Blog: Hybrids - the stakes are high
Dave Leggett | 16 March 2009
One area of the car market that is getting interesting is hybrids. Honda’s new Insight appears to be off to a very impressive start in Japan with Honda looking to position the car aggressively on price as an ‘affordable’ hybrid. Is hybrid market leader Toyota going to take that lying down? A resounding ‘no’ appears to be the answer to that, with Toyota apparently planning a low-price rival to the Insight.
But the notion of the more affordable ‘parallel’ hybrid raises some interesting questions, the most obvious being this: how much do these things cost to make? The technology employed is not cheap, there are two powertrains rather than one and the heavy batteries themselves are not only expensive (and energy intensive to make) but have been subject to severe manufacturing supply constraints at times.
Just how scaleable is this technology and what does the cost per unit by volume curve look like?
And then there’s the demand-side question of customer acceptance for this technology. When it’s a niche, maybe you’re preaching to the converted, people who are naturally attracted to the sophisticated technology and its eco-friendly credentials. Fair enough. But breaking out of the niche perhaps raises a different set of marketing requirements in taking the hybrid to customers who will evaluate the purchase decision on different criteria.
And with the price of oil where it is, the fuel economics driver is not an obviously powerful lever to pull right now either. But it will be fascinating to watch how the Insight does and how hybrids in general play out over the next few years. If they are a transitional solution before electric plug-ins with better lithium-ion batteries make a much bigger mass-market impact in five years’ time (one theory), then all that R&D expenditure to develop them may ultimately prove to have been a very expensive exercise.
However, aiming for higher volumes makes good business sense if that massive sunk investment is ever to be recovered.
How high can hybrid volumes go though? And how long before full EV plug-ins and range-extending EVs (like GM’s Volt, a ‘series hybrid’ with just one drivetrain and a small gasoline engine to power an on-board generator) squeeze them further?
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