Mack Hybrids on Capitol Hill

The Mack TerraPro Cabover was displayed on Capitol HIll as part of the "Hybrid on the Hill Day" organized by the Hybrid Truck Users Forum (HTUF) of CALSTART. The diesel-electric hybrid truck promises 30% fuel economy improvement in the stop-and-go environment of refuse collection.

The parallel hybrid engine is designed for Class 8 heavy-duty applications and meets the EPA'10 emission regulations.

"Our hybrid technology will be commercially viable, yet it will take time to establish a robust hybrid market for heavy vehicles that will enable us to invest in large scale production," said Dennis Slagle, Mack president and CEO. "Incentives will accelerate the adoption of Class 8 hybrids and bring forward the positive environmental changes."

Until the economies of scale are met, howver, the hybrid technology is only available right now at a 'very high premium' compared to non-hybrids. It won't be until the production volumes increase substantially, that the savings from fuel and reduced maintenance will allow for the technology to 'pay for itself.'

In the meantime Tom Kelly, Mack senior vice president, wants government to make up the difference to encourage the market to transition.

"Government incentives are necessary to establish a market for these vehicles with environmental benefits, similar to the incentives offered for hybrid passenger vehicles," said Kelly. "The public benefit of these incentives will be reduced environmental impact as hybrid heavy-duty trucks become more common."

In order to meet those goals, Kelly would like Congress to continue their efforts to encourage hybrid vehicles.

"For example, we’d like to see Congress extend the federal Alternative Motor Vehicle Credit, enacted by the Energy Policy Act of 2005, which expires at the end of 2009," Kelly said.

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John McCain Opts For Ford Fusion Hybrid

So, even John McCain is opting for a Ford Fusion Hybrid.  That's more good news for Ford, as the press has already jumped onto the news. 

Of course, it's hard to ignore given how McCain announced it via Twitter.

Ford has to love how they are the choice for all politicians who want the US  public to know they drive a hybrid made from an American car company.

Like when Obama talked about his Ford Hybrid Escape ("By the way, I just want to mention, I think I still have my Ford parked in Chicago," Obama said. "It's a Ford hybrid, it runs great, you guys should take a look.").

Makes me wonder if the same thing will happen this time next year.  Will we be hearing from Obama et. al. on how they are opting for the Chevy Volt?  Or if GM is still owned by the government, will that be seen as a no-no?  I wonder if the pollsters are already talking to people about that one?

I'm betting the Republicans won't be buying from Chevy (GM) anytime soon, but the Democrats probably will.

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Honda Insight May Not Hit Sales Goal

Vice President John Mendel of Honda believes Honda will not meet it's sales goal of 90,000 for the Honda Insight.

First-year Sales of Honda’s gasoline-electric Insight, which debuted at U.S. dealerships in late March, may be between 50,000 and 60,000 units, John Mendel, the company’s U.S. executive vice president, said in a June 11 interview at Honda’s U.S. headquarters in Torrance. “I don’t think we’ll get to 90,000,” he said.

Image from Wikipedia

Which seems to bear out when you examine the sales so far in the US (2,780 in May, 5,445 in 2009 so far). That probably doesn't worry Honda executives too much right now. With sales of the Insight going so well in Japan, they're basically shifting production to sell more in Japan right now.

If gas prices go up or the recession ends, I would bet the sales goal would be revised again. Just don't expect them to up the numbers being produced.

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Oregon State Hybrid Car Tax Credit Ending

Looks like the Oregon state tax credit for hybrid cars is about to end.  The House has passed a bill that would set a deadline of January 1, 2010 to qualify for the $1,500 tax credit.

The Senate is expected to pass the bill as well.  Oregon Governor Ted Kulongoski wants a new bill to create a tax credit on plug-in hybrid vehicles to replace the credit that's about to be expired.  The Bill is House Bill 2180.

Source: Statesman Journal

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Chevy Equinox Will Not Get Two-Mode Hybrid

Despite all the speculation, it seems GM is not interested in turning the Equinox into a Vue replacement. After deciding to sell Saturn, it was clear GM would not be following through with their plans to introduce the two-mode hybrid Vue.

There was a lot of speculation that GM would move instead try their full hybrid engine out on the Chevy Equinox, since the two CUVs share the same Theta Epsilon II platform. But that is not to be.

According to a Ward's Auto story,

"There are no plans for a hybrid at this point," Ed Peper, GM North America vice president-Chevrolet, tells journalists at a preview of the new Equinox here.

Which is pretty clear cut. But there's a little more detail on why the Equinox has been taken out of the loop.

But Peper (Ed Peper, GM North America vice president-Chevrolet) pours water on the Equinox-hybrid speculation, saying fuel economy from the ’10 model’s new 4-cyl. surpasses what the auto maker could have achieved with a hybrid.

Front-wheel-drive models deliver 32 mpg (7.4 L/100 km) highway, which GM anticipates to be segment-leading, with a cruising range of more than 550 miles (805 km).

Image via Wikipedia

Consumers aren’t terribly interested in paying the premium for a hybrid, especially if a conventionally powered vehicle delivers comparable fuel economy, Peper says. In the city cycle, the Equinox 4-cyl. delivers 22 mpg (11 L/100 km) with front-wheel drive.

GM is continuing to test the two-mode hybrid system using the Saturn Vue, however. GM wants to build a plug-in hybrid vehicle using the technology.

GM has said the two-mode hybrid system that was due for the Vue will be moved to another product.  If the Equinox is out, then the question becomes what's in?

And with the Malibu Hybrid done along with the Saturn hybrids, what does that leave GM with?  The oversized SUVs with the two-mode hybrid technology (Tahoe, Yukon and Escalade) along with their hybrid trucks (Sierra and Silverado).  Those haven't been big sellers so far (combined sales under 1,000 units last month. In comparison, Ford sold 3,906 hybrids last month, while Honda sold over 4,800 and  Toyota moved more than 14,000 hybrids).

I'd say GM had decided to stop competing in the hybrid field, but the Chevy Volt is still coming.

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Malibu Hybrid is Dead

Image by geognerd via Flickr

GM has pulled the plug on their mild hybrid Malibu, citing "slow sales that has led to a backlog of inventory on dealer lots." (Source: WSJ)

A GM spokesman said the company made the decision because of a "sufficient stock of 2009s," and said starting up production in the near future is "possible, but not likely." The company will continue to make hybrid versions of the Malibu for fleet buyers, but it is uncertain if GM will ever produce the Malibu hybrid for retail consumers ever again.
...
A base Malibu, carrying a four-cylinder engine, costs about $22,300, and a hybrid version, which uses a battery to help propel the vehicle, is about $4,000 more. Both models achieve 34 miles-per-gallon in highway driving, according to GM.

The comparison they are making is a bit unfair, since the Malibu hybrid does have more options and is more comparable to the six cylinder Malibu.  But people who think fuel efficiency is a priority are going to make this comparison.  But more importantly, they are going to look at the Prius (or Civic Hybrid or even the new Insight).  When you can get a Prius or Insight for a similar price, and get 10-20 mpg more, which car are you going to select?


And that's the problem with mild hybrids. Too expensive for what they deliver. Would you pay even $1,000 more for a car that only gives you a couple mpgs in the city? For some reason, GM thought they could compete with the full hybrids from Toyota and Honda by making mild hybrids. It just doesn't work.

I suppose they could stand back and say they were making hybrids, but no one was buying it. Not when they could walk down the street to the Honda or Toyota dealership and see the results they were getting with their full hybrid technology.

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Hybrid Car Sales, the Recession and Gas Prices

Recently,  I was contacted about a quick calculation I did back in July of 2007.  I simply calculated the correlation between gas prices and hybrid car sales up to that point.  Not surprisingly, the correlation was very high (0.855) and very significant.

The student who contacted me used the data I had collected, then updated the data to show that the relationship was still very strong.

I decided to see if the correlation still stands up myself.  It had dropped (R= 0.75, p-value < 0.0001), but it was still strong.  (See the first figure to see how strongly the number of hybrids sold is related to gas price that month).  More on that drop later.

For those of you who are already bored with the statistics, skip down to the conclusions.

A More Complicated Model
I also wanted to add some other things to the mix.  So, I decided to run some more complicated regression models using hybrid car sales as the outcome.  I tried modeling gas price, month, time, and the number of models available.  (Time is just a counter for each month starting in January of 2004, when I started tracking hybrid car sales).  I quickly came to the conclusion that hybrid car sales were related to all of these things, but unfortunately, they were also highly correlated to each other.

Gas prices were highly correlated with time (R = 0.55, p-value < 0.001) and number of models sold (R = 0.43, p-value = 0.0004).  And the number of hybrid car models sold is highly correlated with time (R = 0.96, p-value < 0.0001). 

So I decided that I could (and should) drop something and quickly tossed out the number of models sold.  As long as I have the other variables, number of models would just muddy the waters (confound).

I ran a regression model using dummy variables for the months, time, and gas prices.  I got a good fit (R-squared - 0.72, adjusted R-squared of 0.65).  But the residual plots looked off.  The residual plot showed why the correlation had dropped from when I ran this back in July, 2007, but it didn't explain why.  

It almost looked like there was a curve to the residual plot, so I tried modeling with different time variables, but that didn't seem to fit the bill.  I tried a few other interactions, but nothing seemed to make the problem go away.

I was almost resigned to just leaving it at that, but then I decided to try one more thing.  I decided to model the recession, seeing as how that seems to have had a big affect on car sales.  So I created a dummy variable indicating a break point in May of 2008.  It seemed to do a good job, so I threw it into the whole model and voila, it worked pretty well (See the table of Parameter Estimates and the second figure).

Parameter Estimates
Variable	DF	Parameter Estimate	Standard Error	t Value	Pr > |t|
Intercept	1	-4469.28975	2416.66010	-1.85	0.0703
Gas_Price	1	56.88336	10.86820	5.23	<.0001
Recession	1	-13179	1663.59432	-7.92	<.0001
time	1	398.61143	43.60902	9.14	<.0001
January	1	-3876.86879	2181.03947	-1.78	0.0816
February	1	-3206.59171	2179.80633	-1.47	0.1475
March	1	2635.57235	2187.10717	1.21	0.2339
April	1	1694.27245	2209.67133	0.77	0.4468
May	1	4994.91892	2281.48836	2.19	0.0333
June	1	476.40455	2430.98600	0.20	0.8454
July	1	-16.45925	2425.43771	-0.01	0.9946
August	1	-160.91587	2391.17318	-0.07	0.9466
September	1	-3606.45695	2378.10359	-1.52	0.1357
October	1	-2834.32326	2316.73403	-1.22	0.2269
November	1	-1697.19686	2279.80620	-0.74	0.4601

The overall model fits pretty well (R-squared = 0.87, adjusted R-squared = 0.84).

Conclusions

If you don't mind, I'm going to take some liberties with my conclusions. No good statistician would accept these conclusions (and they shouldn't!), but I'm going to write it this way to spark some thought.

If we take the model on it's own, it seems the recession is responsible for sales of hybrid cars dropping over 13,000 units. Also, every time the gas price goes up a penny, 57 more hybrids are sold that month. And, for every month that passes, 400 more hybrid cars are sold than in the previous month (allowing for seasonal differences). The seasonal differences aren't significant.  This is probably due to gas prices being affected by the seasons, so adding the months doesn't really add much to the ability of the model to explain hybrid car sales.  But you can see that March through May are better for sales, while the winter months can be tough.

It's a little surprising to me how correlated gas prices are to hybrid car sales.  Yes, I expect there to be a relationship between them, but not as strong a linear one as we see here.  I would have expected other factors to muddy the relationship (lack of inventory early on, number of models being sold, month of sale, federal tax credits, etc...), but it seems that gas prices trump those things.  But the recession has had a huge affect, trumping even gas prices.

Where Do We Go From Here
That leads us to some interesting questions.  Will we see a bounce back when the recession ends?  If gas prices dropped down too much, would car companies turn away from hybrid technology once again (look at the history of hybrid and electric cars, turn of the century, to understand what I'm saying).  Should the government mandate higher gas prices in order to force consumers to consider hybrids on a larger scale?

Plug-in hybrids and electric cars are probably going to suffer even worse at the hands of gas prices than hybrids do now.  Given their larger price-tags, most consumers are likely to shy away unless there's some other factor pushing them towards on.  It's hard to know for sure, but these are some of the questions we need to consider going forward.




By the way, I ran the models using SAS v9.1.3.

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