Is GM's Green Tech Better Than Toyota's?

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Because Chrysler, BMW, and Mercedes-Benz were interested in creating hybrid versions of its SUVs, it turned to GM's technology. Chrysler executives estimate the venture with GM saved it at least six to nine months of replicating work that GM had already done. "The GM technology was very sound and very adaptable to BMW's desire for high-performance in the vehicles we develop," says Wolfgang Epple, who led BMW's involvement in the venture.

The advantage of GM's so-called two-mode system, points out GM's Larry Nitz, who has headed the automaker's venture with the other three companies, is that the engine speed remains constant when the gears of the vehicle are changing. This is extremely important in the performance of a pickup or SUV when it is carrying loads or going uphill. The power is sent to the wheels mechanically through a series of clutches and gears. In a conventional hybrid, such as Toyota's, power is sent to the wheels electrically, which is less effective for bigger vehicles.

Greening GM's Image

GM may not be known yet for "green" vehicles. But it is on a mission to change that. David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., says that automakers developing hybrid or electric vehicles invariably stumble over patents or intellectual property held by either Toyota or GM.

It was GM, after all, that developed the EV-1 electric vehicle, though it suffered a tremendous public-relations backlash when it killed the vehicle, bought back all the models it had already sold and then destroyed them. Nevertheless, says Cole, "In a few years GM will probably be earning more than a half-billion a year from other car companies licensing its technology, a big portion of which will be related to hybrids and plug-ins."

Will Truck Drivers Care?

The big question, of course, is whether buyers of pickups and SUVs will buy the more expensive hybrid versions of these vehicles at anything like the rate at which car buyers have bought Toyota's hybrids. The marketplace is not a laboratory. Toyota has sold more than one million hybrid vehicles since 1998, mostly Prius sedans. A Prius today costs about $23,500, according to Edmunds.com, and gets 46 mpg. Compare that with a comparable four-cylinder Camry costing around $23,000, which gets 21/31 mpg. The fuel economy numbers on the Prius are compelling and consumers who buy the car, which has a unique design and a model name synonymous with hybrids, clearly enjoy having their neighbors and peers know they bought a hybrid.

The truck and SUV market is different for hybrids. Ford (F) has had difficulty selling its Escape hybrid (BusinessWeek, 12/27/05)>, despite its fuel economy of 32 mpg (front-wheel drive), compared with 18/24 mpg (six cylinder) for the regular gas version. GM's Tahoe gets 21/22 mpg, about 25% higher than the gas version, but still low for a car buyer looking to make a big move in fuel economy. The Tahoe Hybrid price is not yet set, but the arithmetic had better be compelling to impress whatever green-minded pickup and SUV buyers are out there.

Kiley is a senior correspondent in BusinessWeek's Detroit bureau .