Hyundai Seeks Different Sort of Dedicated HEV, PHEV

Hyundai Motor America President and CEO John Krafcik says the auto maker will bring a dedicated hybrid to the U.S. in the coming years, but the company wants to make sure it differentiates its entry from others already in the market.

Hyundai will offer both a hybrid and plug-in hybrid variant of the future model, he tells Ward’s during an interview at the annual CAR Management Briefing Seminars recently held in Traverse City, MI.

“But the idea there is, how far can we take fuel economy?” says Krafcik, who revealed at MBS Hyundai’s new goal to take its fleet fuel economy to 50 mpg (4.7 L/100 km) by 2025.

“We want to do something that is different from (the Toyota) Prius or (Honda) Insight,” he adds. “We want to differentiate ourselves from a design point of view and deliver, we hope, really extraordinary fuel-economy numbers.”

Current dedicated hybrids, such as the Prius and Insight, deliver high fuel economy but arguably suffer from bland styling and lack of driving excitement. Krafcik suggests a more engaging vehicle along the lines of the Sonata Hybrid launching later this year.

The Korean auto maker’s first hybrid-electric vehicle to be sold in the U.S. will achieve 37/39 mpg (6.4-6.0 L/100 km) city/highway. But Krafcik also says it offers better driving dynamics than its competitors by using a more traditional 6-speed transmission over the continuously variable type found in other hybrids.

“You don’t get that motor-boating sensation,” he says of the Sonata Hybrid’s transmission. “It really transforms the driving experience. It feels like a normal car and gets great fuel economy.”

Krafcik says mandates from green states, such as California, requiring auto makers to sell a certain number of Advanced Technology Partial Zero-Emissions Vehicles are driving Hyundai’s push to a dedicated hybrid, rather than stricter corporate average fuel economy rules beginning next year.

Business case for pickup stronger with new CAFE,” HMA chief John Krafcik says.

He expresses reservations over full electrification, due to cost and range limitations.

“It’s just that the math is so difficult, and these range issues are so, so challenging,” Krafcik says. “I keep thinking in my heart of hearts that is the long-term end-game. But the question is how we transition to that.”

Krafcik says he likes the idea of EVs with range-extending internal-combustion engines, such as the all-new ’11 Chevrolet Volt coming in November, and thinks the new CAFE rules eventually could break down barriers previously preventing his company from offering a small pickup.

“The Volt is a really cool solution,” Krafcik says, noting its capacity to drive some 300 miles (483 km) beyond its 40 miles (64 km) of all-electric range using an ICE engine eliminates so-called range anxiety.

But for as many social ills as the Volt solves, it creates others, he adds.

“The challenge for (General Motors Co.) is that it is a $40,000 car. And there’s this concern the people who are going to afford that car, for the most part, are people who did not necessarily need $7,500 in federal government support – taxpayer support,” he says.

Buyers of the Volt are eligible to file for the rebate in their tax returns the year after their purchase, as part of a federal effort to grow the EV market.

“As a taxpayer, it makes me a little bit upset the government is going to subsidize these people that have average incomes of $150,000 – going to be stroking checks to them,” Krafick adds. “A lot of people are going to latch onto that and say that just isn’t right.”

GM Chairman and CEO Ed Whitacre defended the government’s tax rebate at the MBS conference, calling it “just fine.”

Krafcik also says while Hyundai currently has “no plans” to enter the pickup segment, new CAFE rules make a stronger case for such a decision.

Previous fleet fuel-economy rules called for auto makers to meet separate standards for cars and light trucks, which meant some vehicle manufacturers built and sold a small pickup at a loss to achieve the mandate and recoup the money on profitable fullsize trucks.

That left companies such as Hyundai uncompetitive from a pricing standpoint; with the 25% tariff the U.S. government levies on imported pickups an additional burden for foreign manufacturers.

“Now that’s gone,” Krafcik says of the separate rules, phasing out with the ’11 model year. “In the new footprint-based CAFE, you could make a standalone business case, perhaps, to enter the pickup-truck market.”

However, he reiterates, no pickup plans exist at Hyundai. “Not saying we have a plan to make a pickup, because we specifically don’t right now. But who knows? By 2025, it is going to be a very different world.”

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