The recent fall in global fuel prices was dramatically described as a "collapse", but it hardly represents a positive change in direction for the automobile industry. Even if we ignore the impact the strengthening of the dollar has had on prices, and the "calming" effect of Olympic Games on the international market, we are still left with a price range of $110-115 a barrel, a price which a year or two ago was inconceivable. The demand for oil, which is being driven by the emerging markets, still exists, and any geo-political or psychological change such as, for instance, a militant pre-election declaration by any of the current candidates for prime minister in Israel, could send prices soaring again.
The hybrid solution
This is not encouraging news for anyone, including private car owners in Israel, whose employers do not pay for their fuel. At present, buses and taxis are merely a less comfortable way of passing the time stuck in traffic jams, and the trains are also unreliable, as the hundreds of thousands of commuters living north of Tel Aviv who recently found themselves stranded for days while all the lines to the north were shut down for "maintenance" discovered.
Anyone wishing to drastically cut his gasoline bills, can resort to European solutions such as buying a manual gearbox urban car with a 1.2-liter engine, that can do 18-20 kilometers to the liter, or a diesel car with a small, economical engine that can do more than 20 kilometers to the liter. But for the average Israeli, most of these solutions are tantamount to a return to the days of economic austerity.
Hybrid cars are, by process of elimination, is the only cost-effective solution that is readily available and does not entail relegation to the bottom of the social ladder. Nearly 5,000 cars like these are now on Israel's roads and the trend is gathering momentum. The choice of hybrid models in Israel has, however, been limited until now to just two - the Toyota Prius, and the Honda Civic IMA - with a nominal presence by an additional luxury model or two.
But the selection will be extended considerably next year with the arrival in Israel of several new hybrid models. The momentum is not the result of the recent fuel crisis, but rather, a delayed response by the automobile industry to the superiority demonstrated by the Japanese, headed by Toyota, in marketing the burgeoning hybrid technology. The new hybrid wave also constitutes a delayed response to the "green" regulations that many countries have been adopting in recent years to combat global warming.
The burning issue in 2008 is breaking the dependence on oil, although two or three years ago, when work on the development of the models now coming onto the market first began, the burning issue was the melting icebergs.
The problem is that the description "hybrid car" has now become a generalized marketing tag which is being used to promote a number of totally different technologies, each of which has a different impact on the effective fuel consumption (and air pollution).
The automobile industry is now focusing on three different hybrid technologies. The first is the "Full" Hybrid, now in use by Toyota, which developed and patented it, and rival companies such as Nissan, which purchased the rights to use it from Toyota. This technology uses a fairly powerful electric motor, which provides the gasoline engine with considerable power and torque, and can even power the car over short distances on the strength of the battery alone. The battery in cars like these, such as the Toyota Prius, is quite large, although it still isn't the last word in battery technology.
The second type is the Mild Hybrid, which uses an electric motor and much smaller batteries, and in which the power contributed by the electric motor to moving the vehicle is less. The electric motor comes into use when the gasoline engine has to provide full acceleration. A lightweight propulsion like this can save between 10% and 15% of the fuel used by a regular car of a similar power, compared with 25% and upward using full hybrid propulsion. For the manufacturer, the production of a lightweight propulsion model like this is much cheaper, and requires fairly minor changes only to existing car models.
The third type, which is now classed as a hybrid, consists of a small, low-power electric motor, whose sole role is to automatically shut the engine off when the car is standing at a traffic light, and then restart it smoothly when the car is once again in motion - a device known as "Stop & Go". The effect of this type of propulsion on energy consumption and air pollution is marginal.
But it turns out that in most countries, the legislator has not addressed this complex technology in depth, and even a token hybrid propulsion such as the one mentioned above is classed under the hybrid umbrella, benefiting from all the tax breaks and transport incentives that genuine hybrid cars qualify for. This is also true of Israel, where tax policy sets a maximum engine size for eligibility for hybrid incentives, (up to 2.5 liters), but not a minimum size, and certainly not a minimum power threshold. Since this amounts to a substantial tax break, it should come as no surprise if we find cars of the new type in Israel in the not-too distant future. Also likely to join Israel's roads over the next two years are plug-in hybrid cars that can be charged on the main power grid, although exactly when this will happen is still unclear.
Innovation in the pipeline
2009, as mentioned earlier, will see the arrival of a range of new models on the local hybrid market. First to be launched will be the revamped Toyota Prius, which will be introduced in early 2009, following a comprehensive redesign of its interior and shell. The car is supposed to be more spacious, more comfortable, more luxurious and more economical, in addition to an improvement of more than 20% in energy consumption. The Prius still hasn't been fitted with the latest ideas in propulsion, such as powerful lightweight Lithium Ion batteries or a plug-in option for charging from the main grid. These will probably not be included until 2010.
Next in line is a brand new model with full hybrid propulsion from Honda. In contrast to the Civic IMA, the new five-door model model has been designed from the outset as a hybrid, with an elegant and ultramodern design. Honda expects that the price of the new car will be similar to that of the Civic Hybrid, despite it having more sophisticated propulsion, and the option of all-electric power plant. The car will reach showrooms in the US in April 2009, with a European version following in early 2010. Given the likely demand, the first batch of cars will probably be small.
By the middle or end of next year, we can expect more lightweight hybrid models from Volkswagen, Peugot-Citroen, Ford, Mercedes, and others. However, the enthusiasts among us should bear in mind that under the green taxation regulations, the generous tax break given by the Ministry of Finance on hybrid cars (currently 48%) will be lowered gradually from 2011, although this process too will take three years.
Published by Globes [online], Israel business news - www.globes-online.com - on August 21, 2008
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