Exposing hybrid hype

Hybrid cars are expensive and probably unprofitable. So why all the hype?

Muppets don't have to sell out to pay for retirement. Nevertheless, Ford Motor Co. offered enough green to get its fingers into Kermit, who is now promoting an SUV in a TV spot launched Super Bowl weekend. “It's not that easy being green,” moans the fake frog, while riding a bike, paddling a kayak and climbing rocks to reach a mountain top. After his bumpy, wet and stressful trip, Kermit learns he could have saved himself a lot of exercise if he owned a hybrid Escape. “I guess it is easy being green,” he concludes.

The same message was broadcast from the 2006 Canadian International Auto Show in mid-February, where Kermit's dream vehicle was showcased along with Ford plans to drive Canada into “the hybrid age” by manufacturing hybrids at assembly operations west of Toronto–sometime in 2010. And just in case that soft news wasn't enough to warm tree huggers this winter, Ford recycled a PR stunt by rolling out the Model U, an eco-friendly concept car made from renewable resources (think soy bumpers and the like). “An SUV can be as environmentally friendly as a field of corn,” Ford executives boasted in 2003, when the Model U was first introduced in a Detroit arena filled with fumes from gas-guzzling vehicles that actually made it to market. Back then, the Model U wasn't expected to be viable anytime soon. Same story today.

Thanks to oil fears, hybrid vehicles are all the rage these days (in newspapers at least). But last year, they accounted for just 1.2% of the total U.S. auto market and less than 0.5% of global vehicle sales. And industry watchers blame more than Toyota's waiting list. Simply put, hybrids are relatively expensive. Ford's Escape Hybrid, for example, costs about $10,000 more than the non-hybrid version, while offering unproven technology (note Toyota's 2005 Prius recall) that may or may not pay for itself in the long run. Analysts question the claimed emission improvements, not to mention hybrid profitability.

If all goes well, J. D. Power analyst Jeff Schuster says the world might be buying one million hybrid vehicles annually in 2010. “At the end of the day,” says industry watcher DesRosiers, “hybrids will act as a bridge to one of the other technologies. Likely diesel first, at least in North America, and ultimately hydrogen in 2020 but probably 2030.”

In the mean- time, the auto sector remains flooded with products designed years ago when nobody really cared about what General Motors product czar Bob Lutz once called the “what-would-Jesus-drive crowd.” In fact, all the new trucks on the market might just be mitigating consumer reaction to high gas prices. After all, believe it or not, trucks actually gained a bit of market share from cars in Canada last year (truck sales increased 3.3%; car sales rose 3.1%). That's probably why Ford made sure a few of its F-Series pickups were on show alongside the hybridfest. The F-Series has been the best-selling full-size pickup for decades; there are no plans to make it a hybrid.

Kermit was unavailable for comment. Maybe he was driving Miss Piggy to her new gig as a Pizza Hut spokesperson.