Upscale Cars and Green Technology

I recently climbed out from behind the wheel of a 2013 Lexus GS450h. Fully loaded, this very luxurious hybrid will easily top $70,000 MSRP. And that’s not the most expensive hybrid offered by Toyota’s luxury brand. The LS600h L starts at $119,910.

Back to the GS450h: It’s hard not to be impressed with the car’s performance – delivered via 338 combined horsepower and a 34 mpg EPA highway rating, wrapped in a very stylish sedan with luxury appointments.

That got me thinking about the difficulty of bringing advanced technologies to the automotive market. We sometimes hear complaints that a powertrain or technology breakthrough ‘shoulda’ been out years ago. Truth is, it takes considerable time and money to bring any new idea to market these days. Big breakthroughs take even longer and often require a major capital investment on the part of the automaker.

The Prius is a good example. Toyota bet on a forward-thinking, long-term approach with this iconic gasoline electric hybrid. You can bet that Prius isn’t a profitable platform for Toyota when viewed in traditional automotive parameters. But now with over a million Prius models on the road, ‘Prius’ is used as a generic term when talk turns to hybrids. It’s difficult to measure the green halo that the Prius casts across the entire Toyota brand, but it’s certainly a marketing home run. Toyota has the resources to make that kind of multi-year investment. Many companies, especially smaller startups, need to be profitable early in the game.

That’s why we often see green technology introduced in cars that are much more expensive than the Prius. Both Fisker and Tesla took this approach with their launches working the ledger with high-end models eclipsing six figures. In a blog some six years ago, Tesla founder Elon Musk pointed out that his company’s strategy was to “enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model.”

At the time of his blog, Musk’s plan was to follow through with a second model that would be roughly half the cost of the $89,000 Tesla Roadster. As recent history has shown, that $89,000 MSRP ultimately became $111,000, which meant the cost of a more affordable coming sedan would likely be higher as well. That sedan is the highly acclaimed and awarded Tesla Model S. Initially, Tesla is only delivering the limited edition Model S Signature Series at a cost of $95,000 to $105,000. The plan is to next roll out less expensive Model S variants with an MSRP starting at $59,900 with smaller battery packs and shorter, although still exemplary, electric range.

Though battery cost is a prime contributor, this economic reality is not limited to hybrids or electric vehicles. Even clean diesel feels the influence of advanced technology running up cost. A diesel is generally more expensive to produce than a gasoline engine. When you add the cost of federally mandated high-tech pollution controls and exhaust aftertreatment systems, it’s easier to merge clean diesel into higher-end luxury vehicles and more expensive three-quarter ton and larger pickup trucks.

Clearly, the path to vehicles using highly-advanced technology is not a quick or easy one, nor as it turns out, one without cost.

 

Todd Kaho is executive editor of Green Car Journal and CarsOfChange.com