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Honda and Nissan Consider Plug-in Hybrids –  April 28, 2009

Honda and Nissan have been banking on fuel cells and electric cars as the long-term strategy for sustainable mobility. Company executives are now warming up to plug-in hybrids.

Since their introduction in the US in late 1999, hybrid cars have been repeatedly dismissed as a “bridge technology”—a euphemism for a short-lived second-rate technology that briefly serves a purpose until it can be replaced with something better and longer lasting. But in recent statements coming within days of one another, executives from Honda and Nissan are reconsidering the role that hybrids will play in the coming decades.

Honda began leasing a limited number of its FCX Clarity hydrogen fuel cell cars last year, and still sees hydrogen as the long-term alternative to gasoline. However, for the first time, Honda executives are now speaking of hybrids and plug-in hybrids as a mainstream technology with staying power. Nissan is also beginning to consider plug-in hybrids.

For both companies, the plug-in hybrid is seen as the next stage of hybrids and as the key to the technology’s longevity. Honda was banking on a transition to fuel cell cars, while Nissan was primarily moving toward the pure battery-electric vehicle.

Honda began leasing a limited number of its FCX Clarity hydrogen fuel cell cars last year, and still sees hydrogen as the long-term alternative to gasoline. But Honda President Takeo Fukui believes that the cost of fuel will need to increase before hydrogen-powered cars are ready for significant growth. In an interview published by Bloomberg, he said, “Oil prices are going to go up. When that time comes, fuel cells, solar panels, hydrogen, those will be the key words. We will have packages that will be very competitive at that time.” In the meantime, he said the company is “thinking about plug-in hybrids.” He added, “We aren’t thinking about commercializing one right away.” Honda will need to modify its current mild hybrid system—or develop a new approach—in order to produce plug-in hybrids.

The Bridge Gets Much Longer

Honda’s views on plug-in hybrids are also motivated by new consumer tax credits—as much as $7,500 for a robust plug-in hybrid. Fukui said, “We understand the situation, in terms of government and incentives. Naturally, we’re going to have to accommodate that too.”

Nissan also sees a future jump in oil prices as the key to its long-term efficient technology: the electric car. “When GDP growth comes back on a worldwide basis, there will be again attention on the oil market, which will trigger an oil price increase,” said Carlos Tavares, Nissan executive vice president. “We will be in the right tempo to face that environment.”

Mark Perry, Nissan product planner, told, “Zero emission vehicles are clearly our focus and we believe it’s the future state of transportation. Some segments of the market in the near term may best be served by high efficiency internal combustion engines, diesels, hybrids or extended range electric vehicles [also known as plug-in hybrids].” He added that these technologies are “all bridge technologies to the time when battery electric vehicles and fuel cell vehicles can cover every market segment.”

The Key Question: When?

The key question for both companies is how long it will take until electric cars and fuel cell vehicles can reach levels approaching the current hybrid market. After 10 years on the market, hybrids represent less than 3 percent of the new car market.

Speaking at the Society of Automotive Engineers’ 2009 World Congress last week, Minoru Shinohara, Nissan corporate senior vice president, said that plug-in hybrids will be an important transition solution to the pure electric vehicle because they don’t need an extensive public charging infrastructure. The cost of building the public charging infrastructure will cost many billions of dollars; therefore, most analysts believe that it could take decades to construct.

Hybrids will not necessarily disappear even after an electric-recharging or hydrogen-refueling infrastructure is built. Kenji Nakano, senior chief engineer, Honda R&D, also appearing at the World Congress, said, “Hybrid technology is also applied to fuel cell vehicles, range-extender vehicles, and plug-in hybrid vehicles. Thus, instead of being a bridge technology, hybrids are expected to remain in the mainstream for quite some time.”

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