Hybrid vehicles provide a glimpse of the future of environmental vehicle design (e.g., Toyota, , and PNGV), but what is needed to succeed in the marketplace? Factors limiting hybrid market potential as well as near-term production prospects are discussed in this paper. The objective is to understand the barriers to introducing hybrid technology and the necessary ingredients to succeed in The best example is the what will be a dynamic and competitive EX that meets California’s SULEV environmental vehicle market. standard. Overall performance of the vehicle population has improved as well. These views are based on integrating Ignoring the passing trend of buying the results of our ongoing global larger and larger SUVs, fuel technology assessment with analyses of consumption and emissions of typical the economic factors affecting the have decreased with each model production and sale of hybrid vehicles introduction. for the International Energy Agency (both sponsored by the DOE Office of Relevant Engine Development Advanced Automotive Technology). Since IC engines are important to the Competition Limits Potential success of hybrids as well as conventional vehicles, engine The market potential of hybrid vehicles developments are relevant to market is limited by tough competition from potential. conventional vehicles, which are The near relatively inexpensive and widely term available. Refinement over the years development has resulted in vehicle quality being that will have higher than it has ever been. Reliability the most and durability of today’s IC engines is impact on the proven and customers are equally industry and comfortable driving across town or hybrids over across the country. the next 5 Conventional engine technology has not years is the been stagnant while hybrid concepts Integrated Starter-Alternator Damper (or were being developed; in fact, leading ISAD), which replaces the flywheel on manufacturers have produced the crankshaft. These units can provide mainstream vehicles that honestly can engine cranking and generate electrical be considered “environmental” vehicles. power in addition to damping engine torque variations. ISAD technology allows the engine to be turned off when it would normally idle and can supply power assist during acceleration or recover energy while braking (i.e. in a parallel hybrid configuration). Large suppliers, such as Siemens and Continental/Delco Remy, plan to produce millions of the units annually. This physical configuration is common to several parallel hybrid concepts developed over the past decade, but the most recognized (similar) implementation is now in from 14:1 to 8:1, allowing supercharging production - the . without knocking. Direct injection is common, but high NOx catalysts are under development pressure direct injection (HDI) is just by several manufacturers/suppliers. getting into production (e.g. Siemens), but the long term effect of smaller Appropriate combinations of these exhaust particles on our respiratory technologies will improve fuel economy systems is now in question. and emissions by 20-40%. Variable valve timing is becoming Hydrogen may be the long-term solution common as well and the potential for to emissions. Addressing this issue is precise control of electromechanical beyond the scope of this discussion, but valve actuation is an even more a question arises relative to engines. attractive feature for engine developers. Are they better converters of hydrogen However, these systems require high energy than fuel cells from a systems power for fast perspective (i.e., cost and integration)? response – an Hybrid Production Imminent usually high demand for Despite (and because of) the impressive belt-driven engine advancements, production of alternators. A hybrids is imminent as evidenced by the developmental competitive positioning (i.e., alliances, system by acquisitions, investment and increased BMW is shown development) and the early market in the photo. introductions by Toyota and Honda. There will be few diesels without The first high volume ‘hybrids’ (though turbochargers (especially large engines) they may not be called that) will use and variable turbocharger boost will be ISAD technology for several reasons: widespread. • The auto industry is Several methods are being developed to converging on a vary the expansion/compression ratio of global 42v engines, but the latest is the Saab standard Variable Compression (SVC) engine electrical (shown at the top of the page). The system. ISAD engine block and head are hinged and hardware is the combustion chamber volume is necessary to varied by tilting the head, resulting in a provide 6-10 kW continuously variable compression ratio needed for high power auxiliaries, including Product Mix in Transition electromechanical valves, electric power What hybrid products will reach the steering, electric air conditioning, etc. market in the near-term? Momentum An alternator with a belt drive cannot toward production has been building for handle the projected power some time and the turning point was the requirements. Moreover, the no-idling Toyota Prius. Consequently, many law being discussed in Europe may manufacturers will introduce hybrids in necessitate the ability to turn off the the marketplace in the next few years. engine while operating accessories. All the major manufacturers have • ISAD technology is expected to cost no displayed concepts in past years and more than the replaced parts, including months - shown in the lists on the the starter, alternator and flywheel following figure. (hence the phrase “no-cost transition”). Of course, additional components (e.g., The ‘ISADs’, with 42v electric batteries/capacitors) will be necessary accessories and various levels of to get all the benefits of a parallel hybrid. ‘hybridization’, are expected to become the baseline over the next five years. • Depending on the configuration and Siemens is apparently leading the way control strategy, it can improve fuel with BMW and/or DCX next year, economy and emissions 15-30%. followed closely by widespread • Low-risk, immediate benefits – integrate application by automakers in the US batteries or capacitors as they mature. and/or Japan.

HYBRIDHYBRID VEHICLES VEHICLES FUELFUEL CELL CELL VEHICLES VEHICLES

DaihatsuDaihatsu (MOVE)? (MOVE)? DCXDCX (neCar)? (neCar)? DCX/GM/FordDCX/GM/Ford (PNGV)? (PNGV)? FordFord (FC5) (FC5) ? ? FiatFiat (Multipla)? (Multipla)? GMGM (Precept)? (Precept)? Transition to Honda Insight/? GM/Opel (Zafira)? Transition to Honda Insight/sedan? GM/Opel (Zafira)? MitsubishiMitsubishi (HEV)? (HEV)? HondaHonda (FCV)? (FCV)? NissanNissan (Tino)? (Tino)? Mitsubishi?Mitsubishi? ProductionProduction PSAPSA (Dynavolt)? (Dynavolt)? Nissan?Nissan? RenaultRenault PSAPSA (Fever)? (Fever)? (Kangoo/Koleos)?(Kangoo/Koleos)? ToyotaToyota (FEV)? (FEV)? SubaruSubaru (Elten)? (Elten)? Suzuki (EV-Sport, PU3)? FCVsFCVs Suzuki (EV-Sport, PU3)? HVs Production ToyotaToyota Prius/(HV-M4)? Prius/(HV-M4)? HVs Production Toyota-GM?Toyota-GM? ISADsISADs ToyotaToyota Prius Prius → BMW,BMW, DCX…(Europe DCX…(Europe→US/Japan)US/Japan) HondaHonda EV-Plus EV-Plus NissanNissan Tino Tino Demonstration or Audi Duo BMW H ICEVs Demonstration or Audi Duo BMW H22ICEVs Limited Production MitsuMitsu HEV HEV CaCa FCV FCV Program Program - - DCX, DCX, Ford, Ford, VW, VW, Honda Honda Limited Production FordFord Ranger Ranger GMGM EV1 EV1 ChryslerChrysler EPIC EPIC Citroen Dynavolt VehicleVehicle ChryslerChrysler ESX ESX Citroen Dynavolt & ESX-II DaihatsuDaihatsu MOVE MOVE EV-FC, EV-FC, EV-HII EV-HII Concepts & ESX-II GM Triax Concepts DCXDCX Citadel Citadel GM Triax Technology Maturity Technology

Technology Maturity Technology BMW E1, E2 Honda FCX V1, V2, FCX, Spocket, VV BMW E1, E2 & & Commander Commander Honda FCX V1, V2, FCX, Spocket, VV GM Impact Hyundai FGV-II GM Impact GMGM EV1 EV1 Variants Variants Hyundai FGV-II VW Chico MazdaMazda Demio Demio GMGM HX-3 HX-3 VW Chico ToyotaToyota Prius Prius Mitsu. HEV M-BM-B NeCar NeCar 4, 4, S-Class S-Class HV HV VERTVERT Mitsu. HEV HondaHonda JV-X JV-X MitsubishiMitsubishi SUW SUW Advance Advance VolvoVolvo ECC ECC Mitsu.Mitsu. Stylish Stylish Six Six M-B NeCar 3 NissanNissan FCV FCV M-B NeCar 3 Renault Kangoo MCCMCC Smart Smart Renault Kangoo SubaruSubaru Elten Elten SuzukiSuzuki EV-Sport, EV-Sport, PU3 PU3 ToyotaToyota HV-M4 HV-M4

TechnologyTechnology DevelopmentDevelopment oror AcquisitionAcquisition

19951995 20002000 2005 2005 ClCleanean Ci Cittiesies Conf Confererenceence SanSan Di Diego,ego, CA CA MM ay ay 7- 7-10,10, 2000 2000 Sales of hybrid vehicles with substantial pay a premium for fuel economy and electric range (“HVs” on the figure) will emissions improvements is limited. be slow initially due to: Studies by NREL found that consumers in the US might pay 10 to 15% more for • Immature and/or high cost electric drive a 50% increase in fuel economy. In components (primarily energy storage). fact, combining the results of several • Conventional vehicles with ISAD units surveys, they found that fuel economy are low-risk for the automakers. has not been an important consideration since the mid-1980s. The EU and Asia • Foreseen regulatory requirements can be met with advanced IC engines IEA members did not supply consumer combined with ISAD units – consider the preference data. However, the EU potential of the SULEV Accord with the members’ comments implied that additional benefits of an ISAD unit. consumers there are similar to elsewhere in the world - styling, utility, The small impact of vehicles and other factors influence purchase during this period is based on the decisions as much as fuel economy. substantial cost and technical challenges that must be resolved prior • Government policy has a major impact to volume production and sales. on prices and profitability - through Despite the apparent momentum of mandates and regulations in the US and technological advancements described taxes in the EU. in press releases and reflected recently • Incentives are widely used to influence in stock prices, fuel cells are not the production or sale of electric and expected to be available in production hybrid vehicles, however IEA members quantities until sometime beyond the felt that these would not last when immediate period of interest. environmental vehicles reach Global Influence Factors substantial production levels. Price Limits Economic factors affecting the production and sale of hybrid vehicles Perhaps the most limiting factor are global in nature since their success regarding the sale of hybrid vehicles is in the US depends on technology the price of the competition. Most cars transfer through the new automotive sell for $20,000 to $25,000, shown in alliances around the world. the chart of price versus volume. A recent study in support of 800 50 the IEA Large Annex VII, whose objective 700 Mid-size was to identify global Compact VOLUME 40 600 influence factors on the PRICE 500 production and sale of 30 hybrid vehicles, surfaced 400 several important factors. 20 300 • Vehicle production costs 200 appear similar in Europe 000) x ($US Range Price and the US - implying that a 10

AnnualPlatform Volume (x 000) 100 hybrid propulsion system must cost $2,500 or less (in 0 0 a $20,000 ) to compete. E/KS G PL L/H J DM101 N W Sources: Volumes: Automotive News, December, 1999 • Consumers’ willingness to Prices: http://www.autosite.com Despite the introduction of the Prius and large cars and trucks have caused Insight at prices below $20,000, hybrid manufacturers to influence the market vehicles are estimated to cost $2,000 to mix by selling high-fuel economy $10,000 more than a comparable vehicles at little or no profit to balance conventional vehicle. The typical profit the sale of intermediate and premium margin of a $20,000 car cannot absorb cars that get lower fuel economy. the potential cost increase. The demand for Sport Utility Vehicles Subsidies for New Technology has exacerbated the problem for US manufacturers and SUVs have surfaced New technology requires initial support as obvious candidates for hybridization - to compete at low production volumes. due to their low fuel economy, high Manufacturers typically subsidize market share and high profit margins. through introductory prices or the customer pays a premium (to get the Tax Relief in the EU? latest model). If a product contributes to Though the vehicle production cost government objectives as well (e.g., structures are similar in Europe and the lower fuel consumption and emissions), US, taxes differ substantially. Sales they may choose to participate. The taxes range from 16-18% VAT to 218% Toyota and Honda hybrid vehicles are of the price. This examples of combined commitments of is an obvious the companies and their government. Sales Tax opportunity for the Government involvement in hybrid EU to influence Dealer/Mfr vehicles cannot be relied upon on a the market with long-term basis because low volume tax breaks for Overhead production does not substantially benefit hybrid vehicles. the public and supporting high volume Several countries Labor

production cannot be justified. offer tax relief for Materials environmental (- PT) Hybrids Could Ease CAFE Pressure vehicles now, but PT Why would manufacturers subsidize sales are so small new, but unprofitable products? Usually it an inexpensive US EU the reason is to capture market share in gesture. a market with growth potential. In the Mainstream Market Potential if… US, where the vehicle mix is influenced by CAFE, there are other reasons. Hybrid vehicles have unlimited market potential if they are competitive in cost, The chart shows the general range of reliability and durability. Hybrids must profitability for US manufacturers versus use mainstream development and vehicle type. Consumer preferences for production processes to get sufficient Profit Range of Vehicle Portfolio in the US quality. Moreover, if hybrid vehicles in production yield substantial fuel Positive economy and emissions improvements (>50%), they should be credited accordingly. Total energy consumption and air quality will benefit greater from selling millions of hybrids with efficient, clean engines rather than limited sales of ZEVs. Negative ECONOMY INTERMEDIATE PREMIUM