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2010 Mercury Milan Hybrid - Click above for high-res image gallery

In a recent op-ed piece published in The Wall Street Journal, Alan Reynolds of the Cato Institute starts by making a few decent points about fuel taxation and fuel economy rules. Unfortunately, he undermines himself with some blatant errors and misinformation. In discussing how Detroit automakers will deal with new fuel efficiency requirements, he makes the all-too-common mistake of referring to Ford's hybrid system as licensed from Toyota ("Similarly, Ford has the Toyota-licensed hybrid Fusion and will soon produce the European Ford Fiesta in Mexico").

The reality is that Ford independently developed its own hybrid system at the same time Toyota was masterminding its own. The basic architecture of both systems is the same and both are based on the concepts developed and patented by TRW engineers in the late 1960s. When Ford introduced the Escape Hybrid, Toyota went after the Blue Oval for infringing on its patents. Ford had patents of its own on the technology that Toyota was using. Eventually, the two companies reached a cross-licensing agreement that gives both companies the right to build their own systems. Such cross-licensing agreements are common in these kinds of cases, but Ford did not use the Toyota hybrid system. The only other company that uses Toyota's system is Nissan for its Altima hybrid, and they actually buy hardware from Toyota. We continue deconstructing Reynolds' arguments after the jump

[Source: Wall Street Journal]
Photos Copyright ©2009 Sam Abuelsamid / Weblogs, Inc.

Reynolds explains that Toyota can sell big fuel-guzzling vehicles like the Tundra and Lexus LS because it also sells efficient vehicles like the Yaris and Corolla. While this is partly true because the fuel efficiency of the small cars does offset the higher consumption of the bigger vehicles when calculating the company's fleet average, there is more to the story. Toyota's big trucks have not been nearly as commercially successful as any of their domestic competitors. As a result, the penalty isn't nearly as big to offset. This is even more true for Nissan. Lexus' LS also sells in comparatively small numbers, with only 20,255 units moved in 2008.

The author does give due credit to Ford for its upcoming Fiesta and Chrysler for the Fiats it will soon sell, but goes on to trash General Motors for the upcoming U.S. market Cruze, a car which no one has driven yet. This is certainly disingenuous, since there is no guarantee that the Fiats will be any better than GM's offerings. We've driven the Fiesta and it's a great little car and the new Focus will likely be very good as well.

While the current Aveo leaves a lot to be desired, it's at the end of its life-cycle and will be replaced by the end of next year with a new American-built car. The Aveo replacement may be joined by the even smaller Spark, which should help matters.

The main point of Reynold's treatise is a complaint about fuel economy standards being an ineffective means to influence fuel consumption. To a large degree, he's correct as CAFE has limited influence unless fuel prices rise. Simply controlling what's supplied by automakers does not guarantee consumers will buy more expensive, fuel efficient vehicles. Reynolds advocates adjusting the taxes on fuel to make it equal on ethanol, gasoline and diesel at 24 cents a gallon.

While taxes could be adjusted, they will need to go substantially higher than Reynolds' suggestion if they're to have any real impact on consumer behavior. Thanks to Reuven for the tip!

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    • 1 Second Ago
      • 5 Years Ago
      The Fusion hybrid uses a transmission from Japan and a battery from Japan. It is essentially a copy of Toyota hybrid system.
      • 5 Years Ago
      one of the posters here needs to get at least one point right. this sight is not full of anti-toyota bias. much like anything else that could be labeled a domestic media, it has a strong anti-domestic bias
      • 5 Years Ago
      Just think,

      We have the benefits of the internet to research and correct wrong statements.

      Just 15 years ago a statement such as this coming from the WSJ would be taken as fact. The information to dispute was not so readily available as it is now.
      • 5 Years Ago
      This is a case of perception becoming reality for this ignorant WSJ writer.
      • 5 Years Ago
      The sentence is not inaccurate. Ford's hybrids are covered by licenses from Toyota. If they did not get licenses from Toyota they would be in court right now. It would also be accurate to say that Toyota licenses hybrid technology from Ford.
        • 5 Years Ago
        You made up the idea that the article says that Ford's car is a licensed version of a Toyota. It simply isn't in the article. You made it up so you could say it is wrong and therefore say the article is wrong.

        The article says the car is produced with licensed technology from Toyota. This is true. You are extending it to untrue lengths and then complaining those extensions are not true.

        Some Ferraris are made with licensed technology from GM (magnetorheological suspension). This statement is true. That doesn't mean the Ferraris in question are licensed versions of GM cars.
        • 5 Years Ago
        IIRC, the licensing was to protect from lawsuits on both sides.

        So it's basically a wash, and life goes on.
        • 5 Years Ago
        Sorry but vague statement's are misleading, and that's the problem.

        And what did I make up? It was a general statement used to further more point (i.e. an example).
        • 5 Years Ago
        Actually it is inaccurate. Indicating that "Ford has the Toyota-licensed hybrid Fusion", leaves the door open to interpret it that the entire hybrid was developed by Toyota and not Ford. Even though there was some patent information/agreements exchanged between the two automakers, it does not mean that either system is a licensed version of the other.
      • 5 Years Ago
      "The Ford Motor Company will license hybrid technology from the Toyota Motor Corporation in a deal that could help establish Toyota's system as a standard for the industry." - New York Times Article written in 2004

      You gonna tell me the NY Times is wrong as well?

      Ford in fact does use some Toyota hardware in the cars such as Aisin 6-speed gearboxes and Toyota CVT's.
        • 5 Years Ago
        HA HA HA HA HA HA HA HA.

        Oh, AruthK you kill me, the NYT trustworthy... Ah ha

        Um ha


        Man that was good...
        • 5 Years Ago
        What CVT's? The CVT in the Five Hundred/Freestyle was a joint venture with ZF (IIRC), and the CVT in the Fusion Hybrid is not Toyota.
        • 5 Years Ago
        I wasn't quoting this article, I was arguing against using info from what is arguably a much more trustworthy source - the NY Times.

        I think the fact that ruffles the feathers of people like you most is that Toyota was in fact the first to commercialize hybrid tech in passenger vehicles and all others later followed suit.
        • 5 Years Ago
        And actually the 2010 Fusion/Milan/MKZ doesn't use an Aisin 6 speed I believe.
        • 5 Years Ago
        "Ford had patents of its own on the technology that Toyota was using. Eventually, the two companies reached a cross-licensing agreement that gives both companies the right to build their own systems. Such cross-licensing agreements are common in these kinds of cases, but Ford did not use the Toyota hybrid system."

        What part of this quotation did you not understood?
        • 5 Years Ago
        I suppose all this doesn't make any difference to Toyota, as they make money on every Ford sold with an Aisin parts.
        • 5 Years Ago
        @Dean The Escape Hybrid's CVT was made by Toyota.

        The Fusion's 6-speed automatic is made by Aisin - a Toyota Group Company.
        • 5 Years Ago
        I asked what your point was. I'm aware of the relationship that Aisin AW has with Toyota. Aisin manufacturers a lot of transmissions for a lot of manufacturers. By pointing out that Ford sources transmissions from Aisin does not indicate that Ford is sourcing tech from Toyota.

        So again what was your point? BTW Ford has an in house 6 speed co-developed with GM, and I'd be willing to bet that as soon as the manufacturing agreement expires with Aisin all Ford's with 6 speed autos will be sourced in house.
        • 5 Years Ago
        While I am about to argue with AurthK, I think people are being a bit hard on him.

        It's my understanding that Toyota was NOT a controlling owner of Aisin when Ford first contracted with them to build transmissions. Toyota then heavily invested in Aisin to gain controlling interest. Surprisingly, soon after, Ford had a hard time sourcing enough transmissions from Aisin.

        This tells me two things:
        1. The Ford / Aisin relationship doesn't indicate that Ford is licensing Toyota tech.
        2. Toyota is playing dirty by limiting their competitions access to a supplier.
        • 5 Years Ago
        @psubunchofnumbers As far as anyone is concerned Aisin = Toyota. That's the relationship. If Ford is buying transmissions designed and manufactured by Aisin, they're buying for Toyota. Do I need to explain this to you further?

        And as far as design Ford's own 6-speed transmission goes I'd say good for them. They'll probably proclaim as the world's greatest automotive achievement. Lexus (A Toyota Group company) is already building 8-speed transmissions and as usual, are far ahead technologically.
        • 5 Years Ago
        Honda was first. The Insight was the first hybrid car in the world, it debuted in Japan before the Prius did.
      • 5 Years Ago
      Considering the economic times we're living in, this is a *very* big deal - it places Ford under a microscope as being unable or unwilling to innovate; instead relying on the "superiority" of Toyota technology to make a class leading machine.

      I hope Ford sues for defamation.

      Intentional or no, this kind of blatantly incorrect "reporting" hurts the public impression of Ford to no end.
      • 5 Years Ago
      Wait, the WSJ has misinformation on the Editorial / Opinion page? I'm SHOCKED!
        • 5 Years Ago

        Shocked and appalled that the editorial section of the WSJ would have something even vaguely false and/or misleading.
      • 5 Years Ago
      Wasn't this already posted?
        • 5 Years Ago
        on AutoGREENblog
      • 5 Years Ago
      Will the media ever stop kissing Toyota's ass, hell no, what a bunch of jerk-offs.
      • 5 Years Ago
      lol what idiots.
      • 5 Years Ago
      @ AruthK
      I own a Mazda RX-8 and my friend owns a Honda S2000. They both have Aisin transmissions. The MX-5 or Miata has an Aisin transmission. Some mid 90s Jeeps have Aisin transmissions as well.

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