Renting Hybrid Cars Makes Sense

Even though it costs more to buy a hybrid car, it seems some rental companies are seeing a good return on their investment. They get to charge more and they give their customers more choices.

And so far, according to anecdotal reports, it's working.

"They're really flying off the lot like hotcakes," Stone said of the Stamford facility. "We have had very positive feedback. People feel good about renting because they are helping the environment. The employees feel great about it, too."

Hybrid rental prices, however, are higher than those for their all-gasoline counterparts because hybrid vehicles cost more to buy. Enterprise hybrid rates run $62.39 daily for the standard size Toyota Prius, $67.14 for the full-size Nissan Altima and $88.99 for the Ford Escape sports utlity vehicle.

That's good news for both the customers and the rental agencies. And it's also good news for those who advocate hybrid cars in the first place. By renting a hybrid car, more people are being exposed to the truth about hybrid cars, rather than the myths.

Hybrid Car Sales in 2008 and in 2009

2008 may well be remembered as some of the best months (so far) and the worst months for hybrid car sales we've seen so far.  With sales going from almost 40,000 units in April to under 17,000 in December, it's no wonder some people are wondering if the shine has rubbed off of the hybrid hype.  When sales of hybrids drop down under what they were three years ago (see the graph), you know things are bad.

But to say "Gone, hopefully, are the days when the hybrid hype machine said the dual-powertrain vehicles would dominate the market and be standard offerings for most vehicles in every fleet", is pretty short sighted, given where car sales are right now.  For instance, light duty sales were down 18% for the year, while hybrid car sales were only down 11%.  But, there's no joy in hybrid land, either.  Both lowering fuel costs and the general economic downturn has pushed hybrid car sales way down at the end of the year.

And it doesn't look like that's going to change any time soon.

New Hybrid Models for 2009

But, there are some bright spots in the upcoming months.  Toyota will begin selling its next generation of Prius as well as its new dedicated Lexus hybrid, the HS 250h.  Honda is coming out with its new Insight, again a dedicated hybrid car.  And Ford is releasing their Fusion and Milan Hybrids.  The introduction of so many models is sure to buoy hybrid car sales.  To counteract that, Chrysler is killing production of their Durango and Aspen SUV hybrids, but honestly, there's very little lost there.  

Keep in mind, however, the introduction of new models isn't a panacea.  Ford will limit sales of their new Fusion and Milan just like they have the Escape and Mariner.  And there's no guarantee people will take to the new Honda Insight the way they did the Prius.

If it wasn't for the economic downturn, I would say hybrid car sales would likely be way up this coming year.  As it is, however, until people start buying cars again, your guess is as good as mine when it comes to what 2009 is going to look like. 

2009 is Looking Like a Good Time to Buy a Hybrid
Unlike back in June when I told you it wasn't time to buy a hybrid, now may be a great time to buy.  With bailouts, factory shutdowns, inventory issues, and so on, if you're in the market for a hybrid, 2009 may be a great time to buy. If things continue the way they are, hybrids are no longer going to be kept off of the incentive list.

Keep in mind if you are in the market, buying a Toyota or Honda hybrids will no longer make you eligible for a federal tax credit.  There may be other state and local incentives for buying one, but the federal tax credit for Honda phased out on January 1st, 2009. 

Plug-in Hybrids Will Dominate the News, but not Sales in 2009
Although plug-in hybrid sales, including E-REVs, will begin in 2009, they are not likely to really make a splash until the Chevy Volt appears.  When competition between the E-REV Volt and the plug-in Prius starts to heat up in 2010 and beyond, then you may see something.   Other car makers may be coming to market sooner, but until GM and Toyota hit their stride, the plug-in market will be a side-show at best.

Predictions for 2009 in the Hybrid Car Market
Put simply, my best guess is I don't know what's going to happen in the market.  If gas prices stay low, a downward pressure on sales will continue, but even that's a secondary factor to the economy.  Unlike GM, Toyota doesn't look like they're going to go under any time soon (perception is huge), so the major player isn't at as big as a risk from the perception of bankruptcy.

But I am willing to say sales for 2009 will be down.  High price items like cars aren't going to start recovering any time soon (I'm not an economic analyst, but that's my impression) and so the economy is going to keep hybrid sales down.  But the introduction of several models should counteract it, keeping the general car sales downturn from making things worse than they are.  So, hybrid car penetration will most likely increase, even if volume is down.

Hybrid Car Sales, December 2008

Hybrid car sales were down 45% for December, bringing the total sales for 2008 down by 11% for the year. Total hybrid car sales for December was 16,872, while cumulative sales hit 308,001 units sold.

To put the total hybrid cars sales of 16,872 into perspective, Toyota sold 21,757 Prius just in April. Or to put it another way, more hybrid cars were sold in December of 2005.  A drop in gas prices and a general downturn in the economy has hit hybrid car sales hard, making the predictions for a modest increase in sales back at the beginning of the year look very optimistic.

Make	Model	Dec-07	Dec-08	% Change
Honda	Accord	150	1	-99%
Honda	Civic	3,223	1,036	-68%
Honda	Insight	0	0	-
Toyota	Prius	14,212	7,859	-45%
Toyota	Highlander	2,791	890	-68%
Toyota	Camry	4,969	1,888	-62%
Toyota	GS 450h	136	51	-63%
Toyota	RX 400h	2,032	1,463	-28%
Toyota	LS600hL	129	50	-61%
Ford	Escape/Mariner	2,265	1,149	-49%
Nissan	Altima	964	710	-26%
GM	Yukon/Tahoe	0	1,423	-
GM	Escalade	0	306	-
Chrysler	Aspen/Durango	0	46	-
Total		30,871	16,872	-45%
Make	Model	Cumulative, 2007	Cumulative, 2008	% Change
Honda	Accord	3,405	198	-94%
Honda	Civic	32,575	31,297	-4%
Honda	Insight	3	0	-100%
Toyota	Prius	181,221	158,886	-12%
Toyota	Highlander	22,052	19,391	-12%
Toyota	Camry	54,477	46,272	-15%
Toyota	GS 450h	1,912	678	-65%
Toyota	RX 400h	17,291	15,200	-12%
Toyota	LS600hL	937	980	5%
Ford	Escape/Mariner	25,108	19,522	-22%
Nissan	Altima	8,388	8,819	5%
GM	Yukon/Tahoe	0	5,876	-
GM	Escalade	0	801	-
Chrysler	Aspen/Durango	0	81	-
Total		347369	308001	-11%

Toyota, Honda, Nissan and Chrysler were probably very disappointed by their sales numbers this month, but GM may end up looking at December as a bright point for their hybrid car sales.  With over 1,700 of their dual-mode hybrid SUVs sold, they increased their market share to over 10% for the month.  Previously, they've only enjoyed 5% or less of the hybrid market. Toyota still sells around 3 out of every 4 hybrids, with around half of all hybrids sold being a Prius.

Incentives and lower gas prices may have also given rise to a change in the type of hybrid vehicles people are willing to buy.  The rise in GM hybrid SUV sales meant 31% of all hybrid vehicles sold in December were SUVs.  The last time hybrid SUV share was over thirty percent was back in May of 2006.

Toyota also may have reason not to worry too much about its sales this month.  Many Prius buyers may be holding out for a few more months until the new generation is available.  And where Prius sales go, so do hybrid sales.

Hybrid Car Sales, November 2008
Hybrid Car Sales, December 2007

2010 Prius Introduction by Blue Man Group

Take a look as Blue Man Group introduces the next generation Prius from Toyota. Lots of new interior features, slightly different look, etc... are highlighted as they explore the interior and exterior of the Prius.



The 2010 Prius will be introduced this month in Detroit along with the new hybrid Lexus HS 250h. Sales begin in the spring.

Ford Will Continue to Limit Hybrid Sales

From Hybridcars.com

In an online chat with employees last week, Ford Americas President Mark Fields said, “We are constrained by the amount of components, including batteries, that the supply base can provide us."

This comes under the heading of 'not surprising.' Since Ford started selling hybrid cars, they have limited sales to a certain point. Given their reported losses for every hybrid car sold, that's not surprising. They wanted to point to their hybrid car sales (really, hybrid SUV since we're talking about the Hybrid Escape) and tell everyone they were making and selling them.

But they also wanted to keep from losing too much money while keeping a reputation for their hybrid technology. Which is fine. Over the years, even as hybrid car sales started taking off, they've kept this policy in place. They were only going to order so many parts and supplies, including batteries, to build and repair so many hybrids a year.

And they are going to keep on doing so into the foreseeable future.

I had hoped they would loosen up their restrictions a little with the introduction of the Ford Fusion Hybrid and Milan Hybrid, but it's not shocking for them not to. They were supposed to start making money off their hybrid line-up with the new vehicles, but it's quite likely the economic downturn is affecting how many parts, batteries, etc... they are willing to build. It's only when the economy of scale kicks in that Ford's hybrid line will start making money. But if no one's going to be buying in great numbers, it makes sense for them not to expand their production.

Michigan Passes Tax Credits for Battery Development

In an effort to draw some of the new battery development and keep the Chevy Volt development and production in Michigan, the Michigan Legislature passed a tax credit worth up to $335 million from 2011 to 2016 to build high-tech batteries for electric and hybrid vehicles.

GM is expected to decide where to build their battery pack facility in January.

The bill passed at 31-3 in the Senate and 94-0 in the House. They estimate the federal government is going to spend $1 billion in battery development and MI is hoping some of that money will be invested in their state.

I think this is the summary of the bill, and it looks like the refundable tax credit puts the Michigan Economic Growth Authority (MEGA) as the key player. Under the rules, MEGA could enter into agreements for the following:

• The manufacture of plug-in traction battery packs in Michigan, for tax years beginning after 2009 and ending before 2015, subject to various total amounts based on kilowatt hours of battery capacity.
• Qualified expenses for vehicle engineering in Michigan to support battery integration, prototyping, and launch expenses, incurred for tax years beginning after 2008 and ending before 2014; this credit could not exceed $15.0 million per year, MEGA could not authorize more than $90.0 million in total credits under this provision, and the credit could be taken for tax years beginning after 2011.
• Engaging in engineering in Michigan for advanced automotive battery technologies; MEGA could not enter into more than one agreement for this credit, which would be subject to a total limit of $30.0 million and a yearly limit of $10.0 million.
• Capital investment expenses for the construction of an integrative cell manufacturing facility that would include anode and cathode manufacturing and cell assembly, for tax years beginning after 2011; MEGA could enter into up to two agreements for this credit, which would be limited to $100.0 million per agreement; and MEGA would have to appoint a review board to advise it about decisions concerning this credit.

Ford Fusion Hybrid Fuel Economy

Ford completed their fuel economy tests and the Fusion Hybrid has received some very impressive mpg numbers.  At 41 mpg city and 36 mpg highway, the Fusion Hybrid has jumped to the top of the list of most fuel efficient cars.

The Prius and Civic Hybrid beat out the Fusion Hybrid by a bit, but the Fusion Hybrid outranks the Toyota Camry Hybrid and Nissan Altima Hybrid, which may be it's two main rivals for truly midsize cars.

The Fusion Hybrid has a reach of 700 miles on one tank of gas and is a full hybrid, meaning it can go up to 47 mph on all electric power. The range for all electric power is limited, but the battery power is recharged through the gas engine and an improved regenerative braking system which captures 94 percent of brake friction energy.

The Fusion's nickel-metal hydride battery is lighter and produces 20 percent more power than the Ford Escape hybrid. It also devised a way to get 28 percent more power out of the battery cells, said Praveen Cherian, program leader for the Fusion Hybrid.