Wealth - Winter 2011
Winter 2011 Issue

Luxury Hybrid Vehicles—More Than Hype

Luxury Hybrid Vehicles—More Than Hype

Hybrid vehicles have taken off over the past six years and are projected to become even more mainstream going forward. With new luxury models coming to market, is a hybrid vehicle the right choice for you?

January 2011

Sales of hybrid vehicles have taken off since 2004. First made popular by celebrities and fervent environmentalists, hybrid vehicles have become viable options for those who don’t quite fit into either group.

Hybrids are slowly but surely encompassing a larger share of all U.S. vehicle sales (see “Hybrid Market Share”). By 2035, the U.S. Energy Information Administration expects alternative fuel vehicles to hold a nearly 50% market share.

Today, even luxury brands have joined the hybrid market, alongside carmakers like Toyota and Ford. At the 2010 Geneva International Motor Show, Porsche, Maserati, Ferrari, Audi, Mercedes, BMW and Infiniti all announced plans for new top-end hybrids.

Luxury hybrids are in demand and are a growing segment,” says Jonathan Richards, brand manager for Ford’s new Lincoln MKZ Hybrid, which was launched to meet increasing consumer demand.

Because luxury hybrid vehicles are typically 50% more efficient and 50% more emissions-friendly than regular gasoline-powered luxury vehicles, Richards expects their popularity to continue to rise in the near future.

The Technology Behind Hybrid Vehicles

Regular gas-powered cars operate solely on an internal combustion engine, but hybrid vehicles operate on both an internal combustion engine and an electric motor that uses stored energy from hybrid batteries. According to the U.S. Department of Energy, the extra power provided by the electric motor allows for a smaller engine, resulting in better fuel economy.

Furthermore, there’s no need to plug in the battery to charge it. Instead, hybrid vehicles use “regenerative braking” and the internal combustion engine to charge. The electric motor acts as a generator, allowing the vehicle to capture the energy typically lost during braking. That energy is stored in the battery, which outputs the extra energy during acceleration.

Plus, when the vehicle is at a full stop, both the gasoline engine and electric motor shut off so no energy is wasted. The battery does, however, continue to power other necessary systems like air-conditioning and the dashboard display.

Thanks to regenerative braking and the fact that hybrids can operate solely on the electric motor during low speeds, they’re especially useful in urban environments like Los Angeles and Chicago, where drivers experience a significant amount of stop-and-go traffic, Richards says.

To Hybrid or Not to Hybrid

The decision to purchase a hybrid vehicle over a traditional gas-powered one isn’t necessarily an easy one. “What we’ve found through research is that 50% of luxury buyers will consider buying a hybrid, but they are weighing their own priorities in terms of desire for power and performance [versus the] desire to be fundamentally sustainable and environmentally friendly,” Richards says.

Top-end hybrids may be more valued when gas prices rise, but financial savings isn’t the only reason to opt for a hybrid, says Craig Zinn, president and CEO of The Craig Zinn Automotive Group, which recently opened its Florida Hybrid Center in Pembroke Pines, Fla. Many hybrid owners also appreciate the sheer convenience of being able to drive more miles without having to stop to refuel.

Hybrid owner Glenn Spiegelman, of Danville, Calif., typically gets 38 miles to the gallon with his luxury hybrid. While he appreciates the gas savings, he more so enjoys the ability to take longer trips with fewer stops along the way. “A car that is comfortable to drive and gets that kind of mileage is pretty great,” he says.

Richards says the gas-powered Lincoln MKZ vehicle, for example, typically gets 18 miles per gallon (MPG) in the city and 27 MPG on the highway, while the hybrid model gets 41 MPG in the city and 36 MPG on the highway. “Over the lifetime of driving an MKZ Hybrid, one could save 3,000 gallons of gas, almost 30 tons of carbon dioxide and roughly $8,000 versus driving a gasoline luxury car,” he says.

Another unique benefit of hybrids is their silent ignition, which uses the battery to turn the car on without the immediate start-up of the gas engine, says David Corsivo, manager of the Florida Hybrid Center in Pembroke Pines, Fla. At lower speeds, when operating on battery alone, hybrids are almost completely silent. “Without all the moving parts of an internal combustion engine, the noise level is greatly reduced,” he says. However, he adds, it can take time to get used to the lack of engine turnover that occurs in conventional vehicles upon initial start-up.

But while hybrid vehicles may improve fuel economy and the electric motor is meant to prevent loss of power, they still don’t quite match up to gasoline vehicles when it comes to acceleration, Richards says.

Until now, high-end consumers might have a Bentley and a Toyota Prius side by side in the driveway to have both a powerful option and an eco-friendly one. But the introduction of luxury hybrid vehicles is changing that. “In general, those cars get more power than non-premium cars,” Richards says. “So there’s much less trade-off between power and fuel economy for the luxury customer, making the choice a little less difficult.”

Spiegelman’s first hybrid vehicle was a Prius, which he noticed was slow to accelerate. He recently purchased a high-end hybrid model and did not experience a lack of power at all. “It accelerates very smoothly,” he says. “It’s also nice and quiet.”

And although the upfront cost of purchasing a hybrid is higher than that of a gasoline-powered vehicle, Richards says drivers generally see payback within four to 10-plus years, depending on individual driving habits.

In general, luxury hybrid cars get more power than non-premium cars. So there’s much less trade-off between power and fuel economy for the luxury customer, making the choice a little less difficult. Jonathan Richards, brand manager for Ford’s new Lincoln MKZ Hybrid

The Future of the Hybrid

Hybrid vehicles have come far over the past six years in terms of technological advancements, particularly with the introduction of more luxury vehicles.

Zinn, for example, sells the latest in hybrid technology with the fifth-generation Lexus. In addition to its low-emission and high-performance capabilities, the latest Lexus hybrid also uses software in the form of an energy management system. This system evaluates how the car can make the most of its hybrid technology based on the type of driver. For example, if the driver is more aggressive and accelerates, the car is less efficient and the system sends feedback to the driver to inform him or her.

“[The vehicle] is controlled by a software system that assesses how to get the best performance and fuel economy out of current driving conditions,” he says. “It’s so far beyond the original technology.”

Going forward, technological advancements may enable gasoline-powered vehicles to be transformed into hybrid vehicles, allowing both new and existing cars to increase fuel efficiency and reduce emissions. The retrofitting hybrid technology solution, dubbed “Revolo,” was recently created as part of a joint venture between KPIT Cummins Infosystems, an international product engineering partner to the automotive, industrial and high-tech industries, and Bharat Forge, an international automotive component manufacturer.

Girish Wardadkar, president and executive director of KPIT Cummins, says it’s a groundbreaking opportunity because, in any given year, approximately up to 85% of cars on the road are older vehicles.

“We believe there is no reason an internal combustion engine-based vehicle can’t be converted into a more fuel-efficient hybrid that causes less emission,” he says, adding that the retrofitting process takes only four to six hours and, when it becomes available, will cost less than $5,000.

The commercial production of Revolo is planned to begin this month, and the solution will initially launch in India. Opportunities in the United States are currently being evaluated, Wardadkar says.

Hybrid Market Share Graph

A Responsibility and a Luxury

Beyond all the personal benefits of owning a hybrid vehicle, purchasing one is simply socially responsible, Zinn says. “Owning a hybrid is as much about affordability as it is making a statement of social responsibility.”

Hybrids can be a socially conscious choice for those in the market for a new vehicle, whether you’re planning to purchase a car as a college graduation gift for your grandchild or are looking for a fuel-efficient city car for work.

But no matter the occasion, purchasing a hybrid is about mindset and change of driving habits. If maximizing fuel efficiency and minimizing your carbon footprint are priorities, then purchasing a hybrid just may be the right choice for you.