Monday, June 28, 2004

Where Are The European Hybrids?
I'm sure some of my regular readers are beginning to wonder if my blog is nothing more than a shill for hybrid cars, since I've written about them so often. In my defense, today's posting was triggered by a question from a friend, asking if hybrids are so great for fuel economy, then why aren't there lots of them in Europe, where gas is so expensive? This is an excellent question, since European driving patterns would benefit much more from hybridization than those in the US, where long highway trips make up a larger share of total vehicle miles. I didn't have a good answer, but set out to find one.

One factor is simply awareness. Several European manufacturers with hybrids in either prototype or planning don't market in the US at all. Fiat and Renault both appear to working on hybrids, but neither has been a factor here for many years.

More importantly, many European carmakers are placing their bets on other technology. For some, like BMW, that means an internal combustion engine running on hydrogen; my long-time readers know I think this is a dead end. Most, including VW, have focused their fuel economy improvements on updated diesel engines for passenger cars.

Diesels boost mileage at a much lower cost premium than hybrids, but in the past this came with a big penalty in noise and performance. Direct injection, "common rail" and turbocharging changed all that. Having driven a couple of modern diesel rental cars in Germany, I can tell you that there is no comparison to the diesel cars of yore--they drive and handle as well as other cars. The European trend toward diesel has been underway for so long, driven by lower fuel taxes than on gasoline, that soon half the cars on the road in Europe will be diesel powered.

This has a big impact on the attractiveness of hybrids there. If the representative car in Europe is a midsize diesel sedan getting more than 30 miles per gallon, how much better is a hybrid that gets somewhat higher mileage but costs significantly more up front and requires the more expensive gasoline? Rough calculations show that if gasoline costs 20% more than diesel and the hybrid costs $2,000 more up front, then it would take at least six years to pay out the investment. In Germany most people don't own the same car that long, because of the high cost of complying with annual safety and maintenance inspections.

As a result of all this, and contrary to what one might think, hybrids will probably be a bigger hit in the US than in Europe, until the cost differential between hybrids and diesels shrinks a lot.

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