Tests of Hyundai Hybrid Cars To Begin in October August 2004

Hyundai Motor Co., Korea's largest carmaker, yesterday said it will give newly developed hybrid cars to the government for testing in October, marking the first step in the company's ambitious plan to introduce the alternative-fuel cars by 2007.
The carmaker will provide about 50 Click hybrid minicars to the Ministry of Environment within October. Ministry workers will drive the cars during the course of their environment-related duties. Data collected from the tests will be used to fine-tune the car, Hyundai officials said.

As reported earlier, the carmaker plans to conduct similar tests next year on a larger scale, involving up to 200 cars.

Hyundai researchers said they only need to finish safety tests and fine-tuning before introducing the hybrid cars to the local market. The launch is tentatively scheduled for 2007 but could be moved up, the engineers said.

"Global carmakers are working hard to develop alternative-fuel cars to replace conventional gasoline power. Among these new cars, the hybrids are the most reasonable option at this point. We will not miss this market," said a Hyundai official who requested anonymity.

Hyundai plans to mount the hybrid engine on new compacts that will replace the Verna model. The officials said they are also considering hybrid versions of other models.

They declined to elaborate on the line-up, citing strategic reasons, but said they are unlikely to develop a new model dedicated to the hybrid engine.

Hybrid cars run on a combination of gasoline and electricity. They use power from a rechargeable battery at low speeds and switch to a traditional combustion engine at higher speeds and to accelerate. When the car decelerates, the force of deceleration recharges the battery. These engines are believed to have up to 50 percent greater fuel efficiency than those in gasoline-powered cars.

Hyundai's hybrid project has drawn a great deal of attention from industry watchers amid mounting concerns over high oil prices. As a part of its efforts to save energy, the government plans to offer tax breaks on hybrid cars beginning in 2008. It will also require that state agencies buy the fuel-efficient cars.

"The government policies on hybrids will be the biggest factor in the future sales of these cars here. Hybrids will be expensive cars. Many people here are still not familiar with alternative-fuel vehicles. Given such difficulties, some incentives should be given to attract local customers," said Sohn Jong-won, auto analyst at GoodmorningShinhan Securities.

Hyundai said it has yet to set prices for the new hybrids. "Basically, the hybrids cannot help but be expensive due to high production costs. We are still studying how much we can cut down the costs. The exact prices will be discussed after we enter the mass-production stage," said the official.

Industry experts believe that the hybrids will be priced at at least 5 million won more than gasoline cars. Hyundai's gasoline-powered Click sells for about 5 million won.

Kia Motors Corp., the nation's No. 2 carmaker, shares research and technology facilities with Hyundai Motor. The affiliate said it does not have a separate project to develop a hybrid model. GM Daewoo Auto & Technology Co., the third largest carmaker here, also said it is not developing such a car.

Hybrids are currently sold in countries such as the United States and Japan and have established firm footholds in some markets. Three global carmakers - Toyota, Honda and Ford - have models in production. In the U.S., hybrid sales last year jumped 26 percent to 43,435 units.

Industry experts say entering hybrid production is almost mandatory for Hyundai. "To expand in advanced markets such as the U.S. and Europe, carmakers now should add environment-friendly vehicles to their product line-up," said Kim Hag-joo, auto analyst at Samsung Securities Co.

"We believe Hyundai's hybrid project is mainly designed for overseas markets. The carmaker will push the plan even if they are not so sure about the hybrid sales at home," he said. Hyundai relies on exports for more than 70 percent of its sales.

Hybrids were initially designed to fill the gap between gasoline-powered cars and hydrogen fuel-cell vehicles that are being developed. Fuel cells generate electricity during a chemical reaction between hydrogen and oxygen.

Although hailed as an ideal car to replace gasoline power, the fuel-cell vehicles are still in the middle of the development process. Global carmakers are looking for ways to produce such vehicles cheaply enough for commercialization. Building hydrogen fueling stations will also cost an enormous amount of money, auto experts say.

Hyundai is also working to develop fuel-cell vehicles. In April, the carmaker joined the U.S. government's project to test its hydrogen-fueled sport utility vehicles. Hyundai officials expect fuel-cell car to be commercialized around 2010.

SOURCE: Korea Herald

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