Fuel Prices The Next Paradigm Shift

The automobile business is a difficult business at the current time due to paradigm shifts that are happening today. The world was shocked by the sky high oil prices in the summer of 2008 announced that a new paradigm shift was happening. The signs had been there before with the prior Oil Crisis of 1973 and 1979. It is projected that gasoline will cost $10 per gallon USD by the year 2015. A new Business Week article outlines our susceptibility to a new oil crisis.

Fuel saving technologies have been put on the front burner to get ahead of the increasing fuel prices. Automobile companies are spending billions of dollars on new technical developments to deal with expensive fuel costs. If they are caught with an inefficient fleet they may be doomed to obsolesce.

The current fuel saving technology that is currently being marketed is the gasoline-hybrid technology. Gasoline-hybrid technology uses electrical motors along with a combination of batteries to carry some of the load along with a fuel efficient gasoline engine. Toyota leads the world in production of gasoline-hybrids with sales of their Synergy Drive System.

The second fuel saving technology will be electric cars, which includes plug-in hybrid vehicles. GM was at the forefront of the electric battery powered car with its Saturn EV1, which is now called the GM EV1. GM did not produce the GM EV1 due to the limited battery technology at the time and the expense of producing the vehicles.


GM spent an amazing $1 billion dollars on the technology and then subsequently shelved the technology. GM had the label of one of the most progressive automobile companies with the GM EV1 in the U.S. If GM would have continued the battery development in coordination with other battery companies they would be the world leader in fuel efficient automobiles.

The third technology in development is hydrogen power either thru use in a fuel cell or using a standard gasoline engine converted to use hydrogen. Prime examples are the Honda Insight and the BMW Hydrogen 7. Honda is betting the bank that hydrogen will be the dominate technology.

GM picked up the development after they watched Toyota win the public relations war with the Toyota Prius and it's Synergy Drive Technology. The ability of Tesla Corporation to produce the Tesla Roadster and Model S was a major embarrassment for GM..... GM has subsequently developed the Chevrolet Volt, a plug in vehicle which will be able to go 40 miles on battery power before using a gasoline engine to recharge the batteries.

Toyota manufactured the first mass-produced hybrid vehicle the Toyota Prius. Their Synergy Drive system has been the leader in gasoline-hybrid technology. Toyota also was the first company to make money on their fuel saving technology Synergy Drive. Toyota started making a profit on the technology after starting development in the 1990's.Toyota introduced the first gasoline hybrid with its the Toyota Japan during 1997.....Toyota began world wide shipments in 2001...selling the Prius in more than 40 countries. The U.S. is the number one market for the Prius with 50% of 1.2 million units sold worldwide. The fuel economy of the 2010 Toyota Prius is 51 city and 48 highway.


SUMMARY:

Large corporations are like huge cargo ships that transverse the globe....the cargo ships hold a large value of goods....but the ships are hard to maneuver and changing direction is slow and time consuming process.

Toyota has decided to capitalize on it's major investment in gasoline-hybrid technology. Toyota has spent in excess of a billion dollars developing the technology....so they are looking for a return on their money.

I am of the opinion that gasoline-hybrids will continue to be popular especially as fuel prices go up. If fuel prices skyrocket again.....people will be looking for the most fuel efficient vehicles available. Those vehicles in the short term will be electric cars!


Toyota has decided to focus on gasoline hybrids and virtually ignore electric cars for a number of reasons. But, Toyota's reasoning may leave them behind other manufacturers. GM is launching its Chevrolet Volt which has an announced fuel economy of 230 mpg. All the other major manufacturers are coming out with electric cars. The future belongs to the bold!

2010 Toyota Prius

Today's post is about a vehicle the 2010 Toyota Prius, that started a paradigm shift in the auto world. The Toyota Prius has turned the automobile world inside out with their high mileage hybrid introduced in 2001. The other auto manufacturers have been playing catch up ever since. See the Edmunds.com video!

The word prius is a Latin word meaning to precede....a Toyota spokesperson stated that "Toyota chose this name because the Prius vehicle is the predecessor of cars to come. In business speak, Toyota is betting big that this will be next the successful technology in automobile fuel economy. I would have to agree that Toyota has proven the technology to be feasible and profitable.

Toyota was actually able to overcome the battery restrictions that had held the the GM EV1 from permanent production. Although, the EV1 was an electric car not a hybrid.

In 1994, Toyota executive Takeshi Uchiyamada was given the task of creating a new car which would be both fuel efficient and environmentally friendly. After reviewing over 100 hybrid designs, the engineering team settled on a hybrid engine design based on a 1974 TRW (an American auto parts supplier)patent, but many technical and engineering problems had to be solved within the three years that the team was given to bring the car to the Japanese market, a goal they barely achieved as the first Prius went on sale in December 1997. A main problem was the longevity of the battery, which needed to last between 7 and 10 years. The solution the engineers came up with was to keep the battery pack between 60% and 40% charged, proving to be the "sweet spot" for extending the battery life to roughly that of the other car components.

The car was a modest success in Japan then Toyota put it on sale in the U.S. and European markets in 2001. Sales were limited and customer waiting lists of up to 6 months were common during the first few years. In 2004, a complete redesign, increased production, and soaring fuel prices led to significant increases in sales, sales hit a high point with over 182,000 sales in the U.S.

The Prius has been restyled for 2010, the interior has been upgraded and the fuel economy increased slightly to 51 city and 48 highway. The performance from 0-60 mph. is 9.8 seconds. The base price is estimated to be $23,500 plus. See a Car and Driver article on the 2010 Toyota Prius.

My take is that the 2010 Toyota Prius is a continuing evolution of the hybrid gasoline electric car. Toyota will be rewarded for it's smart business acumen. It is a great green economy car, but not my cup of tea!