DaimlerChrysler, GM in Pact on Hybrids
Date: 14-Dec-04
Country: USA / GERMANY
Author: Michael Shields and Michael Ellis
The automakers will co-develop a "two-mode" hybrid technology that will boost both acceleration and fuel economy by 25 percent and can be used on a wide variety of vehicles, the companies said.
The deal teams GM, the world's biggest automaker, and German-American DaimlerChrysler, the global number five, against rivals, including Toyota Motor Corp. and Honda Motor Co. Ltd., which have a head start in the hybrid market.
The "two-mode" hybrid system, adapted from GM's transit bus hybrid on the market in some US cities today, uses smaller electric motors that work like a gear set to offer superior performance and fuel economy, Tom Stephens, group vice president of GM Powertrain, told reporters on a conference call. That allows the system to use a smaller conventional engine, making it more cost-effective than competitors hybrids.
GM and DaimlerChrysler will spend "hundreds of millions of dollars" in development of the hybrid system, one reason they agreed to partner, Stephens said. The companies will sign a definitive agreement early next year, they said.
"We've both been looking for this kind of leapfrog technology that we think will be the one into the future," Eric Ridenour, executive vice president of product development with Chrysler, said on the conference call.
GM will first use the system in late 2007 in its Chevrolet Tahoe and GMC Yukon full-size SUVs, Stephens said. Chrysler will follow "shortly after" with a hybrid version of its Dodge Durango full-size SUV among a range of hybrids, Ridenour said.
HYBRID SUVS
The SUVs will be sold in the US market, where growing cash incentives have become necessary to sustain sales of large SUVs and new regulations in California threaten to curtail sales further.
Hybrids burn less fuel by adding one or more electric motors to a conventional gasoline or diesel engine. The batteries help power the vehicle and recharge automatically by capturing energy during braking.
The "two-mode" hybrid system will improve fuel economy at highway speeds and trailer towing ability, which are both key for the US market, the companies said. The system's electric motors are designed to fit within the approximate space of a conventional automatic transmission.
DaimlerChrysler stock closed up 2.3 percent at 35.17 euros in Frankfurt, while GM shares fell 22 cents, or 0.57 percent to $38.71 in afternoon trade on the New York Stock Exchange.
Toyota's Prius passenger car, first launched in Japan in 1997, has emerged as the most popular hybrid, with US sales of more than 47,000 so far this year. Customers in the United States often have to wait half a year or longer to get one, despite a price premium of about $3,000 over similarly-sized vehicles.
Chrysler and Mercedes have not rolled out any hybrid vehicles yet. GM earlier this year began offering hybrid pickup trucks, but in very small volumes to some fleet customers, and the vehicles only get a 10 percent to 12 percent improvement in fuel economy. Some analysts do not consider the vehicles to be true hybrids.
"There is no doubt that Toyota is about five years ahead of everybody else, so everybody else is late in the game," said Graeme Maxton, managing director of consultancy Autopolis.
Honda Motor Co. Ltd. began selling its third hybrid in the US last week and Toyota has said it will eventually offer hybrids across its entire vehicle lineup.