Prius with environmental messageEnlarge Photo
The debate over hybrids is likely to continue for some time. Just moments before starting this feature, I fielded a call from a friend, intent on buying a gasoline-electric model, no matter what the actual economic equations might reveal. The simple fact is that facing ever-rising fuel prices and ever-worsening concerns about global warming, a growing number of motorists want to do something - anything.
One thing a hybrid buyer is likely to do is pay more than they might expect. A check on any online pricing site will show that you'll usually be able to trim a thousand dollars or more off the list price of a typical sedan, such as the Ford Fusion, Chevrolet Malibu, or Subaru Legacy. And the savings grow if the maker is offering incentives. But a little research reveals that for a Toyota Prius, list price $23,535, you're likely to spend as much as $1,000 over what's shown on the Munroney sticker - if you can even find one.
Now, to be clear, Toyota's little hybrid has been in generally high demand for some time, but other models, like the Ford Escape Hybrid and Saturn Vue Hybrid, were not exactly warming the planet when it came to sales just a year or so ago. But every penny fuel prices climb, it seems, demand simply keeps growing.
A story in the Detroit Free Press, in fact, quotes Detroit-area Toyota store manager Chad Ratcliff saying that there's as much as a five-month wait for a Prius, and three months for a Camry Hybrid. "As a dealer body, we are all screaming," he told the paper.
That backlog of demand has actually distorted the latest sales figures. Shortages of product resulted in a temporary dip in the numbers for many of the more popular hybrids, like Prius. In May 2007, Toyota moved 24,099, compared with 15,011 this past month. The story was similar for Ford's gas-electric model, the Escape Hybrid. Buyers were able to snap up just 2,139 in May of this year, compared with 2,680 during the same period in 2007, when there were plenty of them sitting on dealer lots.
Manufacturers are, in many cases, ramping up production volumes as quickly as they can. But they face a number of obstacles, such as assembly line capacity limits. Toyota, for one, has run into a shortage of the nickel-metal hybrid battery packs used in models like the Prius and Camry Hybrid.
Then there's Ford. During a recent preview of the 2009 Escape Hybrid, company officials told me that they were holding production plans at last year's level, about 75,000. Surprised, I asked why demand wasn't rising, and was told that while Ford could sell more, it has chosen not to. Exactly why was unclear, though one executive issued the surprise response that the Escape Hybrid simply wasn't economically justified.
Regular readers know I have made that point before. A typical hybrid can carry a price premium of anywhere from $1,000 for a so-called mild, or limited-function, model like the Vue to $6,000 and some for a full-hybrid like Escape. Even at $4 a gallon, it's hard to justify the added cost with the modest fuel savings, unless you plan to keep the vehicle for a number of years.
But I suspect there's another reason why Ford and some other makers aren't ramping up production for some of the biggest sellers in today's tough market: even adding those premiums, industry analysts contend most makers are losing money - sometimes lots of money - on every hybrid they sell. It is generally accepted that Toyota subsidized the early Prius to the tune of $10,000 apiece. Today, the company insists it is making money on every hybrid, but I'm among those who believes this can only be the result of Hollywood-style accounting.
So while the market is demanding more, automakers may not rush as quickly as one would expect to solve the hybrid shortage.