General Motors Corp. and DaimlerChrysler AG are throwing their combined weight behind a new hybrid technology for cars and trucks, setting the stage for what had been a niche product to spread to the mainstream for American consumers.
The popularity of Toyota Motor Corp.'s gas-electric hybrid Prius has forced the hand of manufacturers who once regarded the futuristic sedan as a fad. Buyers still wait months to get a $24,000 Prius, which was Motor Trend magazine's car of the year for 2004 and has become a pop culture icon.
Americans are showing lasting interest in hybrids partly because of concerns about high gas prices and instability in the Middle East.
At the same time, Toyota and Honda Motor Co.-which builds the Civic Hybrid - have succeeded in winning state and federal tax breaks for people who buy such cars.
This week the IRS announced that the new Escape Hybrid sport-utility vehicle from Ford Motor Co. also qualifies for a federal tax deduction. Virginia, California and other states have granted the cars exemptions for driving in high-occupancy-vehicle express lanes.
Those forces have become too much to ignore. While GM is still pushing toward a future of hydrogen-powered fuel cells and DaimlerChrysler has been touting super-efficient diesel engines, the companies this week said they will team up next year to develop a new hybrid system.
"This is enormously expensive technology to develop, but nobody can afford to be without it ... because you've got the market driving this thing itself," said Lindsay Brooke, senior analyst at auto industry consulting company CSM Worldwide Inc.
Ford's hybrid Escape is the first entry into the hottest automotive segment, light trucks, and the maker can't keep up with demand. This month, Honda began selling the Accord Hybrid, which uses an electric motor not just to save fuel but to goose a six-cylinder engine for high performance.