hybrid car business, and it looks like Chrysler may be eyeing its signature 300 sedan for hybrid application. Given the consumer trend back toward cars, this is something the domestics can’t do fast enough. For more, head to the Hybrid News Center.
 Hybrid Big-Rigs Garner Corporate, Government Interest: While many say that hybrid applications for larger vehicles may be best suited for the mid-sized trucks (UPS and FedEx vans, and the like), long-haul trucks are also getting a hybrid eye. Wal-Mart is putting a class 8 big-rig on the road in early 2009 to find out whether the fuel-savings can be enough to warrant more widespread application in the sector. Meanwhile the House Science and Technology Committee wants to see a new program created to foster hybrid truck development similar to the current $30 million program the Department of Energy is administering for plug-in hybrid car development (those funds went to General Motors, Ford, and General Electric). More on these “big”stories on the Hybrid News Center.
- Hybrid Mechanics Tuning Up Their Skills: The Bridgestone company is going to begin to offer its services to hybrid owners, giving consumers more options (and competition) for servicing their cars. Meanwhile, it’s not only car consumers, but car technicians that have to overcome some preconceived notions about the complexity of their vehicles. With a little education, mechanics can find out that a number of services can be done on hybrids without any changes to the garage, including servicing belts, wipers, HVAC systems, brakes, exhaust/emissions control systems, and suspension and steering. Get your myths busted and more at the Hybrid News Center.
 You know that Green Vehicle Guide and SmartWay program that the US Environmental Protection Agency (EPA) has created? If you don’t here’s their neat little center that gives you the ability to rate every vehicle on a simple 1-to-10 scale for both smog-forming and global warming emissions.
If you’ve never heard of it that’s not all that surprising, very few consumers have. It’s a voluntary program, of course, that’s not very well advertised, especially by the automakers that, in general, would rather not let consumers see how much pollution their vehicles create.
California has been well known for pushing the boundaries for cleaner cars, and the Golden State earned their stripes again this month, unveiling an environmental labeling system that is much like the EPA’s, except it’s a big mandatory sticker slapped right on each vehicle sold in the state.
To toot our own horn a bit, we did help write the legislation for this. You can read more about what the effect of the new regulation will be, and get a sneak peek at the new label itself on our website. This is going to be great for consumers, and I hope that it spurs every state, whether they choose to go with the California clean cars standards or not, to adopt similar laws. In an era where every gallon counts both for the pocketbook and the planet, this kind of basic information is crucial if consumers are going to play a part in climate and energy solutions.
On a hybrid note, I think this labeling system will really help deflate the notion that anything with a “hybrid” label on it is automatically “green.” Basing labels on the overall performance, rather than the technology type, is a tremendous “truth in advertising” resource.
Who’s Got Hybrids Now?
Well, summer is finally here (I’m personally well aware of this as my elder son’s birthday hits right on the Summer solstice). So I thought some “how I’ll spend my summer vacation” kind of testimonials would be appropriate for this month:
 Sarah Marquardt of Minneapolis, MN is heading out in her Gen. 2 Prius to do some kayaking on one of the 10,000 lakes in Minnesota. She likes the gas savings, but she also likes that she, “can fit a lot of stuff in (and on) this car!”
 Doug Schaefer of Escondido, CA decided to take his Gen. 1 Prius hiking, and isn’t looking back. He notes that, “it seems very strange to get back into "regular" cars and they run their engines all the time! Compared to my previous car, I am buying 300 less gallons of gasoline per year.”
 I’m really hoping that Seth Downs of Anchorage, AK knows where his Gen. 2 Prius’s emergency break is. As he patrols the Utah Desert, Seth says, “We've averaged 48 mpg for the last 2 years with city, highway, and some off roading.” Off roading is right…
 Have to say, I’m more of a city rat myself, so I love the testimonial from Glenn Peters and his Ford Escape Hybrid in Vancouver, British Columbia—a city I’ve always wanted to visit, especially as the mercury in DC edges toward 100 degrees. Glenn gets metric on us, saying, “After 2+ years of ownership (over 40,000 km on the odometer) we have had no problems with the vehicle. It works as promised, and has been a joy to drive.”
There are many more vistas awaiting at "Who's Got Hybrids?" So go check them out yourself. And if you own a hybrid, or know someone who does, please ask them to join our “Who’s Got Hybrids?” family here.
I hope everyone enjoys their first slice of summer, and for those of you in the U.S. have a great Independence Day! Talk to you next month.
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