Sep 12, 2006 (From the CalCars-News archive)
If there was any doubt left about whether there's a market for PHEVs, the nation's biggest car dealer just fixed that by saying, "That is a vehicle that I believe the American consumer will not just consider, but buy. We look forward to selling it."
AutoNation is self-described as "America's largest retailer of both new and used vehicles, on and off the web". It was founded by Fort Lauderdale entrepreneur H. Wayne Huizinga in 1996 as Republic Industries. Consecutively from 2001-2005, it was among Fortune Magazine's list of America's most admired companies. With almost 300 dealerships and about 27,000 employees, it's also #112 on the 2005 Fortune 500. The much-admired Mike Jackson, Chairman and CEO since 1999, in an opinion piece in the company's hometown paper, takes a major step forward.
Better battery can make hybrids more popular
By Mike Jackson
Opinion/Special to the Fort Lauderdale Sun-Sentinel
September 12 2006
Now that gasoline prices have topped $3 a gallon a few times this year, there's an enormous buzz about how consumers are suddenly interested in fuel efficiency. But you have to watch what consumers do rather than what consumers say they're going to do.
Case in point: hybrids. They're off the charts when it comes to consumer interest, but sales lag far behind. In fact, while about 57 percent of the buying public expresses interest in purchasing a hybrid, according to a J.D. Power and Associates study, less than 2 percent do so.
Why the disparity? Because the premium that customers have to pay for a hybrid is out of proportion to the fuel savings. Hybrids may have a superclean image, appeal to those who like advanced technology and offer some mileage benefits, but that's not enough to overcome the sticker shock experienced by most shoppers.
Those who do buy hybrids have a heightened sense of social responsibility combined with the financial means to express it. But unless the premium comes down, those vehicles will never satisfy more than a niche market.
Nonetheless, they are having a strategic impact because they're forming the technological foundation of things to come that will be key to addressing America's energy crisis.
In a sense, today's hybrids are a window to the future of transportation. And those manufacturers that invested significant money and resources into their development -- particularly Honda Motor Co. and Toyota Motor Corp. -- should be congratulated for their efforts. It takes real courage for a commercial enterprise to develop and produce products that don't have a clear road to the mass market.
Even the federal government deserves praise for establishing a policy that promotes increased research and development. The thinking is that if tax benefits are offered to customers who purchase hybrids, the market segment will expand, and manufacturers will rush to meet that growing demand.
As we have seen, though, those benefits are still not enough to draw consumers. Much of that has to do with inherent limitations in the technology that extend directly from the industry's earlier, failed attempt to develop a practical electric car. You don't have to watch Who Killed the Electric Car? to see what was wrong with it. There's really no mystery. It was the battery.
A tank of gasoline weighs 100 pounds and will drive you 400 miles. An automotive battery weighs 1,000 pounds and gets you maybe 100 miles -- if you don't turn on the air conditioning. Plus, the discharge and recharge process wears batteries out quickly.
That's where the hybrid comes in.
A hybrid's engine keeps the smaller battery fully charged, solving the range and fatigue issues. But in a hybrid, the contribution of the battery is limited. In town, you get a meaningful benefit. On the highway, you're paying to lug that battery around.
That brings us to what I believe will be one of the technologies that ultimately will address America's addiction to oil: the plug-in hybrid.
Next-generation batteries are significantly more powerful and can tolerate discharging and charging much more forgivingly than earlier versions. And that opens up the possibility of creating a vehicle that will deliver genuine benefits to consumers and society.
Consider an all-electric mode that has a 50-mile range before the gasoline engine kicks in. A vehicle that gets the equivalent of 100 mpg; can be fully recharged at night when excess energy capacity is available; relies on electricity produced in clean, safe domestic power plants; and delivers all the performance and comfort of a traditional gasoline-powered car without the damaging emissions or dangerous geopolitics.
That is a vehicle that I believe the American consumer will not just consider, but buy. We look forward to selling it.
Mike Jackson is the CEO of AutoNation.