Published March 26, 2004


In the face of rising gasoline prices and stagnating fuel efficiency, Senator John Kerry is sticking with a plan he backed in the Senate to increase the nation's fuel economy standards 50 percent by 2015. That would be the largest increase, by far, since automotive fuel economy standards were first imposed after the oil shocks of the 1970's.


Few think even Mr. Kerry, Democrat of Massachusetts, could actually make good on such a plan if he were elected president, because there is too much opposition from Congressional Republicans and Midwestern Democrats. When Senator Kerry and Senator John McCain pushed such a proposal two years ago, it failed in the Senate on a 62-to-38 vote.


Environmental groups say they believe that bolstering fuel regulations would be Topic A, or close to it, in a Kerry presidency. The Bush campaign says the Kerry plan would have a devastating effect on a region already hemorrhaging manufacturing jobs. Automakers say they do not have the technology to meet his numbers.


And a who's who of top Democrats in Michigan, considered a battleground state, have been pressing Mr. Kerry to scale back.


But the Kerry campaign Web site says "we should increase our fuel economy standards to 36 miles per gallon by 2015," and the senator's campaign staff said he was sticking to that number, which is similar to his Senate proposal.


Cars and trucks, combined, are now required to average about 24 miles a gallon when they are tested in a lab by the Environmental Protection Agency. Out of the lab and on streets and highways, however, cars and trucks averaged 20.4 miles a gallon in the 2002 model year, the lowest point since 1980. And that figure excludes the largest and least-fuel-efficient vehicles, like Hummers, which are exempted from the regulatory system altogether.


Any current discussion of fuel economy is colored by the conflict in the Middle East, rising gas prices and surging global demand for oil, particularly in China. But amending corporate average fuel economy rules - known as CAFE standards - is also fraught with questions about jobs and safety.


Jobs, because the traditional Big Three - General Motors, the Ford Motor Company and the Chrysler Group division of DaimlerChrysler - argue that raising standards would benefit foreign-based rivals, particularly an automaker like Honda that does not sell the largest vehicles. Safety, because one way to improve fuel economy is to make lighter vehicles, which tend to fare worse in crashes with heavier ones.


But the safety question has been complicated by the boom in sport utility vehicles and large pickup trucks, which are heavy but less stable than cars. And a recent government study said lightening the heaviest S.U.V.'s and pickups would save lives by making them less lethal in collisions with other vehicles.


The Kerry approach stands in contrast to the Bush administration's plan to overhaul fuel economy standards for light trucks, a regulatory category that includes S.U.V.'s, pickups and minivans. Though the planning is in its early stages, administration officials have said saving gas is not their top priority. They have envisioned a plan that would potentially do away with a single fleetwide average for light trucks and replace it with multiple mileage targets, depending on size or weight, on the theory such a plan would save lives.


The two sides cited competing studies to bolster their arguments. Scott Stanzel, President Bush's campaign press secretary, said an analysis by the Energy Information Administration concluded that the Kerry plan would cost 450,000 jobs and result in $170 billion in "lost economic output" from 2003 to 2020.


David Wade, a spokesman for Mr. Kerry, said his candidate "won't accept George Bush's false choice between the environment and jobs."


Mr. Kerry has said his plan would create half a million jobs because it would offer incentives for domestic manufacturers to retool plants to build more efficient vehicles, pay for advanced technology research and create tax incentives for consumers to buy clean vehicles.


The United Auto Workers, which has endorsed Mr. Kerry, has not embraced either plan. The union opposed the Kerry plan in 2002 and recently joined with the Sierra Club to write an essay for The New York Times's Op-Ed page attacking the outlines of the Bush plan, saying it would "hurt the environment, auto workers and the economy."


While campaigning, Mr. Kerry has framed fuel economy as a security issue. "The threats that America faces today don't just come from gun barrels, they come from oil barrels - and we need to disarm that danger," he said in a speech last year at the Detroit Economic Club.


President Bush has looked to hydrogen cars as a way to end America's dependence on crude oil imports, but many automakers and analysts see that futuristic technology as being decades away.


Most of the industry has long fought against significant increases in fuel economy standards, arguing that they would hinder the ability to build light trucks, which now account for more than half of new-car sales in the United States.


Automakers have also said it is hard to sell the most fuel-efficient vehicles, though the early returns for hybrid electric vehicles sold by Toyota and Honda indicate a significant market.


The 2002 Senate proposal backed by Mr. Kerry and Mr. McCain was bitterly opposed by the auto industry. The Alliance of Automobile Manufacturers said it would "effectively eliminate sport utility vehicles, minivans and pickup trucks." G.M. sponsored rallies with the U.A.W. at plants in Michigan, Ohio and Wisconsin to oppose the measure and said it would lead to 100,000 lost jobs.


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http://www.nytimes.com/2004/03/26/business/26fuel.html?pagewanted=1

Published March 10.


The Ford Motor Company will license hybrid technology from the Toyota Motor Corporation in a deal that could help establish Toyota's system as a standard for the industry.


Toyota has been trying to sell its hybrid system to a variety of automakers to help offset its high development cost. Ford will incorporate the Toyota technology into a hybrid system it plans to introduce late this year in a gasoline-electric version of its Escape sport utility vehicle, the two companies said yesterday in a statement.


The Ford vehicle would be the first hybrid offered by an American carmaker and the first application of hybrid technology in a S.U.V. Powered by the combination of a gasoline engine and an electric motor, hybrids are more fuel-efficient and less polluting than vehicles with traditional gasoline engines.


Toyota, a close rival to Ford in terms of global vehicle sales volume, has established a strong lead in hybrid vehicles. The carmaker became the first to mass produce hybrids with the introduction of the Prius sedan in 1997. Demand for the latest version of the Prius has been stronger than Toyota expected, though sales volume remains small compared with mainstream models like the Camry.


The Ford deal follows a similar pact between Toyota and the Nissan Motor Company, which agreed in 2002 to license Toyota's gas-electric hybrid system for use in vehicles that Nissan plans to sell in the United States by 2006.


But Ford is leasing considerably less technology than Nissan. Although Toyota says it makes money on its hybrid vehicles, analysts say it may be a long time before hybrids are a significant source of income given the high cost of developing the vehicles and their relatively low sales volumes.


Toyota sold 53,000 hybrid vehicles globally last year, or less than 1 percent of its worldwide sales of 6.07 million vehicles.


Automakers that use any of Toyota's patents are likely to have a more difficult time making money. At a Detroit media event in January, Carlos Ghosn, the chief executive of Nissan, said that the Altima hybrid would not be profitable.


For Toyota, the licensing agreement with Ford is not expected to be a big revenue generator.


Kurt Sanger, auto analyst for ING Securities in Tokyo, said the importance of the deal with Ford was that "Toyota is setting the standard for the hybrid power train.''


"Toyota is making strides to build critical mass for its hybrid program,'' Mr. Sanger said.


Under the agreement announced yesterday, Toyota will license to Ford a patented hybrid control system that links a gasoline engine with an electric motor. The companies refused to disclose the terms of the licensing agreement or how much Ford would pay in royalties. In addition, the companies agreed to license to each other emission reduction technologies that each has developed.


So far, American automakers have been less enthusiastic than their Japanese rivals about hybrid vehicles, arguing that it is difficult to justify the added cost of the technology when few American consumers seem concerned about fuel economy. For several years, Toyota and Honda have been the only automakers selling mass-market hybrid cars. And so far, they are the only companies with concrete plans to offer a range of the vehicles.


Toyota already sells a hybrid minivan in Japan and plans to roll out a hybrid version of its Lexus RX 330 S.U.V., the RX 400h, later this year in the United States. Toyota also plans to introduce a hybrid version of its Highlander S.U.V. in the United States next year. It has set a goal of making 300,000 hybrid vehicles a year by mid-decade.


Honda, which sells two gasoline-electric vehicles, the Insight and the Civic Hybrid, also plans to offer a hybrid version of its Accord sedan.


The new hybrids from Ford, Toyota and Honda will be more expensive than traditional gasoline-powered versions of the same vehicles, though the companies have not yet said by how much.


http://www.nytimes.com/2004/03/10/business/10hybrid.html

Published 3-7-04

It was very early Monday morning by the time Tim Robbins lurched out of the Vanity Fair Oscar party at Mortons restaurant and toward the valet line, with his wife, Susan Sarandon, two children and his golden statue for best supporting actor, in "Mystic River."


The driver pulled up, not in a limousine, but in the diminutive Prius, the hybrid gas-electric car that Hollywood — part of it, anyway — so adores.


Meanwhile, down the street a stretch Hummer limousine was parked at the corner of Melrose and San Vicente, having deposited a group of younger, less famous, "après nous le déluge" type partygoers to the very same Vanity Fair bacchanal.


As Mr. Robbins folded his six-foot-five frame into the front passenger seat, and the rest of his family curled themselves into the back seat, Ms. Sarandon was heard to remark that the fans behind the barriers were screaming in their direction "because they're trying to figure out why we're in this crazy little car," a loaner.


Why, indeed? The culture wars roll on in Hollywood, this time on wheels, and nothing divides people like that nine-mile-a-gallon former military truck or the tiny Japanese-made sedan with dual engines under the hood. It's Hummer versus hybrid, Hollywood hedonism versus holier-than-thou Hollywood political correctness.


Both cars have been on the streets for some time, in the Hummer's case more than a decade. But with the Hummer's most ardent celebrity fan, Arnold Schwarzenegger (he owns seven), elected governor last year, just in time for a large-scale H2 promotional campaign, the car-culture wars have been reignited with a vengeance.


Nowadays the divide is more than cultural. It is also political. It is class- and age-oriented, too. Really.


New money is very Hummer.


Old money (dating, say, from the 1980's), very Prius.


Entertainment industry executives like Jim Wiatt, the president of the William Morris Agency, who used to be seen in a big fancy Mercedes-Benz, drove to the Vanity Fair party in a hybrid. Tom Hanks just bought the redesigned 2004 Prius, the second generation of the car Toyota first introduced in 2000. It is the movie people who can afford mansions who are driving the $20,000 hybrids. And it is the rappers who just made their first couple of million dollars who are buying the $50,000 Hummer. It is the kids of entertainment industry executives who rent Hummer limos for their proms and big nights out.


In the rap world, Tupac Shakur helped popularize the Hummer. His H1, unused since his death in 1996, was offered on eBay for a starting bid of $500,000, but did not sell.


Celebrity Hummer owners include the actor Adrien Brody and the director James Cameron, who made the macho "Titanic." Hugh Hefner has been seen in a Hummer. And Steven Soderbergh's agent, Pat Dollard, says he loves the "sheer excess" of the truck, which he owns.


"It's a high-profile vehicle — it's what you want to be seen in," said Richard Sterman, a Hummer salesman at a dealership in the San Fernando Valley.


But not on Oscar night. "The Catherine Zeta-Joneses — they don't fall out of Hummer limos," said De André Armstrong, president of A Total Success, a Hollywood limousine rental company. "They come out of regular stretch limousines." Indeed, Mr. Brody, who bought his Hummer H2 last year, left it in the garage on Oscar night and arrived by limo.


Patrick Quinn, the director of special events at Z Valet, who parked Mr. Robbins's hybrid, observed about a dozen Priuses at the Vanity Fair party. Many were there because an environmental group, Global Green USA, had recruited celebrities, including Mr. Robbins, to attend the Oscars in Priuses. Among the other recruits were Charlize Theron (the best-actress Oscar winner), Robin Williams and Sting.


So some Oscar-night hybrid flaunters were merely driving loaners. Evidently, they had not put their money where their green principles are. It is a good bet that more than one flies by private studio jet, burning hydrocarbons as wastefully as the Daytona 500.


Lately, however, the Hummer seems to be losing ground in the culture wars. Mr. Quinn of Z Valet said he saw fewer than he used to. Roseanne Barr used to drive a Hummer, but she gave it to her former husband, Ben Thomas, in a divorce settlement. He sold it. The rap star Coolio got one from his record company but gave it up because of the poor mileage (about 11 to 12 miles a gallon, according to General Motors). Nationally, sales for the H2 fell 21 percent in February, Reuters reported, the sixth straight month of falling sales compared with the previous year. G.M. is offering dealers incentives to help spur sales.


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http://www.nytimes.com/2004/03/07/fashion/07CARS.html

A decade ago, Chen Haiyan went about the city the same way as most of her compatriots -- on a one-speed bicycle. Today, her mode of transport still keeps with the times, but now it is a $100,000 silver BMW sedan.


From foreign luxury cars to the Chinese-made Geely, which retails for about $4,000, the automobile has captivated China, gaining traction among people of increasingly wide incomes and backgrounds, with global implications for industry, the environment and energy.


More than 2 million passenger cars were sold in China last year, an increase of more than 80 percent from the year before, according to the State Information Center. China is now the single fastest-growing auto market in the world, and the second largest in Asia after Japan.


"Every year, we keep saying, 'Well, there's no way we can have a repeat performance of last year,' and every year we're wrong," said Phil Murtagh, who oversees General Motors Corp.'s operations in China. "We're seeing the beginnings of a car culture."


For the world's major carmakers, now suffering something close to stagnation from North America to Europe to Japan, China is that rare haven of swift growth and fat profit. Longer term, however, worries are deepening that over-exuberant investment is building too many car factories, pushing prices down so far that the good times will eventually yield to a more familiar China story -- too much supply chasing too little demand, with low-cost, domestic producers capturing much of the market.


The rise of the auto also threatens to add another major source of greenhouse gas emissions, those believed to underlie the problem of global warming, to a world already struggling to limit the threat. China is now the second-largest source of such pollution after the United States. Over the next three decades, China's increase in gas emissions is expected to nearly equal the total of all industrial countries, according to the International Energy Agency.


The spread of the car in the rest of the world has proven to be a revolutionary force, remaking geography and social reality. So it goes here. Cars are refashioning China's cities, now choked with traffic. Bicycles are being gradually banned from Shanghai's larger streets to make way for the automobile, and old houses torn down to make space for wider roads and parking lots. Cars are changing how people shop, enabling the proliferation of big-box retail stores while expanding the confines of an enduring real estate boom. They are making life more dangerous, generating an alarming spike in fatal traffic accidents.


Above all, the car is intensifying China's search for new sources of energy at a time when the needs of the world's most populous country are outstripping supply. Industry remains the single largest drain on China's energy supply. But the ravenous appetite of the automobile is one reason Beijing has dispatched engineers and dealmakers from Siberia to Angola to Indonesia in search of new oil.


A decade ago, gasoline for cars made up about 10 percent of China's demand for oil, according to state statistics. Today, the number is closer to one-third. By the end of this decade, when private car ownership in China is expected to swell to nearly 28 million, gasoline are to make up more than two-fifths of China's total oil demand.


Concerned by this growth in consumption, China's government is now drafting new fuel economy standards, according to industry officials who spoke on condition they not be named. While the new rules will initially have only a minor impact on China's auto fleet when they take effect next year, they are expected to force the production of more fuel-efficient cars when the second stage applies in 2008, the officials said.


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