World’s automakers embracing hybrid vehicles

updated 9:24 a.m. ET Sept. 14, 2005

FRANKFURT, Germany - After some initial skepticism, the world’s automakers are embracing hybrid vehicles in an effort to match Toyota’s success and give customers more options to combat high gas prices.

At the Frankfurt auto show this week, German automakers Volkswagen AG, Audi AG and Porsche AG said they were forming an alliance to develop hybrid engines. Last week, BMW AG joined General Motors Corp. and DaimlerChrysler AG in a similar partnership.

Audi unveiled the first gas-electric hybrid vehicle from a European automaker at the show, a version of its new Q7 sport utility vehicle that will go on sale in 2008.

DaimlerChrysler also said it will release its first hybrid Mercedes before the next Frankfurt auto show, which will be held in 2007.

Toyota Motor Corp. remains the runaway leader in the field. The Japanese company was the first to begin mass-producing hybrids with its Prius in 1997. Toyota sold 53,761 Prius cars in the United States last year, and Prius sales were up 133 percent in the first eight months of this year, according to the company.

GM Vice Chairman Bob Lutz said that kind of success has caused other automakers to take notice. In particular, he said, some companies that have been betting on pollution-free hydrogen fuel-cell vehicles have decided to produce hybrids in the near-term, since hydrogen likely won’t be a viable alternative for another decade.

“I think what happened was the manifest success of the Prius caused a rethink on everybody’s part,” Lutz said. GM plans to debut a hybrid system on the Tahoe and Yukon trucks in 2007.

Hybrid engines have been touted as a way to make automobiles more fuel efficient and less-costly to run. But current cars that sport them tend to cost between $4,000 to $9,000 more than counterparts with regular engines under the hood.

In a two-mode hybrid system, a vehicle can be powered either by two electric motors or by the combustion engine, or the systems can be used simultaneously.

Despite the success of the Prius and other hybrid models from Honda Motor Co. and Ford Motor Co., hybrids still represent less than 1 percent of the U.S. market. Some analysts have said that could grow to as much as 35 percent by 2015, although others have been more conservative.

Hybrids have made even less of a dent in Europe, where buyers have traditionally chosen diesel engines to cut down on their fuel costs. Diesels accounted for 45 percent of the Western European market in 2004, up from 22 percent 10 years ago, according to the European Automobile Manufacturers Association.

But that could change as more European automakers introduce the technology.

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