The smart money is on Honda

Jeremy Cato, September 10, 2008 at 11:01 AM EDT

Honda or General Motors? When it comes to hybrids, who's got it right?

I'm leaning to Honda's simple approach over GM's attempt at a moonshot.

Here's the background. On Monday, unauthorized photos of the Chevrolet Volt, GM's plug-in hybrid, were leaked to the Web. Among other places they popped up on http://www.thecarconnection.com/. GM officials say they had planned to release the photos themselves later this month to coincide with the company's centennial celebrations next month.

Production of the Volt is due to start in November of 2010. If GM pulls this off it will be an amazing technological achievement.

That's because the Volt is really an electric car with a range of about 56 km. It will have a lithium ion battery pack and a small on-board gasoline engine. GM expects owners mostly to re-charge using a wall outlet, but if you get stuck you'll be able to charge up the batteries using the on-board gas motor.

GM actually does not call the Volt a hybrid at all. It is, instead, an “extended range electric vehicle.”

No auto maker has ever managed what GM is attempting. Most troubling of all is the fact the batteries are unproven. GM insists it has all the problems licked and that running prototypes are already being tested. We'll probably see one next week in Detroit at the company's centennial celebration in Detroit.

Even if GM manages to overcome all the technological hurdles, there is the little matter of price. Most believe – me among them – that the Volt will sell for something approaching $35,000 or $40,000. Why? All the new gizmos and gadgets for one. For another, GM will be selling Volts in very small numbers – at least at the outset.

I give GM full marks for being daring, but frankly Honda's approach is less risky and more likely to work as a profitable business.

I am talking about the Insight hybrid Honda showed last week. It is a smallish five-door hatchback due to go on sale next April and it we are led to believe it will sell for about $20,000, perhaps less. The Insight is smaller than the current Civic Hybrid which lists for just under $27,000.

Honda expects to sell 200,000 Insights a year worldwide. Moreover, this Insight is the first of several more hybrids from Honda. A smaller sports hybrid, the CR-Z, will come next and there is talk that around 2012 a hybrid Fit will be added. In each case, Honda will be using hybrid technology that the company has been refining for a decade, since the first two-door Insight hybrid went on sale.

Honda just keeps grinding away at overcoming the technological hurdles, rather than trying to manage a fantastic breakthrough. On top of that, Honda's very clear and oft-stated strategy is to put hybrid systems into compacts and subcompacts because that's where the green technology achieves its greatest efficiencies.

Unlike Toyota and GM, to name two, Honda has no interest in installing hybrid drive trains in luxury sedans and SUVs. And Honda research and development people say a pure electric vehicle, or something close to it, is not ready now and won't be for some time; the battery technology is not there and is not likely to be for many years – not in a reliable and affordable way, at least.

Honda's position here makes the most sense to me. I agree that hybrid systems are best used in small cars which are most often used for city driving – where stop-start technology saves fuel and cuts emissions and regenerative braking constantly recharges the batteries.

Oh, and I like Honda's recent track record overall. Remember, Honda reported a record profit of US $1.68 billion for the quarter that ended in June. GM and Ford, to name two, have lost billions this year.

Honda doesn't need a moonshot to be successful, but GM does. Put all the various factors together and it seems to me the smart money should be on Honda.

Source;
http://www.theglobeandmail.com/servlet/story/RTGAM.20080910.WBdriving20080910110140/WBStory/WBdriving