Gas-Electric SUVs Trade Fuel Economy For Size and Power

By NORIHIKO SHIROUZU
Staff Reporter of THE WALL STREET JOURNAL

For consumers considering a new car, 2004 promises to bring a new breed of gasoline-electric hybrids: fuel-sipping sport-utility vehicles that Toyota Motor Corp. executive Jim Press likens to "eating a rich chocolate souffle without any of the calories."

A trio of hybrid SUVs this year from Toyota and Ford Motor Co., expected to be unveiled this week at the North American International Auto Show in Detroit, offer V6- or V8-like acceleration with the fuel economy of a compact car. That's good news for consumers looking to ease the guilt in buying a gas-guzzling SUV.

But the auto makers are taking a risk that buyers could be disappointed by the new hybrids. That's because the gas-electric SUVs aren't likely to provide the eye-popping fuel economy that has attracted buyers to hybrid small cars such as Toyota's Prius or Honda Motor Co.'s Insight.

To boost hybrids' appeal, auto makers are making upcoming versions bigger, more rugged and more powerful -- and compromising on the technology's original selling point: fuel economy. The auto makers are hoping that consumers will compare the new hybrid SUVs not to cars like the Prius, which Toyota claims averages about 55 miles to a gallon, but to big SUVs like the Ford Expedition, which is rated at just 15 miles per gallon in combined city and highway driving.

Ford will officially unveil a hybrid version of the popular compact Escape SUV, which is expected to go on sale in late summer, and Toyota will show off two hybrid SUVs based on the Lexus RX330 and the Toyota Highlander, due also later this year. Though they won't be shown at the auto show, General Motors Corp. has said it plans to launch later in the decade hybrid versions of its full-size SUVs such as the Chevrolet Tahoe and GMC Yukon.

Ford says it sacrificed little of the regular gasoline-engine Escape's rugged capabilities when it transformed the compact, car-based SUV into a hybrid that couples a four-cylinder engine with an electric motor. Toyota says both the Lexus and Toyota SUV hybrids use an electric-propulsion system coupled to a V6 engine to not only boost fuel economy but also enhance acceleration and give the vehicles all-wheel-drive capability. Ford and Toyota say they plan to charge extra for the hybrid SUVs, though neither of them would say how much the premium is likely to be.

The questions are how much extra fuel efficiency consumers are going to expect in return for the extra cash, and how much they will value the status of having one of the first gasoline-electric SUVs on the block.

A hybrid SUV based on the Lexus RX330 should get about 28 miles per gallon, up from the 20-22 mpg of the standard version.

The front-wheel-drive Escape hybrid should get 35-40 miles per gallon in city driving, with an all-wheel-drive configuration getting "mildly lower" fuel efficiency than that, says Shari Shapiro, an Escape hybrid marketing manager. (Unlike conventional gasoline-engine vehicles, many hybrids get better mileage in the city. That's because their electric motor kicks in more often at slower speeds, saving fuel.) In actual day-to-day driving, the front-wheel-drive Escape hybrid might get average fuel economy somewhere in the 25-to-30-mpg range, and a four-wheel-drive version would get even less. The regular V6 Escape is rated to average 21 mpg, while a four-cylinder Escape is supposed to get 25 mpg.

Toyota, meanwhile, is aiming to squeeze 35 miles of driving out of a gallon of gas on average with both its Lexus and Toyota SUV hybrids. But that's an "engineering target," and in actual day-to-day driving, customers are expected to get as much as 20% less, averaging about 28 mpg. A conventional V6 RX330 is rated to get 20-22 mpg. A conventional V6 version of the Highlander, which is based on a chassis and mechanical systems similar to the RX, goes 20-21 miles on a gallon of gas. A four-cylinder Highlander is supposed to get 23-24 mpg.

Ernest Bastien, a Toyota Motor Sales manager in Torrance, Calif., says the hybrid mileage advantage is still "significant" since both hybrids would deliver V8-like performance. Still, Toyota officials worry that consumers' expectations of hybrid-electric vehicles are too high. "The best feature people like in the Prius is its fuel economy," says George Yamashina, head of Toyota's product-development center in Ann Arbor, Mich. But their expectations are so lofty that "the biggest complaint we get about the Prius is its fuel economy."

Mindful of such consumer tendencies, Honda will likely pass on developing a hybrid SUV or minivan in the U.S. for now. Instead, Honda plans to sell in a year or two a V6 hybrid sedan, most likely a version of the Accord car, to add to its hybrid lineup of the small Insight and Civic hybrid cars.

Despite such worries, Ford's Ms. Shapiro says the Dearborn, Mich., company expects to sell more than 20,000 Escape hybrids a year. Toyota expects more than 10% of RX330 and Highlander sales, which run about 90,000 and 120,000 annually, respectively, to come from their hybrid versions.

Both Toyota and Ford say they are ready to take a big step in selling hybrids to more mainstream consumers by making little differentiation in terms of styling between hybrid SUVs and the gasoline-engine versions of the same vehicles.

While those decisions may disappoint environmentalists and trend-conscious consumers in California and certain other states, ultimately that's the right move, says Jerry Reynolds, a longtime Ford dealer and the Car Guy on a weekly AM radio talk show in Dallas. That's because even in a state like Texas, where "the biggest drivers of automotive sales are power and style," more consumers are showing interest in hybrids, Mr. Reynolds says. But most of those people, he says, "don't want to tell the whole wide world [they] drive a hybrid," and want to look cool in a rugged SUV even if it's a hybrid.

Updated January 5, 2004 12:27 a.m.