Autos;Autos - hybrids;Europe;International;Technology;Transportation Peugeot's Turbocharged Hybrids The French carmaker aims to put diesel hybrids on the road by 2010. If it can bring the cost down, they could prove popular, especially in Europe Autos News & Features By Gail Edmondson Imagine a car that gets 82 miles a gallon -- doubling the average fuel efficiency of the green-automotive market leader Toyota Prius. French auto maker PSA Peugeot-Citroen believes it can deliver such a car by 2010 with hybrid diesel engines that will join two fuel-efficient technologies. "That's the future. It combines the best of both worlds," says Thomas Sedran, partner at Munich consultancy Roland Berger. At the Geneva Auto Show this month, PSA showed off its vision of that future with two hybrid diesel models, the Peugeot 307 and the Citroen C4. Diesel engines, which are up to 40% more fuel-efficient than gasoline, cost about $1,500 more than gasoline engines. But Europeans are happy to pay more for fuel-efficient cars: Diesel-powered models already account for 50% of new-car sales in Europe. However, the cost differential today between a Peugeot with a gasoline engine and one with a diesel hybrid jumps to $9,600. <leadin>PROWLING FOR PARTNERSHIPS.</leadin> PSA's challenge is to drive that premium down. The company's top management believes it can bring the differential with diesel models down to around $1,200 to $1,800 by targeting the cost of the batteries, electric motor, and regenerative braking system. "We believe it's worth taking the challenge because a diesel hybrid combines the strong fuel economy of diesel with much lower carbon dioxide emissions," says Gilles Michel, head of platforms, engineering, and purchasing at PSA Peugeot-Citroen. PSA's hybrid diesel models cut fuel consumption by 28% and carbon dioxide emissions by 39% compared with a regular diesel model. To lower development costs, PSA is looking for partnerships with suppliers and other auto makers. The European Union and individual governments may help kick-start the hybrid-diesel effort by offering state funds for research and granting tax breaks for consumers who buy fuel-efficient cars. <leadin>HOT SEGMENT.</leadin> The French government already has set up a $120 million fund to support research in cutting fuel consumption for transportation. And PSA has chalked up a couple of impressive engineering firsts in diesel technology, including the first diesel particle filters, which helped turbocharge diesel sales in Europe. PSA has asked the French government to help back its hybrid-diesel project through the French Agency for Industrial Innovation. PSA Chief Executive Jean-Martin Folz hopes hybrid-diesel technology will fuel a new market segment and aims to sell tens of thousands of hybrid diesels from 2010 onward. The experimental Peugeot 307 coupe convertible and C4 sedan models developed by PSA are compact cars -- the biggest-selling segment in the European market. They come equipped with 1.6-liter engines -- the latest generation of clean, powerful, direct-injection common-rail diesel machines -- and are "full hybrids." That means the cars can use the electric engine not only for stopping and starting, but also for city driving and for an extra power boost when the diesel engine is running. <leadin>COMPETITION AHEAD.</leadin> The electric engine, which recovers energy during deceleration and braking, would operate up to 30 miles per hour, at which point the diesel engine would kick in. The electric engine would give an acceleration boost when passing other vehicles. If PSA can make hybrid-diesels for a $1,200 premium or less, "the technology will propel sales," says Christoph Stuermer, senior analyst at market researcher Global Insight in Frankfurt. Stuermer and other industry analysts believe manufacturers such as Peugeot may ultimately opt for a less expensive "light hybrid" car, using an electric motor for stopping and starting the auto, but not for propelling it. Ford (<ticker>F</ticker>), DaimlerChrysler (<ticker>DCX</ticker>), and Toyota (<ticker>TM</ticker>) are also exploring the possibility of developing diesel-hybrid cars. Europe will most likely lead the drive to bring such models to market, since European car buyers already show a strong preference for diesel cars. "Diesel cars are so fashionable in Europe today that even people who drive short distances and can't benefit much from the fuel economy in urban driving buy diesel," says Stuermer. "This kind of consumer is the ideal target for a hybrid diesel." But diesel cars may also start to gain traction in the U.S. market starting later this year as oil companies are forced by federal law to convert to "clean diesel" fuel that reduces harmful sulfur emissions. Europe has long mandated clean diesel at pumps. Luxury giant DaimlerChrysler and Europe's largest auto maker, Volkswagen, are leading the charge in the U.S. market with fuel-efficient, clean diesel cars. So if diesel hybrids take off in Europe, American car buyers may not be far behind. http://www.businessweek.com/autos/content/mar2006/bw20060328_100063.htm http://www.businessweek.com/bwdaily/dnflash/content/feb2008/db20080229_251923.htm,http://www.businessweek.com/managing/content/feb2008/ca20080229_675314.htm,http://www.businessweek.com/bwdaily/dnflash/content/feb2008/db20080229_251654.htm False