[Big Dave]

GM’s first foray into hybrids – hybrid SUVs – makes sense from their standpoint but it is only a first step. Hybrid SUVs were the first step because their existing customer base likes SUVs and since the first hybrid necessarily is an add-on, the SUV offers lots of space for add-on equipment (motors, batteries, etc). Also an SUV normally goes for about $40-45,000. All that hybrid equipment probably demands a $10,000 premium. The first time I ever saw a Honda Insight, I (as an engineer) appreciated what a little jewel the thing was but all that machinery screamed “$45,000!” at me. But the price tag was much less. It was a “loss leader.” Honda lost their shirt on every car, but made a few to burnish their “Mr. Clean” image and sell regular Civics and Accords. This is why you don’t ever seem to find enough Priuses. Toyota is not making anything on them but they are great for getting in to buy a Camry. It will always be easier to make a profitable big vehicle with hybrid power because people will pay more for a big vehicle. Most people do not appreciate that big vehicles cost very little more to make than small vehicles.

GM’s next step is to hybridize their larger cars. It might be a short step from a SUV to a rear wheel drive sedan like the G8. You might see a comeback of large sedans (like the old Caprice) as a substitute for the SUV. You might chuckle, but a Caprice with a T-56 and 4.5 diesel models out to 35 MPG EPA and probably over 40 for even a mediocre hypermiler. Hybridize it and gain another 25%. That’s nearly 45 MPG (EPA) with no aero cleanup at all. That is a car that GM’s customers will buy.

No matter what the price of gas gets to some people flat out will not buy a small car. I recently had a line on an Insight that I could buy and get back on the road for about $5,000. Like I said, a high-MPG little jewel and I could get a car worth $45,000 (my estimate) for a song. Super bargain, right? Wrong! The Insight’s 38 inch headroom completely defeats me. I felt like Shaquille O’Neal in it (but I still cannot dunk). I would have had to cut a hole in the top. I am hardly the only person to have that problem.

The real future of improved MPG lies not in the extreme vehicles but in the average-sized vehicle that a family can buy one of and still fulfill multiple missions. IMO that is the direction GM will go.