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Whatever happened to the Toyota Prius?

Eighteen years ago it was stylish beyond belief, the car that was going to lead us out of the Age of the Internal Combustion Engine and into a green future.

Today the Prius has become somewhat dowdy, a tree-huggers’ car that’s trying to boast great gas mileage at a time when gasoline is about $2.30 a gallon.

“The Prius look is dated and a bit quirky,” Akshay Anand, an analyst Kelley Blue Book, told The New York Times. “The Prius has enormous brand equity, but it needs to be more than just a high-mileage vehicle.”

The collapse of oil prices has not been kind to gas-electric hybrids. Their 50-miles-per-gallon performance, which once doubled that of most models, is now being challenged by standard cars that get 40 mpg without electricity. Hybrids “have gone mainstream,” writes Alex Davies of Wired. “They’re no longer radical, or even all that different.”

As a result, Prius sales have suffered. In 2006 Toyota sold 150,000 of them, and the company overtook General Motors as the largest auto maker in the world. Now that honor goes to Volkswagen, which has a wider variety of hybrids and other fuel-sipping models. Sales of the Prius were down 16.8 percent during the first eight months of this year, compared with the same period last year. Although brand loyalty is still significant, there doesn’t seem to be much headroom for future improvement.

But that may be about to change. Last week on the roof of the Linq Hotel & Casino in Las Vegas, Toyota roustabouts hoisted a 2016 model 60 feet in the air in front of a crowd of journalists and auto analysts in order to launch a sexy new version of the Prius designed to attract a new generation of followers.

The four-door sedan has a stylish look that has no hint of fuel economy about it. Davies wrote in Wired: “The edgy (and, really, this car is nothing but edges) new look is an effort to stand out again, to reinvigorate sales of a model that has seen its popularity slip in a market that doesn’t place as great a premium on fuel economy.”

Toyota officials believe they have turned a corner. “Now we have a car that’s not just for mom and dad, tree-huggers and people on a budget,” said David Rodgers, vice president of two Toyota dealerships in Northern California. “This is what America’s been waiting for – a hybrid car with edge. It’s something the kids will want to drive.”

The fuel efficiency is still there. Toyota says the model will get 55 miles per gallon, and it still has the best co-efficient of drag in the industry. But with so much competition from similar brands, the company is going to have to rely on other factors as well.

If the early returns from journalists are any indication, Toyota may succeed. “Though we haven’t yet seen a reasonably priced alternative to the Prius, there’s usually not a lot of crossover between hybrid people and electric vehicle people,” said Karl Brauer, a senior analyst at Kelley Blue Book. “The Model 3 and the new Chevrolet Volt will be increased competition, but there are still Prius loyalists.”

The coming release of the $35,000 Tesla Model 3 and the rejuvenated Chevy Volt should give Toyota plenty of concern. A decade ago the Prius represented 52.4 percent of the alternative-vehicle market. Last year the figure had fallen to 33.5 percent.

Prius-tail2One of the biggest things working against the Prius had been, as one observer put it, “it is no fun behind the wheel.” Stylishness was deliberately prosaic because ownership was a statement of frugality. Now all this has changed. When the Prius arrives in showrooms early next year, the improvements built into the car will “lift it from its mundane, efficiency-focused past and put it before the eyeballs of a wider audience of buyers,” wrote Mark Vaughn of Autoweek.

“Our biggest complaint about the previous Toyota Prius has been the driving experience, which is only slightly less exciting than reading a dictionary,” writes Aaron Gold in Consumer Reports. “We’re pleased to see the styling of the 2016 Toyota Prius has taken on more personality, and we like the idea of better fuel economy. The promise of more driver involvement is intriguing, but then again, Toyota’s definition of fun-to-drive doesn’t necessarily match ours. We’re optimistic, but to find out whether the new Prius will address our most serious complaints—too much noise and not enough fun—we’ll have to wait until we buy one for a full road test.”

Finally, Steve Siler of Car and Driver says: “… the styling evokes the futuristic hot mess that is the hydrogen-powered Mirai, although it’s not nearly as hideous. Say what you will about the overall design, but those taillights are pretty amazing. Welcome back, tailfins!”

Most important, the Prius revival may extend well beyond Toyota’s fortunes. As Edmunds.com analyst Jeremy Acevedo put it: “With the aged outgoing model and low gas prices dragging down sales, the 2016 Prius will be a much-needed shot in the arm for not only Toyota, but the entire green car segment.”

Related posts:

What caused EV sales to go off a cliff in July?

The hydrogen car finally takes shape

Tesla approaches a moment of truth

U.S. is trailing the rest of the world on EVs

 

 

Is what’s good for the affluent also good for consumer fuel choice?

Rodin3.jpgYou and I want to be called rational. We want to believe that with solid analysis, most things are predictable by smart people in this complex world of ours. Are they? I thought about this after reading a recent interview with a noted futurist at Mercedes-Benz, Eric Larsen.

My conclusion, based on his view of the future of cars and transportation fuels, is that his thinking — while provocative — is too tidy, often too rational and many times likely wrong. His comments brought back the words of Matthew Arnold, “We do not do what we ought; what we ought not, we do; and lean upon the thought; that chance will bring us through” – a variation on chaos theory.

Let’s together go through some of Larsen’s views, which, at times, I have taken the liberty to paraphrase or summarize (fairly, I hope).

Larsen: Continued suburban growth, wealth and American family needs will support and create demand for large vehicles.

In making an argument for large cars, Larsen indicates that the suburbs will be around for a long time and that young people will want children and home-based lives, with lots of space around them. They will fill up a car with kids, dogs and stuff from big-box supply stores. That means people will still want big cars. Conversely, rich people want luxury, based on their income and their desire to show off. He indicates, In our new AMG model we have an idea of, one man, one engine. Although he doesn’t use the term, according to Larsen, wealthy people are somewhat schizoid. They want to show they care about the world, and to do this many often buy the more-expensive Prius or provide a niche market for Tesla. But they go back and forth between doing good and doing what their wealth permits and their status seems to generate, a desire for big, technologically contemporary cars. Wealth is so tough to manage! No wonder psychiatrists charge big bucks.

Kaplan: While America’s love for the big car remains a legacy of the good ‘old days when gasoline prices were low for long periods of time and incomes were growing – contrary to Larsen – habits, income and demography seem to be changing slowly, but nevertheless changing, and the result may lead to less suburban growth, more atypical families and less income for gasoline, particularly among low and moderate income families. In this context, smaller cars that behave more parsimonious with gas will likely show a visible uptick in sales, over time. Ladies and gentleman, place your bets on where prices will be in one, two, three or more years out. Make a fair guesstimate on trends concerning vehicle popularity and fuel use (your guesses will be no worse than what the experts predict). The odds are that gas prices will return to their “normal” highs and smaller cars that use alternative fuels will take a larger share of the market.

Larsen: Fracking has been a strong influence, keeping gas prices low.

Kaplan: Sure, fracking has led to higher levels of oil production in the U.S. and softened the market for gasoline, but lower prices (already on the rise again) relate to much more than fracking. They include: lower consumer demand, increased global supply of oil, the changing value of the dollar, the decision of the Saudis to avoid lowering production and to keep prices low to secure increased market penetration, etc. Most frackers did not anticipate the recent significant drop in the cost to consumers at the pump. Quite the contrary!

Larsen: Internal combustion engines are getting better mileage.

Kaplan: Yes, they are getting better mileage, thanks in part to CAFE standards and thanks in part to technology. New cars also emit less pollutants and GHG emissions. So what’s the rub?

Internal combustion engines using gasoline are likely to always generate more pollutants, and more GHG emissions than the alternative fuels now on the market. Dependence on gasoline because of reliance on non-flex-fuel internal combustion engines will also continue to lead the United States into military conflict to safeguard our own and our allies need for oil. Big cars pushed by Larsen, for the most part, continue to be gas guzzlers. Larsen is right to suggest that use of alternative fuels, including natural gas and electricity, instead of gasoline in bigger and newer luxury cars will help mitigate their present negative environmental, economic and security impacts. I am sorry he didn’t extend his comments to converting older big cars to flex-fuel status so they could use other alternative fuels that he seems to favor.

Larsen: [In context of his support of larger cars] natural gas is a cleaner fuel and easier to install from a technical point of view.

Kaplan: Larsen’s comment is basically correct for new cars and cars aimed at a luxury market. The fuel is cleaner than gasoline and installation of CNG equipment, when building a new car from the ground up, is not difficult. However, CNG, at the present time, adds about $8,000 or more to the price of a vehicle – whether new or converted – which prices them out of the market for most low- and moderate-income families.

Thanks to the leadership of the governors of Colorado and Oklahoma, a bipartisan demonstration is going on in 22 states. It focuses on replacing older state cars in fleets with Detroit-produced CNG vehicles. One of the key objectives of the effort is to see if building demand among states can get Detroit to develop a CNG fueled car that fits the budgets of more than just a relatively few Americans.

An equally promising initiative that would convert natural gas to ethanol is now being considered by both business, political, and foundation leaders across the nation. Ethanol, while not perfect, is a better, cheaper and more environmentally friendly fuel than gasoline. Its use requires a flex-fuel vehicle. Together, both will meet Mr. Larsen’s priorities. They will clearly reach the pocketbooks of the rich and famous. Happily, although not apparently Larsen’s major concern, both together will also reach the budgets of many low- and moderate-income households.

Larsen: Refueling with gasoline takes five minutes, once a week. People have anxiety about running out of fuel with electric cars. Tesla, cities and garages are building charging stations. But will they be sufficient?

Kaplan: Electric cars will become more popular as the price comes down, batteries provide fuel for longer driving distances, more infrastructure is developed by the private sector. Larsen’s question, if electric cars become popular, are they really going to put a charger in every space in the garage, is a bit specious. Not every corner has a gas station and not every space in a garage needs to include a charging station. Greater mileage from batteries on a single charge will generate (excuse the play on words) the ultimate distribution of charging stations in garages and, indeed, on roads and freeways.

Larsen: Hybrids can do well in the suburbs, where everyone could have a charging station in the garage, with rooftop solar panels to produce electricity.

Kaplan: Clearly, Larsen would not be a good candidate for a coming-back-to-the-city initiative. Indeed, his apparent views do not fit the movement back to cities at the present time on the part of many diverse households in America. Irrespective, someday soon, solar panels will charge stations in different locations to fuel hybrids and electric vehicles. If panels succeed in the suburbs, they can also succeed in cities (please try singing to the tune of “New York, New York” … if you can do it here, you can do anywhere). The sun has not been appropriated by suburbanites.

Larsen works as research director at Mercedes, which probably colors his views of urban America, the demand for luxury cars and fuel options. His perceptions of where we are as a nation regarding alternative fuels is narrow and seemingly limited. But he has raised some interesting observations related to the roles of demography, place of residence, and income to car buying and consumer choices regarding fuels. I wish he was less dogmatic, more expansive and less riveted intellectually by his experience at Mercedes. We need to introduce him to chaos theory and more alternative fuels.

Pete Seeger And Building Consensus For Transitional Fuels

I have a love for folk music. I recently heard the cantor sing “Where have all the Flowers Gone?” at a service for the Jewish High Holidays. It brought back a lot of memories concerning the ‘60s: a period of hope, achievement and tragedy in America.

Excuse me if I take one line from the song by Pete Seeger, perhaps out of context, to explore the current intellectual and real politic difficulties we have in weaning the nation off of oil. Remember the continuous refrain in every stanza concerning the human costs of war, “Oh, when will [we] ever learn?”

I think we should ask the Seeger question now, in addition to thinking about war, about the issues involved in America’s transportation sector’s continued dependence on oil and the nation’s inability to come up with a coherent transition to a renewable fuel.

Look, I hope that we can make the switch from fossil fuels to renewable fuels as soon as federal policy, technology, design and costs make the renewables and cars competitive for most folks. The sooner the better! But even when the market penetration of non-fossil-fuel powered vehicles is double, triple or quadruple what it is now, the percentage of such cars on the road will be infinitesimal compared to the cars fueled by gasoline — a derivative of oil. Think about it! 254 million vehicles exist in America. Fewer than 100,000 renewable fuel powered cars, primarily electric and electric hybrids, were sold in 2013. Given the average life span of cars, it will take a long, long time before the fleet is predominantly gasoline free. Given these facts, establishing a national strategy that, through research and development, makes renewable fuel-powered vehicles cost efficient and marketable to most Americans as soon as possible, and that, simultaneously, encourages the use of transitional fuels in flex-fuel vehicles, while far from perfect, makes common sense. The dual-linked approach is better for the economy, the environment, the consumer and the country’s security. (Ain’t going to have go to war no more…or at least less war based on oil needs.)

What is it that makes many America’s leaders in the public, nonprofit and private sector unable to act even semi-rationally concerning alternative fuels? Sure, Washington is dysfunctional and partisanship as well as special interests have prevented the development of consensus around fuel policy, but to some extent, we as citizens have not become “energized” to advocate for change. Push alternative fuels, including those derived from renewables, and the oil industry demurs with shrill “earth is flat” type lobbyists; advocate for flex-fuel automobiles, and you get both the oil industry and some in the auto industry leveraging their often negative weight in Congress and in state capitals. Try building strong bipartisan coalitions around development of choice at the pump and you are seen as a dreamer, and subject to the often challengeable absolute wisdoms shouted by different interest groups and their leaders.

Sit back and take it all in! The dialogue, or what purports to be the dialogue, concerning fuel choice often reminds me, at least, of the religious arguments about whose God is better. I don’t think anyone has recently had a direct line to God! The tolls are too expensive. Federal regulations in light of separation of church and state prevent it. Similarly, I do not know any respected analyst who finds complete truth in his or her numbers supporting one fuel over another. We hope for perfectibility, not perfection, in analytical theology.

But repeating the dysfunctional “woe is us” analysis over and over again becomes boring and seems to be an excuse for political inertia or failed leadership in all sectors — public, private and nonprofit. Paraphrasing the Pogo comic strip, we have met the enemy and he is us.

So, “when will we ever learn?” that making love is better than making war with respect to building an agreement on alternative fuel strategies? The oil industry, according to recent analyses, has reason to want to think about the future before it continuously tries to restrain our choices at the pump. Prices per barrel may soon reach the level where drilling for tight oil may be too expensive and alternative fuels may be worthy of investment. (Nothing like the profit motive to bring folks to the table!) The auto industry recently has been increasing production of flex-fuel vehicles and CAFE standards, combined with a successful push for open fuel standards and lower cost fuels, could induce even higher production levels of flex-fuel vehicles. Many environmental groups, some of whom already support a dual strategy leading to expanded transitional fuel choices and support for a faster path to renewables, seem willing to discuss a road less traveled, that is, continued use of fossil-based transitional fuels until renewables are ready for prime time. Maybe all we need now is a leader or leaders supported by informed constituencies who will bring relevant groups and individuals together around a consensus building learning table.

Thank you, Pete Seeger!