HYBRID VEHICLES

 Imagine a car that has two powertrains: one gas, one electric. The gas engine consumes fuel, while the electric system recaptures energy from braking in the form of heat, as well as power from the generator and regular battery (which is in turn recharged by the gas engine). The stored electric energy can later be used to boost acceleration or to run the car during idling, enabling it to burn less gas. The two systems seamlessly switch back and forth, so drivers don't feel much of anything. There's no need to recharge--that happens automatically every time you stop--and you can get phenomenal range (up to 700 miles) and fuel efficiency (up to 70 miles per gallon).

The challenge with hybrids is that two separate powertrains require more hardware, which can raise their price. But there are ways around that. DaimlerChrysler, for instance, recently showed a concept vehicle called the Citadel--a cross between a sedan and an SUV. The electric system boosts the Citadel's power from that of a V-6 to that of a V-8. With electric power on the front axle and a gas-powered engine on the rear, you have a four-wheel-drive system without all the expensive parts normally needed, which offsets the costs of the second powertrain. Says Tom Kizer of DaimlerChrysler: "If you're going to improve fuel economy, do it on the vehicles that burn the most fuel. A 20% improvement from hybridization on an SUV saves a lot more fuel than a 20% improvement on a Neon. Plus [you get improvement on] greenhouse gases and emissions."

Many executives predict that because hybrids are so easy to use, they will be the first alternative cars for most drivers. Two models, the Toyota Prius and the Honda Insight, will soon be available in the U.S. Toyota was first to mass-produce (in Japan) its four-door, five-passenger gas-electric hybrid, which it plans to bring to the U.S. next June. "The vehicles going to North America get 55 mpg, and they're better in the city than on the highway because of increased braking," says Toyota's Hermance.

Honda, which will launch the Insight in December, is taking a different approach. Unlike Toyota's Prius, the Insight is an options-heavy, sporty two-seater that gets up to 70 mpg. Honda plans to market its high-tech aspects as a benefit, not as penny-pinching features. "The worst thing we could say about this car is that it beats the Geo Metro by 30 mpg," says Robert Bienenfeld, Honda's sales and marketing manager for alternative-fuel vehicles. "That would drive people away. This car is nimble and fun, and doesn't talk down to you."

Toyota loses money on every Prius it sells--a situation that won't improve anytime soon. "We expect to see it become profitable in the future, but I wouldn't say near-term," says Dave Illingworth, Toyota's senior vice president of planning and product development. It's unlikely that Honda will fare much better. For now, manufacturers are forced to eat the cost of these new technologies--and to hope the market catches on quickly.