Friday, September 15, 2006

Honda Discontinues Most Fuel Efficient Car

It looks like Honda is going to discontinue the Insight, its hybrid offering which sold only 320 units in the first quarter of '06. Toyota, the worlds leader in hybrid cars reportedly now makes a profit on their hybrid, the Prius. Toyota is the clear leader in hybrid technology-- something I consider to be a largely transitional technology-- where everyone else loses buckets of money on them.

Toyota arguably has the most experience with hybrid technology and overcame some interesting battery problems in the first years of research and development.

The Prius needed a large battery pack to power the car at low speeds and to store energy, but it would shut down when it became too hot or too cold. During road tests with Toyota executives, a team member had to sit in the passenger seat with a laptop and monitor the temperature of the battery so that it wouldn't burst into flames.

While Toyota reportedly makes money on each hybrid sold, I don't have any data as to whether or not they've even come close to recuperating research and development costs of over $1 billion.

There are some fascinating tidbits about Toyota's development and initial marketing strategy of the initial hybrid model. For instance, they had to figure out what market demographic would be drawn to it. Hard-core environmentalists seemed the obvious first bet, but that turned out to be spurious:

It quickly learned that extreme environmentalists weren't interested in hybrids: They were turned off by the technology and tight with a buck. And some dealers were still skeptical.

Interesting article here.

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