By David Morris, AlterNet. Posted September 1, 2004.
Equating a hybrid with a high-efficiency car was sufficient so long
as a hybrid was a high-efficiency car. Enter the Ford Escape – it
ain't no Prius.

The introduction by Ford this month of a hybrid SUV marks the end of
the beginning of the long-evolving saga of the hybrid electric
vehicle. After more than two decades of public and private
initiatives, the hybrid is in the marketplace. And how. Since 2000
the demand for hybrids has grown by a remarkable 88 percent per year.
Every American, German and Japanese car company will introduce at
least one hybrid model in the next two years.

The demand for hybrids exceeds supply. Toyota has a nine-month
backlog of orders for its Prius and recently raised its price by
several hundred dollars.

To date, incentives have been used to enable the auto industry to
move the hybrid from R&D to commercialization. The federal tax
deduction for hybrids is structured to disappear as car companies
begin selling hybrids at a profit. The deduction drops from $2,000 in
2003, to $500 in 2006, and then to zero. Early in 2004 Toyota
announced it was making a profit on sales of the Prius.

Now we need to design incentives that encourage certain kinds of
hybrids. Government incentives today rarely distinguish among
hybrids. To qualify for most federal and state incentives, including
tax incentives, priority for purchasing for government fleets, free
parking and access to HOV freeway lanes, a vehicle simply must be
equipped with both an engine and electric motors for propulsion.
Period.

Equating a hybrid with a high-efficiency car was sufficient so long
as a hybrid was a high-efficiency car. The hybrid Honda Civic and
Toyota Prius met this standard. The Japanese companies transformed
modestly efficient vehicles into outstandingly efficient ones.

But the introduction of the Ford Escape ushers in the era of low-
mileage hybrids. The hybrid Escape's overall fuel economy is better
than other vehicles in its class but is still only half that of the
Prius or Civic. Chevrolet's new hybrid trucks, the Sierra and
Silverado may get little more than 20 mpg.

The mileage situation is, if anything, even worse than this because
the new hybrids don't get significantly better mileage on the
highway. A hybrid can shut off its engine when idling and can use its
battery and electric motor to accelerate. Thus it achieves markedly
better mileage in stop-and-go city driving than on the open highway.
That's where the fuel economy comes from. For example, the Prius
achieves 60 mpg in city driving and 51 mpg on the highway. On the
open road a hybrid Escape gets mileage no better than that of several
other vehicles in its class, like Toyota's RAVA4. And yet one
suspects that hybrid SUVs and pick-up trucks will primarily be used
outside of cities.

This creates a fascinating challenge for Ford's advertising agency.
Nine out of 10 ads for SUVs or trucks show vehicles bouncing along a
tortuous mountain trail, charging through the mud, or speeding
through magnificent desert vistas. Will Ford's ads depict its new
hybrid in situations where its technology truly shines (i.e. in
congested city traffic)? Or will it tout the fact that its hybrid has
the equivalent of 255 horsepower under the hood compared to only 240
for the regular Escape, even though when it uses this horsepower its
overall environmental impact is no different from that of the regular
Escape? Sadly, to ask the question is to answer it.

As we enter the era of low-mileage hybrids, governments need to
redesign their incentives to channel engineering know-how in
technological directions that achieve social and environmental goals.
One way to accomplish this is to require qualifying hybrids to be
high-efficiency cars.

Some states and cities already do. Some, like Arizona and Georgia,
require the qualifying hybrid to achieve a fuel economy much better
than the average of its vehicle class. Some require an absolute
minimum mileage. Connecticut calls for 40 miles per gallon. San Jose,
Calif. allows free parking for hybrids that get at least 35 mpg.

Efficiency standards weren't controversial so long as all hybrids met
them. But the introduction of low-mileage hybrids has changed the
political situation. Recently California passed a bill to allow
hybrids the right to use HOV lanes on freeways, but only if they get
at least 45 mpg. Both the CEO of Ford and the head of the United
Automobile Workers vigorously and publicly complained that only the
Prius, an imported Japanese car, would qualify.

If Ford goes to court it may well win. The courts have ruled that
only the federal government can regulate vehicle efficiency, even if
the federal government, as it has for more than a decade, refuses to
do so.

There is another largely overlooked area in which hybrid incentives
should now be focused; the development of plug-in hybrids.

The crowning achievement of hybrids is that for the first time in 80
years they create a new automotive technological platform. They allow
a car to run on electricity as well as engine fuel. Current HEVs do
not actually run very far on electricity. Their battery capacity is
relatively small, and only their engines can charge the batteries.
The next hybrids should allow the electricity grid to charge the
batteries. People should be able to recharge their batteries
overnight while at home or in the commuters' parking lot while at
work. A plug-in hybrid could run primarily on electricity. When a car
runs on electricity, it can achieve a fuel efficiency of nearly 150
miles per gallon and eliminate exhaust emissions.

As a matter of historical record, when it comes to plug-in hybrids,
Toyota was the principal opponent. In the late 1990s it successfully
fought California's initial requirement that hybrid batteries be
rechargeable from the grid. Indeed, the Prius advertising tag line
is, "You don't have to plug it in." You don't have to plug in a plug-
in hybrid either. But you can, and by so doing, you can have a
dramatic impact on the nation's environment and our dependence on
imported oil.

Hats off to the public and private sectors for successfully midwifing
the hybrid electric vehicle from the drawing boards to the showrooms.
The hybrid has become a bestseller. Now, we need to move beyond
incentives that simply reward car manufacturers for equipping their
cars with propulsion motors. We need to design and introduce policies
that use the hybrid technology as the launching point for dramatic
fuel savings and the creation of a dual-fueled transportation system
that relies on electricity as well as engine fuel.

David Morris is co-founder and vice president of the Institute for
Local Self Reliance in Minneapolis, Minnesota.