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Energy Wars: GM, Toyota Follow Different Strategies

March 30, 2005
General Motors has cut a deal with the Department of Energy to build hydrogen-powered cars while Toyota is planning for a big payday with its tried and tested hybrid technology.

The GM deal is worth $88 million and calls for a fleet of 40 hydrogen fuel cell vehicles along with further development of the technology.

Toyota, on the other hand, is planning to charge hefty premiums - about $5,000 to $8,000 - for its gasoline-electric hybrid SUVs compared with the gasoline-powered versions of the same vehicles.

Lexus dealers in the United States already are taking orders for the RX 400h hybrid, derived from the popular RX 330. The RX 400h goes on sale April 15. A hybrid version of the Toyota Highlander goes on sale in June.

Toyota can get away with the premiums because a growing number of people are willing to pay extra for fuel-efficient Toyota hybrids. The SUVs offer V-8 performance and four-cylinder fuel economy in a V-6 engine.

Back at GM and the Feds, the world's largest auto manufacturer will spend $44 million to deploy fuel cell demonstration vehicles in Washington D.C., New York, California and Michigan. The Department of Energy will contribute the other half of the program's investment under an agreement that expires in September 2009.

Toyota has set its sights on selling a million hybrid vehicles a year. The company expects to sell about 62,000 of the two hybrid SUVs globally this year.

Engineers estimate that the drive train in a Toyota hybrid SUV costs from $3,000 to $4,000 more to produce than a conventional power train.

A hybrid power train gets propulsion from an internal combustion engine and electric motor. The electric motor can be the sole source of propulsion at low speeds with the engine turned off and can give a short-term boost for acceleration.

Adding the electric motor enables an automaker to use a smaller internal combustion engine to reduce fuel consumption. Special brakes generate electricity to help recharge the onboard battery that powers the electric motor.

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