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Automobile futures: Hybrids vs. plug-ins

Toyota Motors (NYSE: TM) is launching the first U.S. tests of its plug-in hybrid technology in two converted Prius hybrids. The test cars will run on nickel-metal hydride batteries for seven miles before a gas engine kicks in.

Although seven miles is nothing to rejoice about, other automakers are also developing plug-in vehicles that are more technologically advanced:
  • General Motors (NYSE: GM) is developing the Volt plug-in, with hopes of reaching 40 miles of electric-powered travel with the new lithium-ion batteries.
  • Ford Motor (NYSE: F) announced earlier this month it plans to give 20 Escape Hybrid SUVs modified as plug-ins to Southern California Edison for testing.
  • Chrysler Group (NYSE: DCX) modified several Sprinter delivery vans as plug-ins, with one designated for newspaper delivery.

Why is Toyota testing plug-in models with old-school nickel-metal hydride batteries? Plug-in advocates believe Toyota had to start somewhere. As much as the industry wants more technologically advanced batteries, "Development has not happened as fast as we hoped," Toyota's senior strategic planner Jaycie Chitwood told USA Today.

Regardless of how much testing the industry is doing on plug-ins, the technology is more than a decade away from mass production. The main problem stems from the fuel cell industry's ability to produce a stronger, smaller battery on a budget that consumers can afford. Until that happens, the world will use hybrid technology.

Hybrid technology is flourishing in America and is now spreading into full-size SUVs. The new full-size hybrid SUVs are a marketing team's dream, as Americans love their bigger, stronger and faster autos, but hate the higher gas prices. General Motors said Tuesday that it now expects 40% improved fuel economy in city driving with its hybrid full-size SUVs, compared to their gas-only counterparts. The Hybrid Chevrolet Tahoe and GMC Yukon will now travel 19-20 mpg in stop-and-go driving. This means they will now get better gas mileage than some mid- and full-size sedans.

General Motors has set a lofty goal at producing 10,000 hybrids this year. How does GM know it can sell that many? It doesn't. Since this is an industry first, GM lacks a track record to show if buyers want them.

Keep in mind that consumers will no longer have those hybrid tax-credits Americans were raving about for the past two years. Analysts must question how much of an impact that plays on slumping hybrid sales in 2007. If this ambitious plan fails, GM could find themselves with thousands of hybrid trucks on the lot and no one to drive them.
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Last updated: November 11, 2009: 08:34 AM

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