Hybrid cars: They're here, but nobody's buying

Everyone from stars to greens to President Bush seems to be hyping gas-and-electric cars. So why do we keep buying SUVs?

By Jake Tapper

Published March 11, 2002 9:57PM (EST)

"I love my little car!" Cameron Diaz bubbled.

It was December, and Diaz was on the "Tonight Show" with Jay Leno. Leno's notecard mentioned that Diaz wanted to talk about her brand new "lavender-y" Toyota Prius, a hybrid gas-and-electric car classified as a super ultra low emission vehicle. "It gets 52 miles per gallon," Diaz squealed to Leno. "In the city. Isn't that exciting?"

But however good her intentions, Diaz's description was surely not what Toyota's marketing director would have liked. She struggled to explain one of the energy-conserving features of both the Prius and the Honda Insight -- the two hybrid cars currently available in the United States. In both cars, the gas engine shuts off and the electric battery kicks in when the car is stationary, a feature that actually enables the Prius to get better mileage in the city than on the highway -- 52 mpg versus 45 mpg -- since it's not wasting gas or spewing pollutants at stop signs or traffic lights.

"The craziest thing is, 'cause all of a sudden you just, like, you're sitting at the stop sign? And you can't hear anything? And you're like 'Omigod! My car has died!'" she said. "But you know what? It's just like a golf cart, Jay. You know how guys love golf carts."

And Leno, given the opening, quickly jumped in to mock the Prius with common enviro-mobile stereotypes that certainly contribute to the car's low sales.

"Oh, man, yeah," Leno yukked, dripping with sarcasm, "you want to impress a guy with a car, you say 'It's just like a golf cart! Man, this thing goes like a golf cart! Whoa!' Yeah."

"It, like, shuts down and then all of a sudden you just step on the gas and you're going again!" Diaz continued. "It's unbeliev -- I'm thrilled. I'm so excited, 'cause it's, like, our future. That's our future." She said that her Prius was fast and generally "drives like a regular car," but she jokingly added -- with Leno's encouragement -- that the one exception is that "it has the extraordinary features of a golf cart!"

Diaz and Leno perfectly captured the flighty, rich do-gooder vs. mainstream skeptic dynamic that has kept hybrid cars -- which have been available in this country since December 1999 -- still largely the elite feel-good toys of the limousine liberal set.

But now, suddenly, Washington seems to be jumping on the hybrid hatchback. The Senate has taken up debate over the energy bill in recent days and Democrats have pushed for tougher fuel efficiency standards that could end up being great news for hybrid technology. Fueled by the post-9/11 realization of our nation's vulnerability due to energy dependence on Arab countries like Iraq and Saudi Arabia, even conservative Republicans have made an effort to support hybrid technology, with President Bush -- an oilman and usually an oilman's best friend -- posing with a small fleet of hybrids and hyping tax incentives for hybrid buyers.

Madison Avenue is dubious, but Washington seems determined. Will that be enough to create a major shift away from American's love for big ol' autos?

Toyota lent me a Prius (Latin for "to go before") last weekend and I have to say: It's nothing like a golf cart. It's actually pretty cool. My buddy Chris, a Buffalo, N.Y., Republican with blue collar roots who drives a BMW, even agreed. It tools around like any other high-performing Japanese car, it feels just as sturdy as your average American automatic, and the one I borrowed came with a very nifty "information system" computer screen with a GPS and a screen that illustrates for you when you're using gas and when you're using electric power.

With its round backside and streamlined design, the Insight is more of what we've come to expect electric cars to look like, as though it would fit in just as well hovering over a city in "Blade Runner" or cruising underwater for giant squid. I test drove the Insight, too, and while the Prius feels slightly elevated and seems to have something of a pug nose, the Insight is the one that turns heads in the street, the one several eager greens gave me the thumbs-up for driving.

But the vast majority of Americans don't know these cars are even available -- that futuristic automobiles that get incredible mileage, significantly reduce pollution, recharge their own batteries and feel pretty much like any other car on the road, even exist. Only around a quarter of the American people know hybrid technology is here, according to Beth Henning, the executive in charge of marketing the Prius to the United States.

The Honda Insight has been available since December 1999, but only 6,500 have been sold in the United States, and only 19,500 Priuses have been sold since they were introduced in June 2000. During that time, the American consumer has embraced the exact opposite kind of vehicle -- immense, pollution-spewing gas guzzlers exempt from the average mileage restrictions that cars must meet. Last year, light trucks -- pickups, SUVs and vans -- outsold cars for the first time in history, accounting for 50.5 percent of the market. Almost 9 million light trucks were sold, including 4 million SUVs and 2.3 million full-size pickups.

What would have to happen for Americans to really open up their wallets for leaner, greener machines? Don't forget, it was only about 20 years ago that the entire country openly embraced the teeny-weeny fuel-efficient cars (I have harrowing memories of my mom's tinfoil-thin, yellow Datsun Honeybee). Can national-security concerns guilt us into micro-sizing?

No, at least according to Duncan Pollock, president of Siegel & Gale, an independent strategic branding and corporate identification firm in New York. "What is the motivation for a car like that?" he asks. "As much as people talk about environmental issues and care about environmental issues, I don't think 'green' sells. I don't think it's a strong buying motivation."

While Pollock agrees that U.S. dependence on foreign oil is a "legitimate public policy issue, especially in the wake of 9/11," he doesn't see it transferring to car showrooms. That hybrids are only manufactured by Japanese automakers is one problem -- the contradiction with any reflexive "Buy American" sentiment intrudes on the patriotic philosophy. More importantly, Pollock says, the national-security argument is "too abstract."

"I think when you're spending $20,000 on a car, the question is 'What's in it for me?' People want a reasonable amount of driveability and power so they can get on the highway safely."

But Pollock's marketing and advertising expertise -- he's worked for both BMW and General Motors -- stands in stark contrast with the hopefulness of Prius owners, including those in official Washington, like Rep. Roscoe Bartlett, R-Md.

When Gen. Tommy Franks, commander in chief of the U.S. Central Command, was warning the members of the House Armed Services Committee two weeks ago about the economic chaos the nation would face if terrorists were to sink an oil tanker making its way from the Persian Gulf through the narrow but strategic Straits of Hormuz, Bartlett says he was gladder than ever that he owned a Prius.

"Forty-three percent of the world's oil moves through the Straits of Hormuz," Bartlett tells me, of the only, and narrow, sea route for oil shipped from Bahrain, Kuwait, Iran, Iraq, Qatar, Saudi Arabia and most of the United Arab Emirates. If terrorists sank a tanker there, it could delay oil supplies for months, and "it would be catastrophic." Though he originally bought his Prius to set a good environmental example, he now sees the Prius as key to national security.

But to the Bush Administration, at least, there are limits to how much hybrids should be embraced. Bush's press event was notable for the fact that the three automobile manufacturers present were all American -- and none will have hybrid cars available for purchase until 2003 at the earliest. White House press secretary Ari Fleischer described the American hybrids to come, none of which were cars and all of which were hybrid light trucks -- the Chevy Silverado hybrid truck, the Ford Escape HEV hybrid electric vehicle (a hybrid SUV), and the Chrysler Town and Country Atrium minivan (without mentioning that Toyota and Honda already had hybrid vehicles in the market). Bigger and bulkier than the Prius and Insight, these vehicles will not be nearly as fuel efficient or cut down as much on the emission of pollutants. More importantly, they don't even exist -- they're scheduled to hit showrooms on a limited basis in the next two to three years, but no sooner than 2003.

With the exception of Ford, American auto companies are preparing to use hybrid technology that's "really underwhelming," says Jason Mark, director of the clean vehicles program for the liberal Union of Concerned Scientists. The hybrid vehicles soon to be trotted out by General Motors and DaimlerChrysler will only have fuel economies improved by approximately 20 percent, when it could be 50 percent better. (The pending Ford Escape hybrid SUV is far more on the program, Mark says.) "They call them 'mild hybrids,'" he says. "We call them 'weak hybrids.'" They conserve a bit more fuel, provide the car a little more power, but essentially mild hybrids don't make priorities of energy efficiency or the environment.

Bartlett guesses that Bush's U.S.-only hybrid press event "was to encourage our stateside automakers to get theirs from the drawing board to the showroom." But he regrets that Honda and Toyota were excluded. "Had I been advising them on the event, I would have advised him to say that they were already here," that the Insight and Prius are ready and on the road and have been for years.

When asked, White House spokeswoman Anne Womack could not think of anyone in the administration who owned a hybrid vehicle, perfectly reflecting American indifference to the cars in deed if not in word. Some blame the auto industry for not pushing their product enough. "I just don't think there's any marketing done," says Rep. Connie Morella, R-Md., who bought her green Prius in February 2001. "Where that reluctance comes from, I don't know."

There have been, however, plenty of incentives already in place for consumers looking for incentives to choose hybrids. In Maryland, Morella brags, she didn't have to pay any sales tax on the Prius, plus she's allowed to use the high-occupancy vehicle lane. (She doesn't use the lane, however, because she fears commuters will see her congressional plates and mistakenly consider her presence in the lane to be an example of congressional arrogance.)

Overall, though, environmentalists consider government action on hybrid technology a mixed bag. Mark accuses GM and Chrysler of sabotaging efforts to provide tax credits for hybrid purchases. With two power systems -- both an internal combustion engine and an electric motor powered by regenerative braking, as well as a battery pack -- hybrids cost more to manufacture. Therefore the auto industry has asked the government for a tax credit for hybrid purchasers. One offered in the House version of the energy bill, in the $2,000 to $3,000 range, was to help defray the slightly higher costs of hybrids versus their non-hybrid alternatives. It was earmarked for hybrids that met certain tailpipe pollution standards, but House members stripped the environmental requirement at the behest of lobbyists for GM and Chrysler who accused Ford of gaming the system on behalf of its smaller hybrid SUV.

The auto industry's response? "We're working with Congress to pass consumer tax credits for hybrid electric vehicles to get more of these vehicles on the road," says Eron Shosteck of the umbrella group the Alliance for Automobile Manufacturers. When pressed about how the environmental requirements were stripped from the hybrid tax credits, Shosteck said he didn't understand the question.

In any case, the energy bill that passed the House last summer included the watered-down version, providing a tax credit for even mild hybrids whose cleanliness and fuel efficiency are not what they could be. The original amendment -- with tailpipe pollution standards -- is in the energy bill being debated by the Senate, offered by Majority Leader Sen. Tom Daschle, D-S.D. But Mark reports that Sens. Carl Levin, D-Mich., and Kit Bond, R-Mo., are planning an amendment to undermine that as well.

But environmental lobbyists say that tax credits for hybrid purchases are not enough."We need higher fuel economy standards to really push hybrid fuel technology into the market," says Mark. Daschle's bill also would do that, raising fuel efficiency standards to 35 miles per gallon by 2013. But Bush argues that tougher fuel efficiency standards should be voluntary, and the auto industry is also beginning to cite studies that hit consumers where they live, literally, saying that lighter cars would cost 2,000 a lives year according to some studies.

Last week, in an indication of how high-profile this issue, with its national-security angle, is becoming, two of the highest-profile members of the Senate, Sens. John Kerry, D-Mass., and John McCain, R-Ariz., announced they had reached agreement on a bipartisan bill "to increase fuel efficiency and help reduce reliance on foreign oil." The Kerry-McCain bill requires the secretary of transportation to set rules with the goal of achieving an average fuel economy standard of 36 miles per gallon by 2015.

And photo ops aside, the Bush administration's commitment to hybrids seems questionable. At his press event, Bush said that the American dependence on foreign oil "is a challenge to our economic security, because dependence can lead to price shocks and fuel shortages ... [and] a matter of national security. To put it bluntly, sometimes we rely upon energy sources from countries that don't particularly like us."

But there are clearly limits to how much this president -- and this Congress -- will encourage Americans to ask not what their country can do for them, but what they can do for their country.

Asked last May if the president believes Americans need to fix our lifestyles to address the energy problem, White House spokesman Fleischer said. "That's a big no."

Auto industry experts also counter that little in the behavior of the American consumer will change any time soon because of the cheap price of gas, which doesn't create much financial incentive for conservation. Even though hybrids are being sold at something of a cost to the manufacturer -- as of now, estimates range up to $10,000 in losses for each Insight or Prius sold. Sure, it might cost more up front, but won't hybrid owners make that money back at the pump? Not necessarily.

"It's very difficult to say that they're going to make it back when the cost of gas has come down as much as it has," allows Toyota's Henning. Thus the slightly high price causes problems. American consumers "don't want to make that sacrifice," another industry executive admits. "In Japan it makes more sense since the price of gas is much higher. That's why we need incentives." The environmental justification for a hybrid so far is the main one, Henning says.

So how can the auto industry and the government encourage more hybrid purchases? Rep. Brian Baird, D-Wash., who bought his Prius a year and a half ago in part to "help establish the market," says that hybrid advertisers need to start making strong political arguments. "We could ask ourselves: Do we really want to be supporting the Saudi princes, do we really want to drill in pristine wilderness areas? I think most Americans don't," he says.

Morella agrees, saying that the government could start painting starker pictures of the harsher environmental regulations to come. "We could even get environmental agencies to say that if more people drove cars that are hybrid gas-and-electric we would not have to do whatever it is we have to do as a penalty for our environmental disregard," she says.

Baird is convinced -- regardless of what advertising executives might think -- that "most Americans would like to have our foreign policy more connected to our values and less connected to our gasoline pumps. And I think most Americans would like to see us conserve as a way reducing energy demand rather than drill in wilderness areas."

Really? That's not what auto manufacturers say, and they can back it up with numbers. "If people could try it," Baird says earnestly, "if they could drive one of these vehicles around they'd realize they wouldn't be sacrificing anything."

Seconds Bartlett, "I don't think of my Prius as a sacrifice." He adores it. "If it was a song on American Bandstand, I'd give it a 100," he says. It was the first foreign car he'd purchased in quite a while. "I wish I could have bought one from one of our people," he says, "but theirs are still on the drawing board."

The Insight, it should be said, is hardly the best argument for hybrid cars. While it gets 61 miles per gallon in city driving, 68 mpg on the highway, and emits 84 percent less hydrocarbon emissions than the average American car, it has an immense battery that takes up all the space of the back seat and trunk. (Honda's pending Civic hybrid will attempt to rectify this problem; its battery will be half the size and the car should have a backseat.)

The Prius unquestionably feels more like a regular car than the Insight. While the Insight gets better mileage, the Prius is better for the environment since it's a super ultra low emission vehicle (SULEV) -- approximately 75 percent cleaner than the Insight, a ULEV that is still far better for the environment than the average American car.

It all adds up to a persuasive argument. But, perhaps, only to consumers already inclined to buy it.

Jake Tapper

Jake Tapper is the senior White House correspondent for ABC News.

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