DaimlerChrysler, GM Will Co Develop Hybrid Vehicles December 2004

General Motors Corp. and DaimlerChrysler AG will jointly develop a gasoline-electric power system to catch Toyota Motor Corp. and Honda Motor Co. in the technology that saves fuel and cuts tailpipe emissions, said people familiar with the plans.

Sales of Toyota's Prius hybrid almost tripled this year through November as gas prices have climbed 27 percent and states, such as California, adopter tougher rules to limit pollution.

The joint venture will be announced today, the people said. General Motors' spokesman Kyle Johnson in Detroit and Chrysler spokesman Jason Vines in Auburn Hills, Michigan, wouldn't comment yesterday. General Motors and Stuttgart, Germany-based DaimlerChrysler have previously cooperated in developing transmission systems.

General Motors and DaimlerChrysler had downplayed gas- electric vehicles to invest in the design of cars and trucks running on hydrogen and to make fuel-efficient versions of gasoline and diesel engines. Honda, which sells Insight and Civic hybrid models, sold the first U.S. hybrid cars in 1999.

Building a hybrid may help General Motors and Chrysler buyers qualify for a 2001 U.S. tax break for hybrid vehicles. While Ford Motor Co., the second-biggest U.S. carmaker, backed the tax provision, Toyota's Prius and Honda's Civic and Insight are the main beneficiaries of the $2,000 credit.

Ford in September began selling its first hybrid, the Escape sport-utility vehicle, using some technology licensed by Toyota. The Escape became eligible for the tax break this year. General Motors and Chrysler had said they didn't plan to sell models that qualify for the tax break, which was extended to 2006, until the 2007 model year.

Environmentalists

DaimlerChrysler and General Motors introduced pickups this year they call hybrids, for business and government customers, that are less sophisticated than Toyota and Honda models and don't qualify for the tax breaks. Chrysler's hybrid RAM pickup shuts off its diesel engine when stopped and uses the electric motor to accelerate. Less than 100 are to be delivered this year.

General Motors in May delivered 50 gasoline-electric hybrid pickups, which cut fuel use about 10 percent, to Miami-Dade County in Florida, and has orders for thousands more to business and retail customers, the company said in June.

A hybrid vehicle also might help General Motors and Chrysler win congressional support to limit future increases in fuel economy standards for other cars and trucks, a demand of environmental groups. Last year, the U.S. raised fuel economy standards by the biggest margin in 20 years, over the objection of automakers.

Prius Popularity

Toyota in August said it would expand Prius monthly production to 15,000 from 10,000, to help meet demand for the $25,000 car that results in six-month waits for U.S. buyers. U.S. sales of the cars more than tripled through November to 47,704.

The company has said it expects global sales of the model to reach 130,000 this year.

Toyota, Asia's largest automaker, next year also will begin selling hybrid versions of its Highlander and Lexus RX sport- utility vehicles in the U.S. and Canada. Those models, along with Prius, may lift Toyota's global hybrid sales to 1 or 2 million a year by 2010, company President Fujio Cho said Sept. 10.

Honda, which sells Insight and Civic hybrids in the U.S. and plans a gas-electric version of the Accord sedan, said this month that will sell about 50,000 hybrids in the U.S. in 2005.

Toyota and Honda combined sold 71,177 gasoline-electric cars through 11 months.

General Motors and DaimlerChrysler have said the gasoline engine in use for more than 100 years eventually will be replaced by fuel cells that generate electricity by combining hydrogen and oxygen in a chemical reaction that emits only water vapor.

Fuel Cells

General Motors has said it will have a fuel cell model that can compete on cost with gasoline by 2010. DaimlerChrysler has said it will have 100 experimental fuel cell vehicles in use by the end of this year, including 19 in the U.S.

DaimlerChrysler this year introduced two diesel-powered vehicles that get 30 percent to 40 percent better fuel economy than gasoline models. Sales of the Mercedes E-320 sedan exceeded the 4,000 expected. Chrysler has 40,000 inquiries for a Jeep Liberty SUV diesel that was expected to sell 5,000.

Ford expects to sell as many as 20,000 Escapes next year. Ford developed its system independently. The electric motor in the Escape Hybrid provides power at slow speeds and provides a boost for the gasoline engine when the SUV accelerates.

The hybrid technology in the Honda Civic uses an electric motor to send power to the wheels to reduce the demands on the gasoline engine.

Prius combines an electric motor with a gasoline engine. Electricity power the car at low speeds, and the gasoline engine takes over as the car accelerates. The battery is recharged by the gasoline engine and braking.

The car can travel more than 50 miles (80 kilometers) on a gallon of gasoline, about double the 27.5-mile average for passenger cars, and emits 90 percent less tailpipe exhaust, according to the U.S. Environmental Protection Agency.

SOURCE: Bloomberg

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