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Hybrids: Do they make economic sense?

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  #1  
Old 05-18-2004 | 01:11 PM
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Here is the long article my calculations below are based on.


From CBS marketwatch
Actual mileage may vary -- significantly
Buyers of hybrid cars discovering claims are overstated

By Chris Pummer, CBS MarketWatch
Last Update: 11:31 AM ET May 17, 2004

SAN FRANCISCO (CBS.MW) -- Toyota and Honda have scored smashing successes with their hybrid cars, but now face a growing number of angry buyers who have found the cars' fuel efficiency falls short of advertised claims.

U.S. sales of gas-electric vehicles are soaring along with gasoline prices. Toyota Prius buyers are waiting four months or more for delivery in most markets, sales of Honda's hybrid Civic hit a record in April and Ford (F: news, chart, profile) is preparing for an onslaught of orders for the coming roll-out of its new hybrid Escape, the first SUV of its kind.

Initially popular with green-minded drivers for their low emissions and fuel efficiency, hybrids are now attracting buyers entirely for anticipated fuel savings. Trouble is, the disclaimer "actual mileage may vary" has never been truer than with these vehicles.

Under test-track conditions, Consumer Reports found the Prius and hybrid Civic's actual mileage performance is 20 to 25 percent lower than the Environmental Protection Agency's lab-tested results. In fact, the two sedans fall as short of EPA claims as almost any vehicle Consumer Reports has tested in decades.

"These vehicles are designed to do well on the EPA cycle," said David Champion, Consumer Reports senior director of automotive testing. "If you're looking at a hybrid just as a financial investment, it doesn't make sense."

Buyers star-struck by the stated fuel-efficiency ratings don't realize that, even at $2-a-gallon gas, it would take 12 years to recoup the cost of a hybrid Civic versus a similarly equipped gas-engine model, Champion said. Based on Consumer Reports results, the annual savings on a Civic hybrid versus a top-of-the-line Civic EX driven 15,000 miles a year is $200 at that pump price. But the hybrid costs about $2,400 more.

The 2004 Prius, touted on Toyota's Web site as Motor Trend's Car of the Year, produced 55 miles per gallon in combined city/ highway driving in the EPA tests. The hybrid Civic yielded 47.5 mpg. Consumer Reports found the Prius averaged 44 mpg overall and the Civic got 36 mpg -- about 11 mpg less than the EPA ratings.

In the case of the Civic, the hybrid version averaged just 7 mpg more overall than the gas-engine model, a disturbing discovery for cost-conscious buyers who could have purchased a base-model Civic for $6,000 less.

Getting an earful

Toyota (TM: news, chart, profile) and Honda (HMC: news, chart, profile) dealers and customer-service phone reps have been taking heat from some disgruntled buyers. Earlier buyers largely accepted the discrepancy with little complaint, in the knowledge they'd at least made an environmentally sound purchase. Many recent buyers, though, are steaming mad at the shortfall in fuel savings.

Adding insult to injury is the fact most buyers don't discover the shortcoming until after the "cooling-off" period -- a week or less in most states and non-existent in others -- when they can return a newly purchased vehicle for a full refund. Since there is technically no defect, dealers can just point to the "actual mileage" disclaimer.

"We explain to everyone when they buy the car that those EPA estimates are theoretical," said David Burrill, hybrid salesman for Toyota of Berkeley in California. "We never set anyone's expectations that they'll get 55 mpg."

Before buyers drive off with their new vehicle, "we take people out to teach them how to drive it efficiently," Burrill said. "During the first week or so, they may get 42 or 43 mpg, but after that, customers tell us they're getting 48 or 49."

A suspect messenger

Through decades of testing, Consumer Reports has found fuel efficiency universally registers 5 to 20 percent less than EPA estimates. The Prius came up 20 percent short in combined city/highway driving and the Civic, 25 percent.

The EPA's 19-year-old testing method runs vehicles in a lab setting in a stationary position on rollers. To gauge highway mileage, vehicles are run at an extremely efficient 47 miles per hour, based on the old federal-highway speed limit of 55 mph.

Additionally, the vehicles face no wind resistance and are run without air-conditioning, which drains more fuel on four-cylinder engines on a percentage basis than on larger engines. The EPA also estimates fuel efficiency by weighing exhaust emissions, which are virtually non-existent when hybrids are in electric-engine mode.

Critics say the EPA tests overstate results in deference to automakers, which for years successfully fought any increase in federally mandated "fleet" mileage ratings on their vehicle line-ups. Instead of using ever-advancing technology to build more fuel-efficient cars, they've built more high-horsepower engines to drive the higher-profit SUVs, minivans and V6 sedans they've marketed to U.S. consumers accustomed to cheap gasoline.

Reputations on the line

Toyota and Honda both built U.S. sales on a reputation for quality and reliability. Yet neither warns potential buyers in its advertising that the mileage claims are inflated.

Toyota promotes the Prius's "unheard of 55 estimated combined mpg" on its Web site. Honda promotes the hybrid Civic's ability to get "650 miles on a single tank of gas," but includes a footnote: "Based on 2004 EPA mileage estimates. Use for comparison purposes only."

But with retail gas prices at record highs, the orders keep pouring in. As Toyota notes in an advisory on its Web site, "If you are in the market for a new 2004 Prius, we appreciate your patience. There is currently a waiting list at many dealerships across the country. . . Toyota is making every effort to increase production to try and respond to the current high levels of demand."

Toyota corporate spokesman Mike Michaels said the automaker must by law advertise the EPA estimates, even though they reflect ideal driving conditions. For instance, he said, the Prius may get as little at 35 mpg overall in northern states during the winter because severe cold weather drains the efficiency of the electric engine's batteries.

"It is a challenge for us, because car manufacturers have no latitude on how we advertise fuel economy," Michaels said. "We and the customers are somewhat victims of circumstances that couldn't have been anticipated. We are really working hard to convey to customers to set their expectations at reasonable levels."

Honda spokesman Andy Boyd, after initially trumpeting a recent Detroit News road test that found the Civic narrowly outperformed the Prius, said Honda has made a point of not promoting only mileage ratings in its advertising.

"We've always positioned it as advanced technology, fuel economy and low emissions," Boyd said. Even at today's gas prices, he said, the most satisfied buyer would still be one who "sees reduced oil consumption as a political goal."

"There's no question there are customers who are dissatisfied" with their fuel-efficiency, Boyd said. "But we've surveyed our (hybrid Civic) customers and found that they're 95 percent satisfied, which is extremely high when benchmarked against other vehicles."

Toyota is advising dealers to instruct their salespeople to inform prospective buyers of the broader EPA mileage range listed in smaller print on the window sticker, Michaels said. "We're trying to get that word out to the sales force. The wise salesperson would definitely show (the potential range) to the customer."

The large print on the Prius' sticker lists 60mpg city/51 mpg highway versus a range of 51-to-69 mpg city/43-to-59 mpg highway in the small print. The hybrid Civic's large-print rates 47/48 mpg, but the EPA's declared range is 39-to-55 mpg city/40-to-56 mpg highway.

The bottom-end of those ranges are still higher than Consumer Reports findings.

The best available option

The unfortunate result of the hybrids' mileage shortcomings is that they may sour some buyers on a technology that represents the best available alternative to the internal-combustion engine, which has powered automobiles for more than a century and has long anchored the United States in the morass of the Middle East.

Among buyers drawn by their fuel efficiency, hybrids are proving especially popular as the commuter car in two-driver households where the second vehicle is a gas-consuming SUV or minivan.

"It's gonna take gas to reach at least $2.50 to $2.65 to make them (hybrids) viable for a return on investment within five years," said Max Martina, managing director of Truckee, Calif.-based Alternative Energy Institute. "But over the next three to five years, you're going to see tremendous advancement in this technology."

Consumer Reports' Champion notes that the midsize Prius is itself a remarkable advancement on the Honda Insight, a poorly received, tiny two-seater that was the first widely available hybrid to debut just four years ago.

"We're still in the early stages in terms of hybrid technology," Champion said. "They're learning more and more how to squeeze every morsel of energy out of a gallon of gas. As we move forward, I'm sure they're going to be more objective in terms of their fuel mileage claims."

Chris Pummer is an assistant managing editor for CBS MarketWatch in San Francisco.

That article made me a bit curious so I did a little cost estimate for the Honda Civic Hybrid based on information from HondaCars.com and the Consumer Reports Average Gas Mileage as reported in the CBS marketwatch article.

Assumption: Gas @ $2.00 a gallon and 20,000 miles per year of driving
Civic Hybrid Civic EX Civic LX
19650 17260 15360 Purchase Price
495 0 0 Hybrid Tax Deduction (33% bracket hondacars.com)
19155 17260 15360 Initial Cost

36 29 29 Consumer Reports Average Gas Mileage
1222 1517 1517 Annual Fuel Cost (20,000 miles @ $2.20)

49% 51% 50% 3 year Residual Value (hondacars.com)
9629 8803 7680 Value @ 3 Years
13193 13009 12232 Total Cost @ 3 Years (initial cost + 3 years of fuel - 3 year residual)
-184 -961 Cost Delta

36% 37% 36% 5 year Residual Value (hondacars.com)
7074 6386 5530 Value @ 5 Years
18192 18460 17417 Total Cost @ 5 Years (Initial Cost + 5 years of fuel - 5 year residual)
268 -776 Cost Delta


Summary: with gas at $2.00 a gallon after three years the Civic Hybrid is even with the Civic EX ($180 worse off after 3 years, $270 better off after 5 years) and about $800 to $900 more expensive than the lower spec LX.

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Old 05-18-2004 | 01:37 PM
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It may have been brought up in the article but my eyes got really tired about a 1/3 of the way thru. So forgive me if I repeat something they already said.

One huge downside of the hybrids is that they rely upon stop and go driving to get their great fuel economy. If you do freeway travelling (or your commute is mostly at highway speeds without much stop-n-go), then the fuel economy drops down to well below many other non-hybrid fuel efficient cars. I heard one report of low 30 MPG for the hybrid when cruising down the freeway. The moral of the story is you should consider a hybrid if a majority of your driving is in the city where its stop and go where the true fuel efficiency can kick in.
 
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Old 05-18-2004 | 01:50 PM
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The overstating of the fuel economy is in the article. That's why for my calculations I used the Consumer Reports estimates, not the EPA estimates.


Consumer Reports said real world mileage for the Hybrid was 36 MPG vs. the Civic mileage of 29 MPG.


Based on 20,000 miles per year with that mileage, the break even point after 5 years is:

Civic EX $1.80 / gallon
Civic LX $3.35 / gallon

Based on 25,000 miles per year with that mileage, the break even point after 5 years is:

Civic EX: $1.44
Civic LX: $2.69


Thus, the Hybrid still makes sense if you would have gotten the Civic EX, but it takes gas being more expensive before the cost trade makes the hybrid more economical than the civic LX.

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Old 05-18-2004 | 04:57 PM
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I researched the Insight for a while but decided an aluminum car wasnt in my best interest. The driving style necessary to meet/surpass the claims is very unorthodox. You basically punch the throttle and short shift all the lower gears until you can skip to overdrive. You then cruise at 60ish, not 75ish. The reasons are:

1. Volumetric Efficiency is best at WOT.
2. The engine is overall most efficient at 85% load.

I'd bet that 90% of people dont drive them that way/cdont go that slow but thats how some of the insight guys are over 80mpg.

I also hear that dealers underinflate the LRR (Low Rolling Resistance) tires to make the ride more comfortable, which comes at the expense of mileage.

That said, take a look at a 5 speed gas engined Toyota Echo's window sticker and you'll see the EPA's mpg range is up to 47mpg i believe.

Its a cool technology for geeks interested in mpg but its definately not for everyone.

--
Cheese

 
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Old 05-18-2004 | 07:08 PM
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Just remember....fuel will go to more than 5 bucks a gallon at some time in the future....it cannot be helped......Any technology can be cost effective under certain assumptions....assuming $2.00 gallon gas is fraught with peril This country refuses to become self sufficient, opting instead to have "them" over "there" dirty "their" soil and environment by pumping the evil stuff out of the ground. Well, "them" are a lot more numerous than "us" and they ALL want three cars and a MINI in "their" drive ways......who's gonna tell them no? and no cuz their demand is driving up the price of "our" gasoline? who?
 
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Old 05-18-2004 | 08:33 PM
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This is why I'd rather have a diesel: The BMW 330d accelerates from 0-62 mph in 7.2 seconds has a combined fuel consumption of 42.8 mpg and has 302 lbs.ft of torque. When Hybrids can claim similar efficiency plus performance I'll be interested.


 
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Old 05-18-2004 | 09:36 PM
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How come diesel powered cars seems to have more torque than similar gas powered ones.

302lbft on the 330d vs around 220 on the 330?
 
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Old 05-19-2004 | 08:03 AM
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>>How come diesel powered cars seems to have more torque than similar gas powered ones.
>>
>>302lbft on the 330d vs around 220 on the 330?

It has to do with the long stroke characteristic of diesel engines that creates more torque. But because of the long stroke, they cannot rev as hogh as gasoline engines.
Someday, just someday, diesel in the US will have less sulphur, and automakers will sell more diesels here. I rented a Volvo V70 D station wagon in Germany, and averaged over 1000 kilometers per tank!!!
I have a far fetched idea on converting gasoline cars to fully electric motors with some sort of recharging device that operates while driving.
The only reason that automakers don't make a fully electric vehicle: the oil companies are paying them off!!!
 
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Old 05-19-2004 | 11:04 AM
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I've been very disappointed by Honda and Toyota's hybrids thus far. Part of the problem is that when the cars were in prototype form, they were telling us that they would get 66mpg, somewhere in that range. Then they come to market and they only get low to mid 40s, so everyone naturally asks what the big deal is. I got low 40s with my '88 Integra, and that was with highway cruising at 70-75 mph. I got low 40s with my '95 Geo Prizm as well.

The hybrids make a whole lot of sense if the vast majority of your driving is in the city, but otherwise the only advantage to be had is a slightly clearer conscience from getting marginally better fuel economy and supporting alternative technologies.
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Old 05-19-2004 | 11:22 AM
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but otherwise the only advantage to be had is a slightly clearer conscience from getting marginally better fuel economy and supporting alternative technologies.
I think chrisnl hits the nail on the head. Assuming that Prius/Insight buyers aren't just bowled over by the hype (and this is indeed a huge assumption) and have actually done the math, the ONLY advantage that can truly be exploited is the "clear conscience" one. I think many hybrid drivers are the types of people who really WOULD rather walk than drive...and often do. I personally admire these folks, but am admittedly not up to their level of ideological purity.

My father-in-law just bought a Prius. He hasn't a clue how it works (although his "explanations" are truly comic gems...he was telling me last week that the car gets 65 mpg and operates off something sort of like a fuel cell). He is 76 years old, lives in NYC, and has no business driving anyway (we're giving him about 2 years before we take away his keys). But boy, does the guy have a clear conscience. I'd say he's a perfect Prius customer.

Oh and btw, the Insight is truly the most ugly car ever to wash up on these shores.
 
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Old 05-19-2004 | 11:34 AM
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Change is coming. And it's coming alot sooner than many of realize. Until a recent Petrology class for my geology major, I was completely unaware of the exact nature of the situation.

Oil production in the US reached it's peak around 1970, and has been on a steady decline ever since. We rely more and more heavily on foreign oil, which is also in it's depletion phase. Hubbert curves for petroleum production show that worldwide, the peak of oil production was around 2000. We are now in the depletion phase, worldwide. New well drilling cannot solve the demand. Estimates are that around 2010, petroleum prices are going to substantially increase. I'm not talking like a $.50 increase like we've had so far this year. More like $7 to $10 a gallon. Possibly more.

My MCS will be the last exclusively petro-chemical powered vehicle that I ever buy. Vehicles like the Toyota Prius and that ugly Honda thing with the wheel skirts are needed. The technology needs to be driven foreward by consumer demand. And we need to start having more of a demand.

I just heard on NPR a couple of weeks ago that someone has developed a way to store hydrogen at very low pressures. This may be the catalyst for the global development of hydrogen zero emission vehicles - which would be great for us, because MINI is working on a hydrogen powered car. :smile:


-joe

ps Oh, there is also a substantial tax credit for buying a 'green vehicle'. I think it's like $1000.
 
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Old 05-19-2004 | 11:35 AM
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Dave,

My eyes got tired about halfway into the post as well. Was there a mention of the high cost of replacing the batteries down the road - say in 5 to 10 years? That would put a dent in the payback figures!

John
 
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Old 05-19-2004 | 11:53 AM
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...and I think that Joe does a good job making the argument for why we simply won't have a choice about hybrids (or other non-exclusively-petro cars) in the relatively near future.

My prediction is that this is all following a curve very similar to airbags. Many here may be too young to remember the huge fight that the auto industry put up against airbags (and to a slightly less extent, seat belts). We heard that airbags were unsafe and that consumers didn't want them. We heard all sorts of arguments except the real one...and that's that the technology cost more than most consumers would knowingly pay for. This went on for about 20 years all the while the technology was being quietly installed in some cars and continiously refined....and the cost was coming down (while manufacturers were finding ways to increase profits on other components thereby providing a way to hide the cost of the airbag systems). Then BOOM (so to speak), within about 3 years all cars came with airbags.

Today, we hear a lot -- and a lot of this from the manufacturers themselves -- about why hybrids and alternative fuel cars don't make sense...and how they're still the stuff of science fiction. Well, in about 10 years I predict that all this will be different and it will actually be quite hard to buy a car that ISN'T hybrid/alternative. This has to be the case, 'cause no large scale auto company will survive trying to sell fossil-fueled cars when fuel costs $10/gal. What we're hearing today is the noise generated by the auto industry while they actually figure out how to make these things work...and marketable.

Me, I'm just sad thinking about the fact that I'll need to garage forever my fossil-fueled toys. But hey, I feel the same way about my non-HDTV TV set (and my 5.25" floppy disks, and my beta VCR tapes, etc., etc.).
 
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Old 05-19-2004 | 12:16 PM
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Having owned a diesel pickup ('89 Dodge Cummins) for the past 15 years, along with the advances made in truck and auto diesel engines in the meantime, my next vehicles are going to be diesel powered. The '89 Dodge Ram with the Cummins diesel marked the turning point where true, heavy-duty. high efficiency diesel engines were finally available in mainstream vehicles. Previous engines were almost exclusively conversions of existing gasoline engines. Given the wholly opposite operating conditions which gas and diesel engines reside, and the required design differences, a converted gasoline engine was never able to produce the efficient, long-lasting engine that a true diesel engine promised. The ongoing power and efficiency 'war' being played out in the diesel truck segment these days was started when Dodge put the Cummins engine in the Ram. Everyone looking in this market today is benefitting from this.

European diesel engines have similarly enjoyed a renaissance in efficiency, drivability and emissions. Because of the high costs of fuel in Europe and the availability of higher quality fuels there, diesel engines are available in most car lines, and offer similar if not sometimes better performance than their gas engine counterparts. Once cleaner, low-sulfur diesel fuel is readily available in the US (we have the honor of having some of the worst quality fuels available of ANYWHERE), more of these super efficient diesel engines will be available here.

Most americans remember the diesel engines available in cars here in the late 70s/early 80s as being slow, cantankerous, smelly and prone to breaking down. This is no longer the case these days, as most would be hard pressed to tell the difference in a car or truck powered by either a gas or diesel engine, either from outside, from behind the wheel, or following one.

Diesels will be the 'next big thing' in cars, like it has been lately in trucks.
 
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Old 05-19-2004 | 12:34 PM
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Oil production in the US reached it's peak around 1970, and has been on a steady decline ever since. We rely more and more heavily on foreign oil, which is also in it's depletion phase. Hubbert curves for petroleum production show that worldwide, the peak of oil production was around 2000. We are now in the depletion phase, worldwide. New well drilling cannot solve the demand. Estimates are that around 2010, petroleum prices are going to substantially increase. I'm not talking like a $.50 increase like we've had so far this year. More like $7 to $10 a gallon. Possibly more.
To add fuel to the Peak Oil fire, we are using 4 barrels of oil for each barrel of oil that is being discovered.
 
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Old 05-19-2004 | 12:35 PM
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>>My eyes got tired about halfway into the post as well. Was there a mention of the high cost of replacing the batteries down the road - say in 5 to 10 years? That would put a dent in the payback figures!<<

I don't believe the article mentioned that. Until recently I thought that this was a huge Achilles' heel for hybrids. Within the past couple of months I heard a report somewhere (I believe it must have been NPR) that Toyota has stated that their batteries will be good for 180,000 miles, possibly even longer.

I just did a quick web search and found this article , which states:

"Some critics have questioned whether hybrids will be durable over the long run. Perhaps they should ask Vancouver BC's Andrew Grant, the world's first Toyota Prius taxi cab driver. After three years of daily use his Prius had logged over 180,000 miles with only a handful of minor problems. Grant has now purchased a new-generation Prius and more of these remarkable vehicles are being used by cab owners willing to take a chance on the technology."

They also state that the Prius has an 8yr/100,000mi warranty on the battery and hybrid systems, which means that they're probably expected to last well beyond that.

I don't think the batteries are the problem. The inability of auto makers to bring a car to market with truly substantial fuel economy improvements (despite doing so with their prototypes) is the problem.
 
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Old 05-19-2004 | 03:03 PM
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The batteries in the hybrids (both toyota and honda) are I believe aluminum tubes containing 9 D cell batteries. If i remember correctly, Panasonic is the oem.

--
Cheese

 
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Old 05-19-2004 | 03:08 PM
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- which would be great for us, because MINI is working on a hydrogen powered car. :smile:
>>

BMW has been one of the leaders in this field. Do a Google news search for all the info.
 
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Old 05-19-2004 | 03:22 PM
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>>The batteries in the hybrids (both toyota and honda) are I believe aluminum tubes containing 9 D cell batteries. If i remember correctly, Panasonic is the oem.
>>
The MY04 Prius HV battery is a sealed nickel-metal hydride (Ni-MH) battery. It consists of 28 modules of 6 x 1.2V cells. Total output of the unit is 201.6V AC, which is more than doubled through an inverter to DC 500V before being converted to AC current. It is a proprietary Toyota design.

JK
 
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Old 05-19-2004 | 07:31 PM
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>>>>The batteries in the hybrids (both toyota and honda) are I believe aluminum tubes containing 9 D cell batteries. If i remember correctly, Panasonic is the oem.
>>>>
>>The MY04 Prius HV battery is a sealed nickel-metal hydride (Ni-MH) battery. It consists of 28 modules of 6 x 1.2V cells. Total output of the unit is 201.6V AC, which is more than doubled through an inverter to DC 500V before being converted to AC current. It is a proprietary Toyota design.
>>
>>JK

A standard rechargable NiMH D cell is 1.2V :smile: So that makes it 28 tubes of 6 batteries each. Here's a pic.

 
  #21  
Old 05-20-2004 | 01:53 AM
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Just also remember that both electricity and hydrogen require ENERGY to produce. and that ENERGY, unless it is going to be 100% solar or hydro is gonna depend to some extent on big bad oil while it lasts.
Hybrids should be all the rage in Europe. they ain't. why, cuz as someone alluded to before, diesels are better gas sippers. Long range, the world needs to move to something like 40% hydro and 50% atomic electricity (AAAAAAARGHHHHH!!!) and the balance wind and solar.
Full electric vehicles cars will then be possible with a total infrastructure. electric motors have like 10 times as much torque as I/C motors....it is just a matter of getting enough juice and getting used to quiet vehicles that do not vibrate......
Don't worry about oil companies....they will be fine.....selling you electricity.......
 
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Old 05-20-2004 | 04:48 AM
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Iceland is really agressively persuing a hydrogen economy. They have (I believe) the first consumer usable hydrogen refueling station just outside of reykjavik. And I think it has just been used once. But they are actively developing the technology. If solid storage of hydrogen becomes a viable solution to the hydrogen dilemma, it is going to rapidly change what we drive in the next 5 to 7 years, not 10+.

Standard IC engines can be retrofitted to run on hydrogen, with the only emission being water and water vapor.

It's just down to a safe, usable, large enough capacity hydrogen fuel storage system.

-joe

 
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Old 05-20-2004 | 07:20 AM
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Joe.....hydrogen doesn't just happen...it needs to be extracted....it takes energy to do that......guess what the hot set up is? Using diesel to generate hydrogen......
 
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Old 05-20-2004 | 07:39 AM
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>>Joe.....hydrogen doesn't just happen...it needs to be extracted....it takes energy to do that......guess what the hot set up is? Using diesel to generate hydrogen... <<

Seriously? So what's the big deal with hydrogen being one of the supposed premier energy sources of the future, then? Does the energy output of the hydrogen dwarf that of the diesel that's needed? Is it just that diesel is still cheap enough for that to be the preferred method? Interesting.
 
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Old 05-20-2004 | 08:04 AM
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From: Loveland, CO
I hate to say it but contrary to the spirit of Motoring ..... what we really need is to drive less. :???:
 


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