Lifestyle

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


That's what Chrysler, Daimler, and BMW seem to think. They're all using GM's hybrid technology for their new trucks and SUVs

In the next 24 months, General Motors (GM), Chrysler, Daimler (DAI) and BMW (BMWG) will collectively bring out at least nine hybrid trucks and sport-utility vehicles, including the Chevrolet Tahoe and Chrysler's Aspen and Dodge Durango, which are being unveiled this week at the Los Angeles Auto Show. But for the conditions of a joint technology agreement among the companies, each vehicle might have a badge on its side-panel that says "GM Inside."

That's right, GM, once a laggard in fuel efficiency technology, is making its nemesis Toyota (TM)—the undisputed image leader in fuel-efficient transportation—take notice by starting a new and legitimate rivalry for the next generation of hybrid trucks and SUVs, as well as plug-in vehicles. Chrysler, Mercedes-Benz, and BMW all opted in 2005 to adopt GM's hybrid technology in a four-company venture, rather than to license Toyota's hybrid hardware.

Hybrid Trucks Ready to Roll

GM launched the Chevy Tahoe hybrid last month, while the rest of the companies are rolling their hybrids out in 2008 and 2009. The Durango and Aspen hybrids are expected to increase fuel efficiency by 20% to 25% over their gas-only counterparts, or about 18 city/23 highway. The SUVs will come with 5.7-liter HEMI V-8 engines with Multi-Displacement System (MDS), also known as "cylinder deactivation," as well as a feature that allows the engine to stop at traffic lights. That means, under highway cruising conditions, only four cylinders will push the SUV down the road unless it's packing a huge load. The improvement in city driving fuel economy, though, is 40% over the gas-only version.

Mercedes is using the same two-mode, hybrid transmission technology in the ML450 Hybrid, set to launch in 2009. BMW showed its first vehicle utilizing the technology from the venture in the X6 ActiveHybrid concept vehicle it showed last September at the Frankfurt Auto Show. The X6, scheduled to go on sale in the fourth quarter of 2009, can be driven on electric power only, on the combustion engine alone, or with a combination of both power sources.

It may surprise many consumers that companies as historically finicky and image-conscious as Mercedes-Benz and BMW would opt for GM's hybrid technology over Toyota's. After all, an internal study by GM last year showed that 70% of the consumers the automaker polled described GM as "part of the problem" when it comes to climate change and the impact of automobiles on the environment, whereas 70% of the same group described Toyota as "part of the solution."

GM's Solution Packs More Power

GM began its hybrid technology program in the shadow of Toyota. The Japanese automaker introduced the Prius hybrid in 1998 in the face of GM skepticism that there was a market for such a vehicle, or that it was the right sort of vehicle to carry a hybrid system. GM was developing a system for diesel-electric hybrid city buses with technology it planned to leverage into pickup trucks and SUVs. Toyota was clearly successful in terms of tapping into consumer desires and in developing a green halo that serves it well today. "There is no question that we [GM] underestimated the marketing power of the technology," says Larry Burns, GM's executive vice-president for research and development.

However, Toyota's hybrid system does not work well for towing or pulling heavy loads associated with pickups and SUVs. That's why Toyota has yet to introduce a hybrid version of its Tundra pickup (BusinessWeek, 1/30/07), or of SUVs such as the Sequoia and the Land Cruiser. 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.


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