[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
HYBRID CARS: INCREASING FUEL EFFICIENCY AND REDUCING OIL DEPENDENCE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ENERGY AND RESOURCES
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
JULY 20, 2006
__________
Serial No. 109-233
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
U.S. GOVERNMENT PRINTING OFFICE
34-660 PDF WASHINGTON : 2007
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California LINDA T. SANCHEZ, California
JON C. PORTER, Nevada C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia ELEANOR HOLMES NORTON, District of
PATRICK T. McHENRY, North Carolina Columbia
CHARLES W. DENT, Pennsylvania ------
VIRGINIA FOXX, North Carolina BERNARD SANDERS, Vermont
JEAN SCHMIDT, Ohio (Independent)
BRIAN P. BILBRAY, California
David Marin, Staff Director
Lawrence Halloran, Deputy Staff Director
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
Subcommittee on Energy and Resources
DARRELL E. ISSA, California, Chairman
LYNN A. WESTMORELAND, Georgia DIANE E. WATSON, California
JOHN M. McHUGH, New York BRIAN HIGGINS, New York
PATRICK T. McHENRY, North Carolina TOM LANTOS, California
KENNY MARCHANT, Texas DENNIS J. KUCINICH, Ohio
BRIAN P. BILBRAY, California
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
Lawrence J. Brady, Staff Director
Dave Solan, Professional Staff Member
Lori Gavaghan, Clerk
Shaun Garrison, Minority Professional Staff Member
C O N T E N T S
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Page
Hearing held on July 20, 2006.................................... 1
Statement of:
Frank, Andrew, director, University of California-Davis,
Hybrid Electric Research Center; David Hermance, executive
engineer, Toyota Motor North America; John German, manager,
environmental and energy analyses, American Honda Motor
Co.; and Don Mackenzie, vehicles engineer, Union of
Concerned Scientists....................................... 19
Frank, Andrew............................................ 19
German, John............................................. 68
Hermance, David.......................................... 58
Mackenzie, Don........................................... 74
Letters, statements, etc., submitted for the record by:
Frank, Andrew, director, University of California-Davis,
Hybrid Electric Research Center, prepared statement of..... 22
German, John, manager, environmental and energy analyses,
American Honda Motor Co., prepared statement of............ 71
Hermance, David, executive engineer, Toyota Motor North
America, prepared statement of............................. 60
Issa, Hon. Darrell E., a Representative in Congress from the
State of California, prepared statement of................. 3
Mackenzie, Don, vehicles engineer, Union of Concerned
Scientists, prepared statement of.......................... 76
HYBRID CARS: INCREASING FUEL EFFICIENCY AND REDUCING OIL DEPENDENCE
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THURSDAY, JULY 20, 2006
House of Representatives,
Subcommittee on Energy and Resources,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:05 p.m., in
room 2247, Rayburn House Office Building, Hon. Darrell E. Issa
(chairman of the subcommittee) presiding.
Present: Representatives Issa and Watson.
Staff present: Larry Brady, staff director; Dave Solan and
Ray Robbins, professional staff members; Joe Thompson, GAO
detailee; Shaun Garrison, minority professional staff member;
and Cecelia Morton, minority office manager.
Mr. Issa. In the essence of trying to minimize the waste of
your time, I will ask unanimous consent that we begin without
our reporting quorum. Without objection, so ordered.
I will do my opening statement and then, hopefully, the
ranking member will be here by then. If not, we will make other
provisions.
Good afternoon. I want to welcome everyone to this
subcommittee hearing.
Today's record oil and gasoline prices underscore our
country's need for more fuel-efficient automobiles. We need to
use fuel more efficiently to lessen the dependence on imported
oil from unstable areas of the world. Almost 70 percent of the
oil consumed in the United States is used by the transportation
sector. Therefore, to improve the Nation's energy security, it
is vital that we increase fuel efficiency of the cars and
trucks--particularly light trucks and SUVs--that we drive.
One of the more practical solutions in the near term and I
might say in the present term is to increase the number of the
hybrid vehicles on our Nation's roads. A hybrid is a vehicle
that combines an electric motor and a battery pack with an
internal combustion engine to increase fuel efficiency over
traditional automobiles.
These one-time improvements have their limits. Today, we
will explore these limits and how we can further advance in the
future. Is the recapture of kinetic energy in its infancy, its
midlife, or have we, in fact, gotten most of what we can get
from this technology? Can we increase the efficiency of
recapturing this energy into batteries or even capacitors?
Additionally, hybrids have a reputation for superlow emissions.
Can we accomplish more in the way of reductions of emissions
using constant speed engines and the other attributes that
often come with hybrid technology?
Currently, hybrids are about 30 percent more fuel efficient
than nonhybrid counterparts, so they burn less fuel and emit
fewer pollutants per mile travel than non-hybrid vehicles.
Advances in hybrid technologies could potentially increase
these benefits.
A complex series of factors influences an individual's
decision to purchase a hybrid vehicle, including purchase
price, cost of gasoline, government incentives and personal
convictions. This is the brag part of it. As the owner of two
hybrid vehicles and the previous owner of two other hybrid
vehicles, I am convinced of their benefits, but I am also
concerned about the low level of market penetration that limit
the overall impact of hybrids on fuel efficiency of the U.S.
fleet.
In an effort to better understand these competing factors,
today's hearing on hybrid vehicles will focus on, but not be
limited to, potential fuel efficiency and environmental
benefits, cost-effectiveness, market penetration, government
incentives, U.S. manufacturing capacity, and anticipated
advances in technology.
[The prepared statement of Hon. Darrell E. Issa follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Issa. We are privileged to have here today Dr. Andrew
Frank, director, University of California at Davis, Hybrid
Electric Research Center; Mr. David Hermance, executive
engineer, Toyota Motor North America--and, yes, mine happen to
all be Toyota. But I am looking forward to hearing more from
Mr. John German, manager, Environmental and Energy Analyses,
American Honda Motor Co.; and Mr. Don MacKenzie, vehicles
engineer, Union of Concerned Scientists.
I am looking forward to your testimonies; and particularly,
since we have those in the record, I ask unanimous consent that
the briefing memo prepared by the subcommittee staff be
inserted into the record as well as all relevant materials.
I additionally ask that your written statements all be
placed in the record so that you need not do your opening
statements verbatim but in fact can embellish or short cut or
add to, essentially get more than we got in writing.
I now would turn to the ranking member, but instead what we
will do is I will ask that the panel be sworn in. As soon as
the ranking member arrives, she may choose to insert her
opening statement into the record or at that time may give her
opening statement.
I would ask you at this time to please rise to take your
oath and raise your right hands. I mention this is a rule that
we do to everybody, not just auto companies. We do it to
university professors, too, I guess is what I'm trying to say.
[Witnesses sworn.]
Mr. Issa. The record will show all answered in the
affirmative. Please be seated.
Dr. Frank, we have introduced you. We haven't begun to say
enough about how pleased we are to have you here. Before this
began, you did one-up me, by letting me know that you had
already created a hybrid vehicle in 1971 before I first saw the
technology coming out of the University of Michigan in 1972.
So, with that, I would like to learn more.
Please--normally, we say 5 minutes, but it is a plus or
minus 5 minutes. There will be a light that will come on, and
with 1 minute remaining it will go to yellow, and when it goes
to red do not open any new thoughts.
Mr. Frank. Hit me on the head with a hammer.
Mr. Issa. No, no. We are the kinder, gentler Government
Reform. We didn't even hit Sammy Sosa on the head.
STATEMENTS OF ANDREW FRANK, DIRECTOR, UNIVERSITY OF CALIFORNIA-
DAVIS, HYBRID ELECTRIC RESEARCH CENTER; DAVID HERMANCE,
EXECUTIVE ENGINEER, TOYOTA MOTOR NORTH AMERICA; JOHN GERMAN,
MANAGER, ENVIRONMENTAL AND ENERGY ANALYSES, AMERICAN HONDA
MOTOR CO.; AND DON MACKENZIE, VEHICLES ENGINEER, UNION OF
CONCERNED SCIENTISTS
STATEMENT OF ANDREW FRANK
Mr. Frank. I am going to talk about hybrids and plug-in
hybrids. I want to distinguish the difference between what the
two are, and mostly I want to focus on environmental benefits,
cost-effectiveness, market benefits, transition incentives, and
U.S. manufacturing capacity.
The car companies and most research of hybrids of today use
a relatively small battery pack. It has fuel economy up to 50
percent better, but it has no electric energy or not enough
electric energy to drive the car all electrically for any
substantial distance. The engine is downsized 10 or 20 percent.
But if you add a plug, then the question is, what is a
plug-in hybrid? The plug-in hybrid is like a Toyota Prius, but
it has a much smaller engine, much smaller--I am talking about
half or less--and a much larger electric motor and larger
batteries. But these batteries can be plugged in at 120 volt
standard plugs. The most important thing is the combination
allows the vehicle to actually have better performance and, of
course, much better fuel economy.
But, really, we shouldn't be talking about fuel economy. We
should be talking about fuel consumption. Because when you plug
it in you are using energy from the wall rather than using
gasoline, and that is the best way to get ourselves off the oil
diet, as President Bush says.
So we call this all-electric range. All-electric range
[AER], operates on batteries from 100 percent state of charge
down to about 20 percent states of charge. Then when you stop
driving you plug it in and the batteries fill up.
This is what a long-range, all-electric range or plug-in
hybrid is all about. There is a much larger battery but much
smaller gasoline engine. There is the conventional hybrid, and
there is the 60-mile-range HEV. Sixty means that it is possible
to build a car with 60 miles of all-electric range. This
requires a lot of batteries, but the overall vehicle does not
have to weigh any more.
We have already built these cars. They don't weigh any more
because the engine is much smaller. But the most important
thing is we add a plug. So the advantages of a large battery
pack is it provides the ability for zero emission driving, and
it does not have to be charged since the gasoline or diesel
engine is always there. If you don't charge it, you just use
more gasoline, but if you do charge it, you use one-tenth to
one-third the cost of fuel. In other words, using electricity
is like buying gasoline at 70 cents a gallon instead of $3 and
going up. People will be plugging these cars in.
Mr. Issa. Even in California?
Mr. Frank. Even in California. In fact, all the numbers I
will talk about are California numbers.
Batteries can be used to store energy from small wind,
solar and water systems. In other words, you can have personal
solar panels on your house, and today's sun will give you
tomorrow's driving. And what that does is give individuals
energy independence.
So here are some examples of solar panels that are built by
the Ovonic Solar Co. specifically to charge automobiles.
The same thing will hold for wind. The problem with most
renewable energy like wind and solar, however, is storage, but
the plug-in hybrid gives you that storage, and it does not cost
the utilities anything because the private person is paying for
that.
Therefore, the plug-in hybrid provides the most efficient
use of renewable energy; because in a conventional renewable
energy, big solar and wind, when the sun shines or the wind
blows, you have to shut down a power plant somewhere because
every electron you generate has to be used; and when you shut
down a power plant, that makes the power plant less efficient.
In this case, with a plug-in hybrid, you have a place to
put that energy, and that is in the car. So a plug-in hybrid
makes the renewable energy much more cost effective.
Additional use batteries can be charged at night, thus
balancing the electric grid, making the electric grid actually
more efficient. The electric charging does not have to be done
with anything special. A standard plug, 120 volts with GFI, is
all you need. So we can reduce gasoline consumption by 80-90
percent just by charging the cars with a standard 120 volt
plug. That is not using any solar.
So here are some results of a study that was done by EPRI,
the Electric Power Research Institute, but I must say this is
not solar electric power. The DOE, General Motors and other
California agencies were involved in this study, and the
results are a compilation of U.S. DOE labs and car companies
and, of course, the universities. That's me.
On the left hand side is the fuel costs--the CV means
conventional vehicle; and the HEV zero is a conventional hybrid
like a Prius.
The upshot of all these curves is the more batteries you
have, the more benefits. More batteries means that CO2 and smog
decreases.
This is a market preference, and the objective is to get to
50 percent.
I am going to skip ahead.
And this is the most important one. This is the annual fuel
consumption [referring to power point presentation]. The annual
fuel consumption goes down. This is for SUVs all the way down
to compact cars.
Notice once you get out to 60 miles all-electric range that
the amount of fuel used is one-quarter of a compact Ford Focus.
This is the amount of gasoline saved.
If we could get 10 percent of the fleet of HEV 40's--by the
way, that is the number chosen by President Bush--we would
reduce oil consumption by about 300 million barrels a year.
That is about 4.5 percent of the U.S. oil used per year, and we
would be out of the Middle East.
So that is the diesel, [again referring to power point] and
I am going to skip right to the conclusions.
We can reduce the Mideast imports. Plug-in hybrids can use
solar and other renewables, and plug-in hybrids allow us to
integrate--here is an important feature--integrate both
transportation and stationary energy use for an overall society
that is much more efficient. We need to convince the car
companies to make these things, and maybe they are convinced
already. We need to create public demand for these, and we need
to construct at least 1,500 more demonstration vehicles.
I'm sorry to overrun.
[The prepared statement of Mr. Frank follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Issa. David, are you roughly 5 minutes?
Mr. Hermance. Yes, sir.
Mr. Issa. We will do your testimony, and I will run like a
bunny for two votes, one which should be just about over and
the next, and then I will return. They are the last votes of
the day, and I am yours when I get back.
STATEMENT OF DAVID HERMANCE
Mr. Hermance. Mr. Chairman and members of the committee, my
name is Dave Hermance; and I'm the executive engineer for
Advanced Technology Vehicles at Toyota's Technical Center in
Los Angeles. I want to thank you for inviting Toyota to
participate in this hearing and to provide our perspective on
hybrid vehicles.
Toyota believes that there is no single fuel or powertrain
technology that can solve all of society's transportation
needs. Simply put, there is no silver bullet. This is why
Toyota and many other companies are pursuing multiple fuel and
technology paths in the continuing quest to reduce the impact
of the automobile on society.
Through our research, we have discovered one key, however,
to making improving efficiency of any choice of fuel or
powertrain system and that is hybridization. Toyota is
committed to hybrid as a core technology for future product.
Today, by combining a secondary energy storage system,
usually a battery, with conventional powertrains, Toyota's
hybrid energy drive has the ability to reduce fuel consumption,
reduce criteria pollutants and increase the ``fun to drive'' of
the vehicle, which is why some people drive.
In the future, similar hybrid systems can be combined with
new diesel technology or alternative fuels technology or,
ultimately, maybe even with hydrogen fuel cell technology. In
all of those cases, hybridization increases the efficiency of
any fuel or powertrain system; and increased efficiency is what
is going to be the key to admission to the future.
The vehicle purchase process is usually not an academic
exercise in logic. It is usually more an emotional process.
Manufacturers strive to find a balance of attributes that a
potential customer will value. The overall process is referred
to as finding the right value proposition, and this will likely
vary by market segment, and it may vary over time, depending on
what fuel prices and other outside effects are in play.
For example, the Prius pairs a best-in-class fuel economy,
saving about 350 gallons of fuel per year relative to class
average, with class average acceleration performance. The Lexus
GS 450h provides better than V-8 performance, while saving
about 160 gallons of fuel per year. And the new Camry hybrid
vehicle offers better performance than many midsize V-6
products, while saving about 220 gallons of fuel per year.
I should note that all Toyota and Lexus hybrid vehicles are
federally certified as Tier 2--Bin 3 and in California as
superultra low emission vehicles. Importantly, hybrid vehicles
are saving fuel today using the existing infrastructure.
Since our introduction of Prius in the Japan market in
1997, Toyota's cumulative global hybrid sales have exceeded
600,000 units. Of that total, slightly more than 300,000
through the end of the first quarter have been in the United
States. We have sold another 50,000 since then in the States.
Currently, Toyota has five hybrid models on sale in the
United States and one additional model, the Lexus LS 600h,
which you can buy----
Mr. Issa. Which I have on order.
Mr. Hermance. All right--in 2007 as a 2008 model year
vehicle. Clearly, the United States is an important market for
Toyota's hybrid strategy.
Moving forward, we can easily see the results of Toyota's
continuous improvement philosophy by examining the improvements
in Prius over the initial 6 years since it was launched. Since
launch, we have increased the combined label fuel economy by
over 30 percent, we have improved the acceleration performance
from zero to 60 by 4.4 seconds, and we have steadily reduced
the already low emissions. These enhancements are the result of
increasing the efficiency of all the components, steady
improvements in battery technology, and applied learning to the
control systems. Over the same time interval, the vehicle has
also grown physically in size to better meet the U.S. market
and sold at steadily higher volumes, and we also managed to
take 50 percent of the cost out of the component set.
As a direct result of this approach, we can foresee a time
when we offer a hybrid in every segment in which we compete.
Over time, the cost/benefit of our hybrid systems will be
improved to the point that a hybrid becomes a normal ``check
the box'' option for a powertrain, just like a choice of a 4, 6
or 8 cylinder engine is today. Our goal is to double the number
of hybrid models by early next decade, and it is reasonable to
expect that doing so will bring Toyota's global hybrid
production to over a million units a year. We also plan to take
50 percent of the cost out of the system in that time interval
as well.
Thank you, Mr. Chairman. I will be happy to answer your
questions now or later.
Mr. Issa. I am going to depart for just a few moments.
[The prepared statement of Mr. Hermance follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Issa. I have to be honest, Mr. Hermance. I have had
nothing but Toyota and Lexus hybrids, but I am looking forward
to seeing what Honda has to offer. It is just an order. It is
cancelable still. So this is a perfect segue for me to depart
for a moment and Honda to think about the hard sale.
With that, we will stand in recess for about 20 minutes.
[Recess.]
Mr. Issa. Thank you all for your patience.
As earlier promised, before we begin again, the ranking
member, the gentlewoman from California, Ms. Watson, will make
her opening statement.
Ms. Watson. Thank you, Mr. Chairman.
Because our Nation's demand for energy has increased 30
percent since 1990 and the U.S. Energy Information
Administration estimates that the demand will rise another 45
percent by 2025, it is important for us to be researching and
examining all possible solutions to our energy problem. The
purpose of this hearing is to examine the innovative technology
of hybrid vehicles and assess what the potential for hybrid
vehicles is in increasing the overall fuel efficiency of
automobiles while decreasing our dependence on imported oil.
There are several potential benefits to increasing the
number of hybrid vehicles on America's roads, but do those
benefits outweigh the costs of possibly having more cars on the
road, increasing congestion? Is this breakthrough technology
the answer to our environmental problems with fuel emissions?
And I hope that our witnesses will address that. I know that
you have started; and so, if you have given us that
information, maybe you can put it in writing to my office.
Hybrid vehicles are becoming increasingly popular in the
United States compared to the traditional vehicles. Hybrids are
more fuel efficient, emit lower amounts of fuel, and their use
in the long run is less expensive. The United States saw the
sale of its first hybrid in 1999 and went from only 10,000
vehicles sold in 2000 to almost 206,000 sold in 2005. They have
many cost savings, State taxes and environmental benefits.
In my own State of California where the traffic problems
are among the worst in the Nation, there are several benefits
for purchasers of hybrid vehicles. An example, if you own a
zero emission vehicle or a superultra low emission vehicle in
the city of Los Angeles, you can park without paying at metered
parking spaces throughout our city. Other States have adopted
tax incentives for consumers who purchase alternative fuel and
advanced technology vehicles.
These incentives are great, but are they really helping us
accomplish our goal of saving energy and taking cars off the
road? Saving energy is everyone's responsibility. Almost every
aspect of business and commerce use some type of energy to
perform their daily operations. Automakers especially need to
work with government to set reasonable goals to improve fuel
economy standards and reduce greenhouse gasses.
So, Mr. Chairman, it is important that, while we do want to
advance the production of hybrid vehicles, we do take into
account that we should caution against simply promoting hybrid
technology as the answer to promoting fuel efficiency and
reducing oil dependence. We must explore what we can do to
focus on a broad range of policies that would transition toward
the use of renewable resources, reduce emission of greenhouse
gasses and other air toxins and promote a reduction in driving
habits. We need to work with the industry experts in developing
policies that would include stronger fuel economy standards,
which would benefit both the hybrid industry and our
environment.
Again, I thank our witnesses for your input; and I thank
you, Mr. Chairman, for calling this meeting. I look forward to
the testimony, and I yield back.
Mr. Issa. Thank you.
Mr. German, you have been very patient. The floor is yours.
STATEMENT OF JOHN GERMAN
Mr. German. Thank you, Mr. Chairman. I welcome the break so
perhaps you will not realize how similar my first two
paragraphs are to Mr. Hermance's.
Mr. Issa. As we said before the break, it is the difference
in cars we want to hear about. It is very similar of the Toyota
Prius' determination of whether or not its passive start works.
Up is on and down is off.
Mr. German. Good morning, Mr. Chairman and members of the
subcommittee. My name is John German, and I am manager of
environmental and energy analysis for the American Honda Motor
Co. Let me thank you for the opportunity to provide Honda's
views on the subject of hybrid vehicles and their role in the
Nation's efforts to reduce its consumption of petroleum.
Hybrid technology offers very significant opportunities for
improving vehicle fuel economy, and that is one of the reasons
why Honda was an early adopter of the technology. It is
important to point out, however, that global demand for
transportation energy is so immense that no single technology
can possibly be the solution. There is no magic bullet. We are
going to need rapid development and implementation of as many
feasible technologies as possible.
Honda has a long history of being a technology and
efficiency leader. Our overall philosophy is to be a company
that society wants to exist. One of the results of this
philosophy is Honda's leadership on hybrid vehicle development.
We introduced the first hybrid vehicle in the United States
in 1999, the Honda Insight. This vehicle was designed to
showcase the potential of hybrids and advanced technology. The
Civic Hybrid, introduced in 2002, was the first hybrid
powertrain offered as an option on a mainstream model. The
Accord Hybrid was the first V6 hybrid, and the 2006 Civic
Hybrid incorporated significant improvements to the battery,
electric motor and hybrid operating system to improve both
efficiency and performance.
Honda's commitment to reduce energy consumption extends
beyond hybrid vehicles. As the world's largest producer of
internal combustion engines, we have already incorporated many
technologies to make those engines more efficient, and there is
substantially more that can be done in the future. For example,
Honda pioneered variable valve timing in the early 1990's, and
we now use it on 100 percent of our vehicles.
For the future, we have announced plans to introduce within
the next 2 years a more advanced version of Honda's four-
cylinder i-VTEC technology with up to a 13 percent improvement
in fuel efficiency over 2005 levels and a more advanced
variable cylinder management technology for six-cylinder
engines with up to an 11 percent improvement in fuel
efficiency.
Honda has also announced its intention to introduce within
3 years a clean diesel vehicle, meeting stringent clean air
standards and achieving up to 30 percent better fuel economy.
Honda also believes that alternative fuels offer
significant potential. We are the only company that continues
to offer a dedicated compressed natural gas vehicle, the third
generation Civic GX.
We recently introduced a home natural gas refueling station
that will expand the market beyond fleets to retail customers.
We were the first company to certify a fuel cell vehicle with
the EPA and the first to lease a fuel cell vehicle to an
individual customer.
So development of hybrid vehicles needs to be viewed within
this context. Hybrids have a lot of potential, but to achieve
significant market penetration they must be able to compete in
terms of cost, performance and utility with advanced gasoline
and diesel engines. In this regard, the most important factor
to consider is to reduce the cost, size and weight of the
battery pack. We have found that today's hybrid customers are
most interested in fuel cost savings, but at this juncture
mainstream consumers do not value the fuel savings as highly
and hybrid sales represent only about 1 percent of annual sales
nationwide. Market penetration will increase as the costs come
down in the future.
Taking what we have learned, Honda's next step in hybrid
vehicle development will be the introduction of an all-new
hybrid car to be launched in North America in 2006. The hybrid
vehicle will be a dedicated, hybrid-only model with a target
price lower than that of the current Civic Hybrid. I am not
sure it is a direct competitor to the LS 600h, but I can check
it out. We are targeting an annual North American sales volume
of 100,000 units, mostly in the United States, and 200,000
sales worldwide.
The ability for hybrids to reduce refuel consumption and
green house gas emissions is proportional to the efficiency
improvements and market share. If hybrids increase to a 5
percent market share, this will reduce in-use fuel consumption
and CO2 emissions by 1 to 2 percent. A 10-percent market share
will offer 2 to 4 percent reductions. Note that there is
nothing distinctive to hybrids about these effects. The same
benefit could be obtained by raising the overall fleet fuel
economy using conventional gasoline technology or diesel
engines.
As Honda has previously announced, we believe it is time
for the Federal Government to take action to improve vehicle
economy. Performance requirements and incentives are the most
effective policy instruments, as they allow manufacturers to
develop and implement the most cost-effective solutions. One
example would be to increase the CAFE standards. The NHTSA
already has the authority to regulate vehicle efficiency, and
Honda has called upon the agency to increase the stringency of
the fuel economy requirements, and we have also supported
efforts to reform the passenger car standards. At the same
time, Congress should develop a program of broad, performance-
based incentives to stimulate demand in the marketplace to
purchase vehicles that meet the new requirements.
The other effective action the government can take is
research into improved energy storage. The success of the
electric drive technologies, including hybrids and fuel cells,
depends on our ability to build less expensive, lighter and
more robust energy storage devices.
The Department of Energy's work in this area should be
supported and funded by Congress.
I appreciate the opportunity to present Honda's views, and
I would be happy to address any questions you have.
Mr. Issa. Thank you.
[The prepared statement of Mr. German follows:]
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Mr. Issa. Mr. MacKenzie.
STATEMENT OF DON MACKENZIE
Mr. MacKenzie. Thank you, Mr. Chairman and Chairwoman for
the opportunity to testify before you today. I'm an engineer in
the clean vehicles program at the Union of Concerned
Scientists, a national nonprofit alliance of citizens and
scientists who have been working at the intersection of science
and policy for over 30 years. We also maintain a now award-
winning Web site, hybridcenter.org, that is dedicated to
educating the public on hybrid vehicles.
Hybrids are indeed a timely subject. Despite the nay-saying
from some and the reneging of certain automakers on their
hybrid commitments, the hybrid market as a whole continues to
grow quickly. In fact, hybrid sales in the second quarter of
this year were up 20 percent over the same period last year.
That said, hybrids still represent only a quarter of a percent
of all the vehicles on our roads and continue to need support
if they are going to live up to their potential.
They do have a significant potential to help reduce our
dependence on oil and the environmental and economic burdens
that come with that dependence. But hybrids alone cannot
deliver the kind of reductions that we need. To solve our oil
dependence problem, we need a three-pronged approach that will:
No. 1, reduce the amount of fuel that consumers burn by
increasing fuel economy standards for all vehicles. This is an
area where hybrids can help. No. 2, we need to reduce the
number of miles that our vehicles are being driven. And No. 3,
in the long term we need to replace the petroleum fuels that
we're still using with sustainable low-carbon alternatives.
A good advanced technology hybrid is capable of doubling
fuel economy and can be equipped to use alternative fuels, but
not all hybrids are created equal. Those like the Toyota Prius,
Honda Civic hybrid, the Escape hybrid and now the Camry hybrid
increase fuel economy by 40 to 80 percent. On the other hand,
muscle hybrids like Honda's Accord and the Lexus GS-450h from
Toyota forego fuel savings in favor of faster acceleration,
thus missing out on much of the potential of hybrid technology.
Hollow hybrids like GM's Silverado pickup claim the hybrid
name, but don't have the true hybrid's ability to capture and
reuse significant quantities of energy.
A further challenge is that if the sale of a hybrid is
offset by the sale of another gas guzzler, then there is no net
savings in oil use. Despite leading the industry in hybrid
sales, both Toyota's and Honda's overall average fuel economy
is projected to be lower in 2006 than in 2005, this is
according to an EPA report that was released this week. It is
therefore somewhat inaccurate to ascribe specific fuel savings
numbers to hybrid sales to date. The way to ensure that the
U.S. car and truck fleet cuts down on its oil use is through
increases in fuel economy standards.
I will now discuss some steps that the Federal Government
can take to encourage greater sales of clean, high-fuel-economy
hybrids, and ensure these hybrids deliver the maximum possible
benefit in terms of reduced oil use. Any incentives for hybrids
should be designed to encourage the sale of vehicles that take
full advantage of the technology's potential for increasing
fuel economy. Putting aside all jargon and classifications, the
bottom line is how much of a fuel economy increase does this
vehicle deliver and how much pollution comes out of the
tailpipe.
The structure of the Federal hybrid tax credit is a good
example of a rational, performance-based incentive that gives
larger credits to hybrids that deliver larger fuel economy
gains. The fatal flaw in this program is the 60,000-vehicle-
per-manufacturer cap on the number of eligible vehicles, which
will soon take away credits from many of the best hybrid models
while leaving credits in place for poor performers. Congress
should make it a priority to lift this cap as quickly as it
can.
Members of the committee and others in Congress have
identified the importance of producing hybrid vehicles and
their components in the United States. Congress should adopt
manufacturing incentives that promote the production of hybrid
technologies in the United States, but should do so only if
these incentives are linked to increases in fuel economy. This
pairing avoids corporate welfare, and ensuring that meaningful
increases in fleet fuel economy are achieved. Industry should
not receive public dollars unless a public benefit is
guaranteed in return.
Manufacturing incentives tied to increased fuel economy are
essential because it is high gas prices and not investments in
technology that threaten domestic auto manufacturing. A study
by the University of Michigan and the Natural Resources Defense
Council found that as a result of the Big Three's poor
positioning on fuel economy and technology, a sustained gas
price of $2.86 a gallon would put almost 300,000 Americans out
of work. In contrast, a study by UCS found that increasing fuel
economy standards to 40 mpg over 10 years would lead to the
creation of 160,000 new jobs nationwide, including 40,000 in
the automotive sector.
I will stop there, and I thank you for the opportunity to
testify, and I look forward to your questions.
Mr. Issa. Thank you. And thank you very much for observing
the 5 minutes. That is always very much appreciated.
[The prepared statement of Mr. MacKenzie follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Issa. We will get right to questions. I will lead off.
First of all, Mr. German, I will look at the 2006 Civic for
my son. Having said that, I would like to start with Mr.
MacKenzie.
The EPA report on Honda, if I understand correctly, the
projected reduction has to do with the mix that Honda is
enjoying primarily because the Big Three have dominated the
full-size truck market for a long time, and Honda and Toyota
and others are now going into that. This is a mixed change, not
a ``per a given like vehicle'' reduction. In other words, the
Honda Accord is not going down in mileage, the Honda Civic is
not going down. No major platform is going down in mileage, but
rather the projected mix is anticipated to be different. Is
that roughly what I remember reading?
Mr. MacKenzie. Yes, that's a very good point, and I think
it illustrates the need for us to have increases in fuel
economy standards at the same time as we have incentives for
some of these high-fuel-economy vehicles in order to ensure
that we get those increases.
Mr. Issa. This goes back to a question I have specifically
for you because you touched on this. I am a supporter of CAFE
standard increases. I am personally convinced that we should
never have stops and starts that send mixed messages to the
industry. They can be incredibly small if technology is sort of
at a stumbling point and larger if we see opportunities.
Having said that, don't you agree, or would you be willing
to agree with me, that a modernized CAFE should look at each
category, where we expect them to be, where they can be, and
begin increases in fuel economy by major categories? Meaning if
I have a family of one grown child, so by definition my wife
and I drive alone, but if you have seven children and you need
to carry nine people, that realistically you don't have the
option of going to the Honda Civic, you have to choose a family
sedan or perhaps even a van of some sort.
So wouldn't you agree that, in fact, CAFE standards should
observe block categories, although we could disagree on where
those blocks are; that the ratings should be on some tangible
performance that is unique to perhaps a slightly larger
vehicle.
Mr. MacKenzie. I think the idea of a class-based or
attribute-based standard is reasonable. If you look at the rule
that NHTSA came out with for trucks, that does a good job of
addressing a lot of the concerns about possible disparate
impacts on different manufacturers. What we need now is to see
larger increases, see that kind of a framework, but using that
to drive larger increases that we know are possible with the
technology that is available.
Mr. Issa. And then I don't want to dwell on CAFE, but for
both of the auto manufacturers, realistically I would assume
that your companies, as representatives of many companies,
support that concept; that you can look at each of your major
platform categories and work to improve standards on a
platform-by-platform basis. Is this a reasonable approach as
you view it?
Mr. German. Honda has supported CAFE increases. We are on
record that we actually prefer the current system, but that if
you do want to do an attribute system, that size works a lot
better than weight. We are happy that NHTSA adopted a size
system, and we are supportive of the system.
Mr. Issa. And I was referring to a size system. I don't
want to penalize something for using aluminum rather than
steel.
Mr. German. Exactly.
Mr. Issa. Moving back into the core, as we talked about
batteries, because part of this hearing is how much further can
we go, supercapacitors typically, as well as capacitor-type
technology, typically intake and outflow capacity of
electricity quicker and can operate at higher voltage. Would
you recommend that when the Federal Government is looking at
these developments that we look specifically to higher voltages
so that you can have more efficient electric motors and the
coupling of those? Does that make sense?
I will give Dr. Frank a chance. In a plug-in environment
this may not always be optimal, but certainly when you are
looking at quick recovery for some kinetic energy savings?
Doctor.
Mr. Frank. Ultracapacitors have higher efficiency and
higher power capability, but when you go to a plug-in hybrid
where you have a lot of batteries, you already have high power
capacity, so you don't need ultracapacity. The only purpose of
ultracapacity is you want to stick to a very small battery
pack, but if you stick to a small battery pack, you can't make
a plug-in. The big battery pack does everything that the
ultracapacitor will do, but better.
Mr. Issa. I appreciate that.
I noted that the some of the studies have suggested that it
is a hybrid of the hybrid, if you will, that mixing batteries
for depth and capacitors for those quick on and off
accelerators may also be part. Are these the nuances that we
should be looking at?
Mr. Hermance. You can indeed increase overall efficiency,
particularly on the regenaritive side, with the use of
ultracapacitors, but they store very little energy. So even in
today's hybrids, not even toward plug-in hybrids, you're
marginal whether you can store enough energy in a capacitor.
So, yes, those applications that have used both have generally
used them together, with the exception of some fuel cell
applications which are quite different applications.
The bus industry has used both combinations of battery
storage and capacitor storage, and that is possible. The one
downside is that capacitors are both pricey, and they take a
lot of volume.
Mr. Issa. But they are light.
Mr. Hermance. No, they are actually not. Well, they are
light for their unit volume, but they are not free from a
weight standpoint.
Mr. Issa. Of course.
Mr. Hermance. But they are also quite expensive, and you
have to balance the benefit you might get from that improvement
with the cost of that system and whether that makes a viable
decision for the customer.
Mr. German. Right now Honda is using ultracapacitor on our
fuel cell vehicle where you don't need much energy storage. But
I agree with all the comments of Dr. Frank and Dave Hermance.
The only thing I will add is that there is some very early
stage research being done on using nanotubes with
ultracapacitors, which has the potential, if it works out, to
tremendously increase the storage capacity and still maintain
all the good characteristics. It is a long way off, but it is
fun to watch this stuff.
Mr. Issa. When I was a young boy in the auto industry, we
generally looked at about 32 volts. As we got above that, we
started worrying about arcing, we started worrying about all
the disadvantages that keep us from putting our finger anywhere
near 110 volts if it were DC. However, in the technology that
you are both going toward, clearly voltage matters, and you are
going up in voltage.
Where is the sweet spot now and in the long run in voltage
development? In other words, how high can you go in order to
reduce the size of the electric motor and gain other
efficiencies? And where are your engineering challenges today
that the government might play a role in helping to get past?
Mr. Hermance. You want to go first, John?
Mr. German. No.
Mr. Hermance. OK. Today our systems operate at as high a
voltage as 650 volts. There is a practical limit that changes
to a different class of materials if you go much beyond that.
There is a little more margin, but not a lot more. The other
break point that you mentioned before is at nominally 50-volt
system. Below that there are different requirements for safety.
At high voltage you require a level of safety, isolation and
what-not that is different from the low-voltage systems. But
there are practical limits to the voltage as well from the
standpoint of the class of materials that you use to provide
the necessary isolation, and it is not a lot higher than the
650 that is in current use.
Mr. Issa. So you think your voltage is getting close to
where it can be? And by definition does that mean that you are
going to multiple motors, which I know is in Toyota's strategy,
but multiple motors is going to become a bigger strategy?
Mr. Hermance. Actually, you don't need to go to multiple
motors. You might go to an additional motor for all-wheel
drive, which allows you a little bit better regen capture, but
at a cost. We are managing to make the motors themselves more
compact over time. Really we don't see a need to go to multiple
motors from a traction power standpoint. We just made them more
efficient and more compact by going to the higher voltage.
Mr. German. Having electric motors in each wheel is an
interesting idea which has a number of efficiencies. The
problem is that is unsprung mass; that is, mass that has to be
controlled by the springs and affects ride and handling of the
vehicle. So far we haven't figured out how to make electric
motors light enough to be able to put them in the wheels.
Mr. Issa. You can put them in the middle of the transaxle.
Sadly enough, I had an Indy car team, and we never solved the
problem of our unsprung weight versus the competitors', so we
never won in my years.
I am going to finish up here. I guess I will ask for a
second round, but when I look at California's experiment with
the zero emissions vehicle, the General Motors famous leased
vehicle, an abysmal failure because it was, in fact, a product
that needed special charging, and it basically had limited
range, and then you had to find yourself a high-voltage source
and plug in and wait.
Dr. Frank, particularly for the technology you are looking
at, I see that essentially what you are hoping to get by is to
find the sweet spot of 60 or so miles so that we can avoid the
problems of the General Motors vehicle and incorporate the
ability beyond 60 miles to go from plugged, if you will, to
totally unplugged. Is that roughly the basis for your
preference toward a plugged hybrid?
Mr. Frank. That's exactly the objective. But the plug-in
hybrid opens the door to renewable energy use directly as well.
So the plug-in hybrid solves all the problems of the pure
electric vehicle because there is no charging infrastructure.
You have always got gasoline on board. It is a dual-energy-
source system. So because of the dual-energy-source capability,
you don't have to charge quickly, and that's one of the main
features, so that means you can charge with conventional 120-
volt plugs, which are everywhere in our society already.
Mr. Issa. Last question, Mr. Hermance. I'm going to put you
on the spot and use the bloggers against you. You are probably
familiar with the Prius stealth mode modifications that are
actually available outside the United States, but in the United
States are being done aftermarket by people who read your
sites--essentially creating the ability to extend to the limits
of the batteries you already equip a zero emissions mode. They
make some significant claims, tens of miles. Would you like to
comment on those with your existing product and whether or not
that approach, in Toyota's opinion, could be in the future,
which would be closer to Dr. Frank's concept?
Mr. Hermance. The basic difference between the vehicle as
it exists today and Dr. Frank's concept is there is no
provision for putting grid electricity, plug-in, into the
battery pack. You only have the energy on board within the
narrow operating range of the vehicle to use. The actual
distance possible with the on-board energy is only about a
mile, not tens of miles, in addition to which in the current
system without grid replacement of that energy, you have to
replace that energy with gasoline, and therefore it is an
inefficient operation. In fact, there is an increase in CO2
emission and increase in fuel consumption utilizing that
modification of the vehicle as it is currently configured. Some
of what they think they are getting, they are not.
Mr. Issa. Thank you. And I am pleased I was able to get
that on the record for my nephew, another Prius owner.
Diane.
Ms. Watson. Thank you very much. I'm going to direct my
questioning to Mr. MacKenzie. He looks like the one that is
going to be around with these cars.
Mr. Issa. Ouch. You could have just said he was your
witness, instead of my witnesses are old, and you have the next
generation.
Ms. Watson. I did not say those words, Mr. Chairman. You
said ``for my son in the future,'' so I'm calling on someone's
son here.
What would you see are the most effective ways to reduce
oil consumption in our overall transportation sector?
Mr. MacKenzie. Well, the No. 1 thing the government can do
is to increase fuel economy standards for all vehicles. That's
the fastest and most effective, proven way that we have to
reduce oil consumption.
Ms. Watson. Then how can we make sure that the advantages
of hybrid penetration are not offset by less fuel-efficient
vehicles elsewhere in the fleet? Will hybrid penetration
necessarily result in higher fuel economy?
Mr. MacKenzie. Well, that's a good point. I alluded to
that, of course, in my testimony. You see that looking at some
of the automakers today, you can see that leading the market in
hybrids does not necessarily mean that your fuel economy is
going to get better. So promoting hybrids in and of itself is
not a guarantee of oil savings. If we want to make progress on
our oil dependence, we need to couple those incentives for
hybrids with increases in fuel economy standards to ensure that
we reap those benefits.
Ms. Watson. I want to just throw this out, because all of
you have been watching what has been going on in the Middle
East, and there is a prediction there that all of us would
expect that the prices are going to go up. And we are so
heavily dependent on oil in the Middle East, and I am just
wondering, when will the industry be up to a position where we
don't have to be dependent on Middle Eastern oil? You know, the
President said we are addicted to oil, and my question is what
do all of you feel will be our potential in the manufacturing
industry, the high-technology industry, in seeing that all the
vehicles that we use are up to a point where we don't depend on
foreign oils?
Mr. German. One of the main problems faced by the auto
industry is that the average customer places a relatively low
value on fuel economy and fuel savings. If you look at it, you
take even $3 a gallon, if you adjust it for the price of
inflation and adjust it for the increased efficiency vehicles
adjusts compared to what they were in the 1970's, adjust it for
the difference in the standards of living and the disposable
income, $3 a gallon is still pretty cheap. It is a smaller part
of the budget of the average family than fuel was before the
first oil crisis in 1973.
Some customers are certainly responding to the increase in
gas price. You see that in certain segments, but most customers
are not. If you look at it from the standpoint of dollars and
cents, it is actually fairly rational.
So this is the problem we face. Society needs reductions in
fuel use. Individual customers don't see it as a major part of
their purchase decision. There is a disconnect. And it is this
disconnect which is the reason why Honda is supporting
increases in CAFE standards.
Ms. Watson. You know, I represent an area in central Los
Angeles, and right now the main street in my district is a
street called Crenshaw. There is evidence that the youth are
coming out at night, and they are doing these donuts. Do you
know what a donut is? They go speeding down, and they put their
brakes on, and they spin around. It happens after 1 a.m. And I
come down that artery and I am saying, my goodness, look at the
tracks, look at the gasoline expended.
When you said what you did, Mr. Chairman, I thought we have
a tremendous need to educate all our people as to how to make
the best use of our resources, gasoline or whatever. The kids
have to fill up at the gas station, and in California our
gasoline prices have gotten up to $4 from time to time.
Of course, we need better, shall I say, law enforcement,
traffic enforcement on our streets. But there is a mentality,
it is a lifestyle mentality. Kids do it because that is what
you do during this era. So there is a combination of things
that we have to grapple with, I think, in our society, because
it is really lifestyle, and all of our kids, particularly the
gang members, they want to do what everyone else does. It is a
real issue as the prices continue to go up and the resources
continue to diminish.
Mr. Hermance. There are a number of folks in an area not
far west of your district that are promoting that with movies
like Fast and Furious 1, 2, 3, and several more yet to come,
but you're right. There is a huge need for education and a
message to be communicated of the value of the resource versus
its long-term scarcity. That is not there.
And as John says, right now, if you ask on a list--we
survey 31 attributes of a vehicle for purchase decision. Fuel
economy used to be dead last. It has moved up, but it is still
in the bottom third of reasons for purchase of a specific
vehicle, except in very small segments. So you are right, there
is a major education process necessary.
Ms. Watson. Dr. Frank.
Mr. Frank. Thank you.
Ms. Watson. I just want to say he is from USC, and that is
right in the area that I am talking about. I think you are
familiar.
Mr. Frank. I am at UC Davis.
Mr. Issa. But he does a wonderful job. Undergraduate
Berkeley. Graduate Berkeley. Ph.D. at USC. Now he's at Davis.
He covers it all.
Mr. Frank. Right.
Anyway, the point is the objective is to give the general
public, including kids who are doing those donuts, everything
they want, but not use gasoline. The real objective is to
reduce oil. So the plug-in hybrid which I have been promoting
for about 25 years, and I think Dave knows about that, anyway,
is one way to do this. The whole objective of the plug-in
hybrid is to use electricity, which is equivalent to buying
gasoline at 70 cents a gallon. That's the big goal. At 70 cents
a gallon people will plug their cars in.
The California Resources Board did not like the idea
before, but they do now because the price of gasoline is $3 and
$4 a gallon. If you can buy the equivalent power for donuts or
whatever, if you buy the equivalent power for 70 cents a
gallon, that's the motivation. The question is how do we get
the car guys to buy into that?
Ms. Watson. That's the reason why my question was, Mr.
Chairman, is when do you think the industry will be ready to
accept that particular option? Car guys?
Mr. Hermance. Toyota has announced the intent to pursue the
development of a plug-in hybrid. That said, it is probable that
it will not be a plug-in hybrid as described by Dr. Frank. The
most cost-effective way to use electricity to reduce fuel
consumption is not to have all-electric range, but rather to
have longer periods that the engine is off during normal
operation. That mitigates the need for significantly larger
drive motors and power electronics, and this is the evolving
direction from the large workshop with DOE of many
stakeholders. So it is not necessary that a plug-in vehicle
have all-electric range. The benefits are very substantial with
much less incremental costs. The incremental costs of large-
battery vehicles now is still very high.
Ms. Watson. You know, there was a statistic that showed
that your Honda Accord was the car most often stolen in
California. So there is something about that Accord that they
love. It has a faster speed? You want to counter that?
Mr. German. It is just a lot of them are being stolen for
parts. You chop it up. We sell 350,000, 400,000 Accords a year.
There is a big demand for parts. The latest statistics is the
older Accords that are being stolen the most, they are going to
chop shops and chopping them up and selling the parts off them.
Ms. Watson. Thank you, Mr. Chairman.
Mr. Issa. Thank you. I will try to sum up a few more
questions. First of all, I am old enough to remember when the
Oldsmobile Cutlass was the most stolen car in America. Now
there is no Oldsmobile.
And for those who don't--I think I should confess here, my
prior business was the largest manufacturer of car security
systems in America. So thank you because Honda made me a
Congressman in many ways; however I started the company with
Olds Cutlass.
A couple of quick questions. First of all, as we are
discussing plug-in hybrids and extended-range batteries for
greater amounts--let's just say more electricity, less motor,
in a sense aren't we looking for--both of what you are trying
to do, we are looking for a sweet spot similar to the one that
the train companies found in the 1950's and 1960's and so on.
Trains--locomotives that power America have been diesel
electric for a very long time for a number of attributes they
found: diesels running at constant speed, the advantage of
being able to get the amount of power they needed over the
drive wheels. And we could go through all the tradeoffs that
went into the development of the electric train, which is a
universal product basically today.
In a sense, isn't your development--this is primarily for
Toyota and Honda--isn't your development to try to find within
the market demand for performance and other characteristics the
highest overall productive use of the vehicle, both, of course,
acceleration, deceleration, fuel economy and emissions? Isn't
it sort of a combination that you are working with today,
David?
Mr. Hermance. Clearly it is. If the buying process were
wholly rational, you could tell fuel economy much easier. Since
the buying process is often emotional, you have to find the
balance of benefits that customers are willing to pay for. That
includes fuel economy certainly, but it also includes
performance, and at least in California it includes emissions
performance. Finding that sweet spot, if you will, the best
value proposition is how you get customers to buy your
vehicles.
Even if we were to develop independently the best vehicle
to solve any specific problem, if we couldn't sell them in
significant volume, it wouldn't make any difference. So you
have to find something the customers value, they are willing to
part with their hard earned money to buy and still reap both
societal benefit, and the customer has to feel good about his
decision.
Mr. German. The value proposition is what has led both
Toyota and Honda toward small battery packs in primarily
assist-type modes. That is because the battery right now is
still very expensive, and its energy storage density is very,
very small compared to liquid fuel. You are trying to maximize
the fuel savings without putting more batteries in, and you
have to make sure that the battery is going to last the life of
the vehicle, and part of the way we are doing that now is by
limiting the change in the energy stakes to very small levels,
which greatly improves the life.
Mr. Issa. We have a little housekeeping before the ranking
member is going to have to leave. I would ask unanimous consent
that we be able to hold the record open for 2 weeks from this
date so that all the Members may make submissions and possible
inclusions into the record. Without objection.
I would also ask unanimous consent that this hearing
continue until the remainder of this cycle of questions, at
which time we will adjourn. Without objection. I thank the
ranking member.
That allows us to be very legal in this because this is one
of the most bipartisan subcommittees. We have done every one of
our hearings in an effort to try to get to the best opportunity
for America to go the right direction on energy.
I would like to ask a couple more quick questions. This is
not intended to be a speech, but it will sound a little bit
like it.
If it is fair to say that the President was right about us
being addicted to oil, and that addiction being dangerous, then
it would be fair to say that it is, in fact, a national
security imperative that we lessen our addiction, slash,
dependence on foreign oil.
If that is the case, what messages from Congress within the
capabilities of your technology and within the reasonable time
constraints to move to those technologies--what messages
besides CAFE would best come from Congress that would move the
decision process toward lower emissions absolutely--that is
certainly something that this Congress is dedicated to--but the
higher fuel economy?
I hear all of you, rightfully so, and I spent years selling
the products the customer wanted, and every once in a while I
would make something that I wanted the customer to want, and
very seldom did it end up being what the customer wanted, but
Congress has an influence. Used imprudently, we can put your
companies into deep, deep recession. We can change the whole
nature of the buying pattern. We can cause a recession.
At the same time, what measures do you think would be
prudent for Congress to use, besides what we have already
talked about, CAFE, to encourage a movement toward dramatically
lower fuel consumption, again, within those norms that would
allow society not to have a whipsaw?
Mr. Hermance. One quick thing I think John mentioned in his
testimony and I would reiterate, you could lift the 60,000-unit
cap for manufacturers on the hybrid tax credit. We have already
gone through the cap. Our customers will cease to realize the
full benefit at the end of September. Lifting that cap to allow
customers to buy the most efficient vehicles which are the ones
that get the largest credit seems a prudent thing to do as a
near-term help.
Near term it is hard to do other things immediately. Some
longer-term program of education to improve the understanding
of the buying public about the value of the scarce commodity is
certainly--we have to change buyer behavior somehow so that
they value fuel efficiency.
Mr. Issa. Anyone else?
Mr. Frank. There are many ways to carry out these benefits.
Of course, I have been promoting the use of the plug-in hybrid,
and Mr. Chairman mentioned that the cost is high and the
batteries and so on. The life is short. We have a lot of
evidence that shows that is not quite exactly true.
The Honda--excuse me, the RAV 4, the Toyota RAV 4 electric
vehicle batteries are very similar to what we're going to in
the plug-in hybrid, I think lasted over 120,000 miles, and
Southern California Edison has already shown this, and that is
a lifetime battery. The metal hydride batteries have now come
down significantly in price over the years. One of the most
important things is the plug-in hybrid battery is not the same
as the power batteries that are currently used at much lower
price per kilowatt hour. There is a lot of evidence to show the
battery technology is not so far off. That is No. 1.
No. 2, lithium batteries are much better, much lighter,
half the weight for the same amount of energy. So when we go to
energy--and Toyota, by the way, has already invested in
lithium, and almost everybody else has as well, and all of
their competitors are looking at lithium. So the batteries is I
don't think as far an issue as before. As I have shown in
slides, we can build these cars with long range and not cost
anything in weight and incremental costs. I have addressed
that. It is much less than you think.
Mr. Issa. Please.
Mr. German. I think the primary message from Honda is
whatever you do, try to make it performance-based. Don't try to
pick specific technologies or whatever. Set out performance
standards or incentives and base them on equal footing so
manufacturers can develop their own products.
Some States are looking at changes in sales tax based upon
the efficiency of the vehicle. You could extend the gas guzzler
tax, use those moneys to incorporate more incentives for high-
performance vehicles. There are all kinds of possible scenarios
out there, including the CAFE. As long as it is performance-
based, that is really the key.
Mr. MacKenzie. In terms of things----
Mr. Issa. We want to hear from the youth of America, as our
ranking member wanted to tell you.
Mr. German. David, I want to make sure that by performance
we don't mean how fast it accelerates. Performance in the
efficiency of the consumption of the vehicle.
Mr. Issa. Both of your companies, for investment in
traction control, which the gentlelady was not aware that your
traction control vehicles clearly did not leave those marks.
Mr. Hermance. There is no switch on our car. You can't shut
it off.
Mr. MacKenzie. I was using performance in the same way, and
I want to echo our support for an action that the government
could take promptly would be to remove that cap on the number
of eligible vehicles for the hybrid tax credit, should be done
as soon as possible in the interest of consumers getting a
strong and consistent message.
Mr. Issa. I'm going to ask you a followup question since
you are the only one that doesn't have a financial gain if I
bring that to fruition. If you were in my seat, would you
eliminate the cap on all vehicles, or would you--because it is
going to cost money to--at least to the Federal revenue. Would
you incentivize that toward the overall higher performing as
far as fuel savings vehicles? Would you, in fact, change the
existing rules of the road now, or would you simply raise the
number?
Mr. MacKenzie. Well, the structure as it stands is quite
good. It is a performance-based system, and those vehicles----
Mr. Issa. You are happy with the 3,000 and all the
different levels?
Mr. MacKenzie. The levels are fairly reasonable and set up
well, so I think the solution is to just remove the cap.
Mr. German. If I could make one additional comment on that,
I am not going to disagree----
Mr. Issa. He made your case wonderfully. Take ``yes'' for
an answer.
Mr. German. The current tax incentives are based only on
the city fuel economy, and that is not really the best
performance metric. Some hybrid systems do better on the city
and highway. Diesels do better on the highway. And to make it
more neutral, it should be based on the combined fuel economy
of the vehicle, not the city. So that would be one positive
change that could be made if you are going to change it.
Mr. Issa. Sure. I am probably overstepping this committee's
jurisdiction, but with all due respect to the city and highway
measures, I think some of your companies have been lobbying
to--I know there has been a small change, but to really
modernize the EPA fuel economy standard, to make it as accurate
as possible, which it historically has never been. Is that fair
to say that is the other part is, yes, make it combined, but
also make it--don't make it assume that highway driving is 50
miles an hour, and city driving has this incredibly amount of
stops relative to what really happens?
Mr. German. I won't get into the details because they are
monumental, but yes, you are correct.
Mr. MacKenzie. It is a whole other kettle of fish in a
large kettle.
Mr. Issa. My Committee on Energy and Commerce, which I am
on leave of absence from, would assume primary jurisdiction on
some of that.
Mr. German. Just one point. Because of the timeliness
requirement, it might be better to quickly lift the cap and
then adjust the metric, because the EPA changes in labeling
won't occur for at least another year, and the cap is going to
be an issue at the end of September.
Mr. Issa. By the way, I would completely agree with you,
except I have seen the history of when we do one and promise to
do the other. I am certain that a staggered view all in one
bill might, in fact--with a deadline for new standards, might,
in fact, be a compromise.
Mr. MacKenzie.
Mr. MacKenzie. In regards to basing the credits on the
combined rather than just the city fuel economy, an additional
complication there is that may then be appropriate to adjust
what those credit levels are if you are going to adjust your
numbers to the combined.
Mr. Issa. Dr. Frank, because you got your Ph.D. before
anyone else in the room, you get the closing statement.
Mr. Frank. Well, I just want to say that by going to the
plug-in hybrid--I will push it one more time--that you get both
fuel economy in city and highway because of the downsized
gasoline engine. All the performance comes from the electric
motor. So I have to disagree with Mr. German from Honda a
little bit. Toyota certainly knows that they have done a very
good job, but when you go to the plug-in hybrid, everything
gets better. You can downsize the engine much further and get
city and highway fuel economy both.
Mr. Issa. I thank you all for your testimony. I would be
remiss if I didn't make a plug that if California lifts its ban
on nuclear energy, and as a result we are using far less fossil
fuel to produce our electricity, although the 70 cents may
still be 70 cents, the emissions benefit goes to a zero
emissions.
With that, I will make my closing remarks. From what I have
heard here today--and, by the way, we really did look at your
statements before I made ``what I heard here today''--it is
clear that the breakthroughs in technology and manufacturing
are needed to improve hybrid cars. It is also clear that those
are on the horizon. We can increase their efficiency and
commercialize plug-in hybrids to reduce the Nation's reliance
on unstable foreign suppliers of oil.
The hybrid car market is not a niche market in America, and
manufacturers must acknowledge this fact. Consumers are
clamoring for more hybrids, and today, with the increased CAFE
standards, the next generation of hybrids can provide a
foundation for reducing U.S. petroleum consumption.
I'd like to thank our witnesses here today for such an
informative hearing. And once again, there is no level of
thanks this committee can give for people who come together
from very different backgrounds, from academia, from, to be
honest, the for-profit car companies, and from think tanks and
bring together just consistency that the direction that we are
going is just the beginning; the direction that we can go is up
to you, but it is also up to Congress. With that, I hope this
record will help the rest of the Congress seek some of these
solutions. We stand adjourned.
[Whereupon, at 4:03 p.m., the subcommittee was adjourned.]