More MBS Coverage TRAVERSE CITY, MI - Toyota Motor Sales U.S.A. Chief Operating Officer Jim Press says he is fed up with naysayers who doubt the future of gas-electric hybrid vehicles.

“There are all these people who don't want hybrids who are trying to generate all this myth, but I just can't imagine a company 20 or 30 years from now that won't build hybrids,” Press tells Ward's here at the 2005 Management Briefing Seminars.

Here is what Press had to say in an interview about the current controversy over hybrids:

Ward's: With the expansion of Toyota's hybrid vehicle lineup, do you worry about a backlash from consumers, who may not be thrilled they won't be getting the fuel economy listed on the sticker or ever make back the money they spent on the hybrid powertrain? (See related story: Toyota Plans to Roll Out 10 Hybrids)

Jim Press of Toyota

Press: Well, first of all, I think the reason we're getting into hybrid powertrains is multi-faceted, (such as) responsibility to the Earth. Oil really isn't a renewable resource, it really is going to run out, and as it runs out it's going to get a lot more expensive. And as you burn carbon-based oil, it really isn't good for the environment. So anybody that produces a product that's harmful to the Earth really isn't going to be able to do that long-term.

If we don't put our eggs in this basket, we're not going to have a basket. Everything is going to be a hybrid to some extent. How else will we survive? If you look at hybridization through the eyes of a typical executive and want a 2- or 3-year payback, then you'll be out of business. Because in 25 or 30 years if you don't have hybrid technology that's refined in all of your products, you won't be in business.

Ward's: What did you think of the recent analysis by Edmunds.com that gas would have to be over $10 a gallon for a consumer to ever see any payback for the purchase of a hybrid vehicle?

Press: First of all, (with oil) at $60 a barrel, it's becoming more of a factor. At $70 a barrel it may be more of a factor. These are the same people who said oil will never be higher than $30 a barrel.

Second, when you buy an automatic transmission, how much money do you make on that? Why doesn't everybody buy a stick? What's the payback when you go from a stick to an automatic? What's the payback if you add air conditioning? Is that to save money?

So why are hybrids held to this standard when a hybrid SUV emits 20% of the harmful emissions of another car? What do you think the gas mileage is of a Suburban vs. a Highlander hybrid? I would guess a Highlander hybrid would get better gas mileage than that Suburban.

Ward's: Ward's columnist Jerry Flint recently drove a V-8-powered Ford Mustang and a Highlander Hybrid at an average speed of about 60 mph (97 km/h) and saw little fuel savings with the Highlander. (See related story: Hybrid Hysteria)

Press: The key fuel economy point of a hybrid is city driving. In traffic, I don't think at 25 or 30 mph (40-48 km/h) in a metropolitan area he'd have that same result. (Getting back to the issue of payback), how much money do you save when you buy air conditioning in the car? How long does it take to payback? Air conditioning costs more. So why don't you ask, “Why do you buy air conditioning; you're not making money on AC?”

Ward's: But on a day like this (90°-plus F [32°-plus C]), you need air conditioning.

Press: It won't be too long before a day like this you'll need a hybrid, or else you won't be able to breathe. Jerry Flint also said Scion would be a disaster.”

Ward's: But customers do pay a hefty premium for a hybrid powertrain. A Lexus RX 400h costs $12,000 more than the base RX 330.

Press: The hybrid system isn't ($12,000). That's a real big misconception. That's the navigation system on it (and) all-wheel-drive. The componentry on the hybrid is right around $5,000; in the Highlander (the hybrid powertrain) is less.”

cschweinsberg@primediabusiness.com