Automotive News - November 10, 2008 - (Page 17) NOVEMBER 10, 2008 • 17 GREEN CAR A special section that looks at hybrid and alternative-fuel vehicles — and the technologies, people and politics that drive them Boosting mpg will bump up stickers, too Rick Kranz rkranz@crain.com Padding the bill The tab for fuel-efficient vehicles will add up quickly. Here are some costs carmakers will try to pass to consumers for technologies. C armakers to consumers: Prepare to pay up. Automakers expect consumers to pay for technology required to meet the federally mandated increase in fuel economy next decade. That could bring back the phrase “sticker shock.” It emerged in the late 1970s, when the first major round of government-imposed environmental and safety regulations coincided with a steep rise in inflation. In today’s dollars, “the average hit will be in the $500 to $800 range” by 2020, says Phil Gott, director of automotive consulting at IHS Global Insight. “If you buy a hybrid, it will be more. If you don’t buy any advanced technology, if you get a cheap small car, it will be less.” But a National Highway Traffic Safety Administration study found that if an automaker needs to develop a smaller-displacement engine with turbocharging to meet the new regulations, that cost alone could bump up the cost per vehicle by more than $800 in some cases, even without hybrid technology. High inflation and dramatic spikes in the cost of commodities and precious metals could alter those predictions. But one way to reduce the cost of hybrid ownership might involve leasing the source of much of the power, namely the batteries. $1,800-$2,000 Stop-start system $203-$229 Cylinder deactivation $124-$166 Engine accessory improvements $122-$525 Gasoline direct injection $118-$197 Electric power steering $100-$139 Continuously variable transmission $85-$95 Six-speed automatic transmission (upgrade to) $38 Aggressive shift logic $21 per cylinder Reduced engine friction $6 Low rolling-resistance tires CAFE costs All automakers are wrestling with the same federal mandate. Preliminary rules issued in April indicate that corporate average fuel economy stan- dards will go up more than 4 percent a year, for cars and trucks combined, in each of the 2011 through 2015 model years. Ultimately, the law will require cars and trucks together to average at least 35 mpg by 2020, about 40 percent higher than today’s fleet. Today’s cars must meet an average of 27.5 mpg. The light-truck standard is rising modestly under a previous set of regulations to 23.1 mpg for the 2009 model year and 23.5 mpg for 2010. The Bush administration has said it will issue the final rules for 2011-15 before the end of this year. To reach those new fuel mileage targets, automakers are or will be adopting a long list of often expensive technologies. On the list are: Six-speed automatic transmissions Direct-injection gasoline engines Smaller-displacement, turbocharged engines Cylinder deactivation Even less viscous oils to reduce engine friction. Traditionally, automakers have put new technologies into high-end vehicles first and packed the cost into the sticker price. As volumes grew and costs dropped, the technologies trickled down into less-expensive models. Not this time. “The challenge is that the fuel economy standards are coming so fast that you really have to put these technologies into the heart of the market right away,” Gott says. “The OEMs are going to have to put as much as they can into the hands of the consumer.” tainly not in the roughly 18 months that consumers usually want to see a payback, Gott says. “So the industry will have to bare the brunt of those costs and perhaps drag out the payback time to the industry a bit longer than usual.” Toyota Motor Corp. acknowledges that adding technology to reduce fuel consumption will create affordability issues, potentially leaving some shoppers out of the buying process. “There are applications where cost will be a real issue,” says Toyota spokesman John Hanson. While every car and crossover will be available with a hybrid system by 2020, he says, “We think we can achieve very good gas mileage without having to rely solely on hybrids. There always are going to be those cost cutoffs that are going to be in play.” The key to reducing the cost of any technology, especially hybrid, is mass production, he says. “It becomes a much more affordable vehicle if you can offer some of these technologies as standard equipment.” Toyota has 15 years invested in hybrid research. “We are seeing that economies of scale work at both the high end and the low end,” Hanson says. He would not reveal Toyota’s cost for the hybrid system. Jim Hall, director of industry analysis at 2953 Analytics, estimated the cost of Toyota’s hybrid system at $3,000 to $4,000. The type of vehicle makes a big difference in cost, too. The hybrid system includes the motor generator unit that replaces the transmission, plus the controller, battery pack and wiring. “For the other guys, it is probably closer to $4,000 to $4,500,” Hall says, because they lack those economies of scale. Plug-in hot button The Japanese automaker will introduce its plug-in hybrid in 2010. But the vehicle’s potential sticker price is a hot button and remains a subject of much debate. “It is one of the issues that we are looking at right now,” Hanson says. “There will definitely be a premium for a plug-in hybrid.” Hanson says Toyota is wrestling with a litany of questions as it sets the sticker price: “Will that vehicle live up to consumer expectations? Will it deliver value? Will they see this as a good investment all the way around, not just for fuel economy but for emissions as well? Will they see it as too much of a hassle for the cost that they are paying?” Hybrids and plug-in hybrids rely on batteries. Next decade, lithium ion batteries are expected to be the core battery for some plug-in hybrids and pure electric vehicles — at a price. “The cost of the batteries is going to see COST, Page 20 $3 Low friction lubricants (such as better motor oil) Source: NHTSA, 2953 Analytics No 18-month payback Consumers may resist paying for these technologies. “None of these will really pay for themselves unless fuel prices go back up,” cer- CHRISTINE BALDERAS/ISTOCKPHOTO
Table of Contents Feed for the Digital Edition of Automotive News - November 10, 2008 Life at 11 million: Slash, rethink The options: Bailout or disaster Can Toyota reheat the frozen Tundra? Chrysler dealers cheer halt to merger talk VW will unveil roadster at Detroit auto show BMW boosts dealers' year-end ad money Mercedes' $220 million flagship Mercedes hit hard in Northeast, once a sales stronghold Mercedes will kill CLK, add larger coupe, convertible Mitsubishi reclaims its finance business Toyota's Esmond to speak at congress Loss is more: Europe snatches bigger share of U.S. market Cash burn rates threaten GM, Ford GMAC: We're nobody's captive As losses mount, suppliers risk cash-flow crunch Tata: Yes to Jaguar XF derivative, no to SUV U.S. aid is needed now, but not to help Cerberus They are too big to fail Why should we help GM and Chrysler? First and foremost, you must be flexible U.S. trade policy gives it all away To the Editor: A rough ride is nothing new for autos Dealer's politics were pertinent Chrysler's 1st electric: Probably a cargo van Auto meltdown forces Mercedes to scrap prediction of sales record Boosting mpg will bump up stickers, too Adding up the tab for fuel economy Camaro Black: Eye-catching, affordable and available Honda sees green in Civic HFP's street performance Honda offers peek at future Fit Ford F-150 Raptor flies off-road Souped-up, tricked-out â and headed for the showroom Report: Toyota plans $5,000 car Amid gloom, Mazda chief sees revival in 2009-10 Report: Past-due subprime loans jump Toyota aims to win loyalty with credit card Study: Car buyers turn green for different reasons Thanks, buddy Hyundai helps Dealers Metaldyne offers pennies to bondholders Obituaries Personnel As expected, Oct. sales sank Another Chinese automaker plans Mexico factory Honda backs off U.S. clean diesels Industry pal, foe vie for key post in Congress Industry expects more activism from D.C. N.A. output falls 19.9% Toyota moves in striking distance of GM's U.S. sales crown Going, going . . . An ex-GM exec's view: It's going to get nasty Sex, Nazis, chicken and BMW: A scandal that puts fiction writers to shame Recession rips up roadster market Toyota takes heat for 'the herpes of the advertising world' Want to boost mpg? Turn up the heat on AC Cutting energy loss: A nibble here, a nibble there ... Carbon slashes weight, but it's still too pricey Carmakers shift to gears in search of mpg gains Natural gas draws interest as alternative fuel Friction? Ay, there's the rub Electric for a week Automotive News - November 10, 2008 Automotive News - November 10, 2008 - (Page Intro) Automotive News - November 10, 2008 - (Page Bellyband1) Automotive News - November 10, 2008 - (Page Bellyband2) Automotive News - November 10, 2008 - The options: Bailout or disaster (Page 1) Automotive News - November 10, 2008 - The options: Bailout or disaster (Page 2) Automotive News - November 10, 2008 - VW will unveil roadster at Detroit auto show (Page 3) Automotive News - November 10, 2008 - Mercedes hit hard in Northeast, once a sales stronghold (Page 4) Automotive News - November 10, 2008 - Mercedes hit hard in Northeast, once a sales stronghold (Page 5) Automotive News - November 10, 2008 - Loss is more: Europe snatches bigger share of U.S. market (Page 6) Automotive News - November 10, 2008 - Loss is more: Europe snatches bigger share of U.S. market (Page 7) Automotive News - November 10, 2008 - As losses mount, suppliers risk cash-flow crunch (Page 8) Automotive News - November 10, 2008 - As losses mount, suppliers risk cash-flow crunch (Page 9) Automotive News - November 10, 2008 - Tata: Yes to Jaguar XF derivative, no to SUV (Page 10) Automotive News - November 10, 2008 - Tata: Yes to Jaguar XF derivative, no to SUV (Page 11) Automotive News - November 10, 2008 - First and foremost, you must be flexible (Page 12) Automotive News - November 10, 2008 - First and foremost, you must be flexible (Page 13) Automotive News - November 10, 2008 - Dealer's politics were pertinent (Page 14) Automotive News - November 10, 2008 - Dealer's politics were pertinent (Page 15) Automotive News - November 10, 2008 - Auto meltdown forces Mercedes to scrap prediction of sales record (Page 16) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 17) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 18) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 19) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 20) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 21) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22a) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22b) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22c) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22d) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22e) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22f) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22g) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22h) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22i) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22j) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22k) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22l) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 23) Automotive News - November 10, 2008 - Souped-up, tricked-out â and headed for the showroom (Page 24) Automotive News - November 10, 2008 - Amid gloom, Mazda chief sees revival in 2009-10 (Page 25) Automotive News - November 10, 2008 - Toyota aims to win loyalty with credit card (Page 26) Automotive News - November 10, 2008 - Hyundai helps (Page 27) Automotive News - November 10, 2008 - Dealers (Page 28) Automotive News - November 10, 2008 - Personnel (Page 29) Automotive News - November 10, 2008 - Personnel (Page 30) Automotive News - November 10, 2008 - Personnel (Page 31) Automotive News - November 10, 2008 - Personnel (Page 32) Automotive News - November 10, 2008 - Personnel (Page 33) Automotive News - November 10, 2008 - Personnel (Page 34) Automotive News - November 10, 2008 - Personnel (Page 35) Automotive News - November 10, 2008 - Personnel (Page 36) Automotive News - November 10, 2008 - As expected, Oct. sales sank (Page 37) Automotive News - November 10, 2008 - Honda backs off U.S. clean diesels (Page 38) Automotive News - November 10, 2008 - Industry expects more activism from D.C. (Page 39) Automotive News - November 10, 2008 - Industry expects more activism from D.C. (Page 40) Automotive News - November 10, 2008 - N.A. output falls 19.9% (Page 41) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 42) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 43) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 44)
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