PARIS — Honda took the cover off its Insight hybrid concept car today here at the Paris Motor Show, and with it took direct aim at the new Toyota Prius. As Toyota officials work to electrify their champion of the hybrid market, Honda was hoping to take the leap from niche to mainstream by delivering a relatively conventional, four-door, five-seat subcompact sedan at what Honda expects will be the lowest price tag of any hybrid-electric vehicle on the market.
While company officials declined to discuss many details, Honda sources told PM that the production version of the new Insight, due to market in mid-2009, will carry a price tag "under $20,000," or about $3,000 less than the company's current Civic Hybrid as well as the Prius. Multiple sources also suggested that the newly reborn Insight will beat the Civic's combined 42-mpg rating, which would put it in Prius territory when it comes to fuel economy.
Though in an interview with PM he later dismissed electric-only vehicles as a priority for Honda—which is also developing a hydrogen-powered car—CEO Takeo Fukui described the Insight debut as the launch of a "new era of affordability," telling a huge crowd here that bringing down cost at the dealership was the "best approach to advance hybrid technology to mainstream customers." Indeed, analysts like CNW Marketing's Art Spinella have argued that the price premium for existing models is the single biggest factor working against the widespread acceptance of hybrid-electric cars. His research shows that even at $4 a gallon, it can take as much as a decade to recoup the added cost of a hybrid powertrain in products where more conventional, fuel-stingy powertrains are available. In early years, manufacturers like Honda and Toyota were actually thought to be absorbing at least part of the additional costs of hybrid technology. Although Toyota insists it now makes a profit on the Prius, Spinella estimated here that in the period after its launch, Toyota was subsidizing as much as $10,000 a car in costs.
Honda's hybrid system, dubbed IMA, has traditionally been less expensive than Toyota's so-called Synergy Drive. With far less complex technoogy, IMA isn't designed to permit a car like the Insight to drive on battery power alone. Some have dubbed IMA a "mild hybrid," or "mybrid," though company officials bridle at that description. The Civic Hybrid was the first to bear the IMA name, generating plenty of publicity but relatively paltry sales numbers. It was, for starters, a startlingly distinctive product, with a wraparound body designed to maximize fuel efficiency, which was further enhanced by the lightweight aluminum used for body panels and the chassis. But while it set fuel-economy records, the two-seater delivered limited functionality and decidedly poor performance.
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With a 1.3-liter engine paired with its IMA drive, the new Insight is expected to deliver Civic-class acceleration, though Honda is expected to wait until January, when it unveils the production version at the Detroit auto show, before revealing specific details. What is known is that the concept's basic shape, its five-passenger hatchback design and its overall footprint, which is slightly smaller than a Civic, will carry into production. Like the original Insight, the new car is designed to stand out from other models in the Honda lineup, a distinctiveness that has also helped Toyota market its Prius. While the new hybrid will be based off its own, unique platform, it will rely on conventional materials—steel, more specifically, rather than costly aluminum.
Meanwhile, one well-placed source said Honda has put an emphasis on improving the "manufacturability" of the IMA drive system in order to bring down costs. Notably, while many of its competitors are planning to adopt advanced lithium-ion battery technology, Honda will stick with nickel-metal hydride. It's not quite as energy-dense, but it is time-tested, reliable and significantly more affordable.
If all goes according to plan, Honda hopes to sell 200,000 units of the Insight worldwide each year, and with the upcoming introduction of a hybrid version of the small Jazz (pictured at right), Fukui predicted that total Honda hybrid sales should surge to 500,000. The Honda chief, in an interview with PM after the press conference, asserted that it is "very important for the future of the auto industry" to be pushing into new, high-mileage technologies. Fukui described the Honda's FCX Clarity fuel cell vehicle as "the number-one environmental solution," but acknowledged that hydrogen-based propulsion systems are still years away from going mainstream.
There had been some expectations that Fukui would discuss even more advanced hybrid or battery technology that might bridge systems like IMA and the FCX. Most of Honda's rivals are now developing so-called plug-in hybrids—such as the Chevy Volt, which will yield about 40 miles on battery power alone—or pure-electric vehicles, one of which Nissan promises to introduce in the U.S. by 2010.
"We're not planning to make a pure battery-based electric vehicle," Fukui said. "The next phase we see is the fuel-cell vehicle."
But a senior company source suggested that could change, considering the competitive climate. "We are looking at all sorts of things," the source hinted. If the market shifts towards battery power, or if fuel-cell technology proves more difficult to achieve than even Fukui suggests, Honda could very well plug in to some other electric drive alternatives.
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