[Texgreen] Alternative fuel cars are still far off

[Roger Baker]

... Even with the growth, analysts don't expect hybrids to reach 1  
million units, or 5 percent of the total market, until after 2011.  
Plug-in technology is probably even further in the future because  
battery technology does not yet exist...

More evidence, tracking the Hirsch report, that peak oil isn't  
sending the right price signals and significant production ramp-up  
takes a decade or more. -- Roger

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<http://www.washingtonpost.com/wp-dyn/content/article/2007/01/05/ 
AR2007010501949.html>

Gauging The Demand
Before committing to alternative-fuel vehicles, automakers are . . .
By Sholnn Freeman
Washington Post Staff Writer
Saturday, January 6, 2007; Page D01

With great hoopla, automakers will unveil futuristic prototypes next  
week at the Detroit auto show, including advanced hybrids and a gas- 
electric sports car, the FT-HS, from Toyota.

The only problem is that some of the technology being touted exists  
only as fancy fiberglass models.

The buzz machine shifts into high gear tomorrow with carmakers  
competing to demonstrate their concern about high gas prices, U.S.  
dependence on foreign oil and global warming. But despite all the  
glitz, what Americans will drive in the next few years will look a  
lot like what they drive today. Industry analysts say automakers  
won't have significant numbers of alternative-energy vehicles --  
hybrids, diesels and plug-ins -- for sale until well after the turn  
of the decade.

The hype is racing ahead of consumer appetite for alternative-fuel  
vehicles, industry experts say. Only a small fraction of the cars on  
the roads are hybrids and diesels, which get better fuel mileage than  
gasoline-only cars and burn cleaner than they used to. While such  
vehicles have distinct advantages, consumers for the most part seem  
unwilling to pay their higher prices. As a result, carmakers will  
push ahead cautiously before deciding to turn out large numbers of  
the vehicles.

Auto companies are hesitant about the price of new technology. In  
hybrids, batteries and other components add $1,500 to $3,000 to the  
cost of each vehicle. Current cost pressures have auto companies  
scrounging to save as little as half a cent on some parts.

But the manufacturers are doing everything they can to be perceived  
as environmentally friendly.

Automakers are "investing large sums of money attacking the problem"  
of heavy fuel consumption and carbon dioxide emissions, which  
scientists say lead to global warming, said Tom Purves, chief  
executive of BMW's North American operations. "As an industry, I  
believe we've never worked as hard on these problems."

Environmental groups contend that the companies are delivering  
"automotive vaporware" to deflect attention from political momentum  
in Washington that could force them to boost fuel efficiency. The  
groups say carmakers are also trying to stay out of the crosshairs of  
a looming federal debate on global warming. The car companies have  
gone to court to fight attempts by states to regulate global-warming  
gases and have resisted attempts by U.S. lawmakers to mandate fuel  
efficiency increases.

"We would be much more impressed if GM were to say the U.S. needs to  
cap greenhouse gas emissions. That would be a wonderful new concept,"  
said John M. DeCicco, senior fellow at Environmental Defense. "The  
country needs a climate change policy, and automakers need to step up  
to the plate."

Vehicles powered by fuels other than gasoline occupy a small corner  
of the U.S. auto market. Diesels have accounted for about 3 percent  
of the U.S. market over the past few years, and most are extra-large  
pickups used as work trucks. Diesels, which get 30 percent better  
fuel mileage than gasoline-powered cars, account for nearly half of  
the market in many European countries.

Though still small, hybrid sales are growing steadily. In 2006,  
automakers sold 255,000 hybrids, according to estimates by J.D. Power  
and Associates. This year, the figure is projected to be 350,000, in  
part because Toyota is increasing production of its popular Prius.  
Even with the growth, analysts don't expect hybrids to reach 1  
million units, or 5 percent of the total market, until after 2011.

Plug-in technology is probably even further in the future because  
battery technology does not yet exist. Several sources in the  
industry said they expect Toyota to add plug-in power to the next- 
generation Prius, which is due later in the decade. Toyota declined  
to comment. Later this year, Toyota will bring out the Lexus LS 600h,  
a hybrid version of the luxury brand's flagship sedan.

Analysts say hybrid demand could dry up as early adopters finally get  
their hands on Priuses after waiting-list delays.

"Everybody who wants a hybrid is probably driving one," said Eric  
Fedewa, an industry analyst with CSM Worldwide. "There might not be  
substantial upside on the numbers unless there is legislative change  
or fuel prices change dramatically."

Other hybrids will go on sale this year. They include the Nissan  
Altima sedan and the Saturn Aura. GM will also begin selling hybrid  
versions of the Chevrolet Tahoe and GMC Yukon sport-utility vehicles.  
Dodge plans to introduce a hybrid version of its Durango SUV later in  
the year.

European automakers have been at the forefront of pushing acceptance  
of diesel technology. Despite diesels' fuel economy, the U.S.  
government has long considered their tailpipe emissions to be a  
health hazard. Manufacturers have talked up the new technology and  
worked with federal regulators to improve diesel fuel and engines to  
address air-quality concerns.

"Increasingly, people are going to become aware of the fact that  
there is more than one solution," said Purves, the BMW executive.

Just a few new diesels are due over the next few months, including a  
diesel version of the Jeep Grand Cherokee. Automakers will monitor  
how consumers react to them before they make plans to expand model  
lines or add production, said Fedewa, the CSM Worldwide analyst. "If  
we see that consumers buy every one that's made, then we know diesels  
are going to be strong sellers in North America," he said.

Other big automakers, such as Volkswagen and BMW, have pushed diesel  
introductions to 2008 in order to meet clean-air standards in all 50  
states. BMW said it will bring a new diesel vehicle to the U.S.  
market in 2008, but so far the company won't identify the model.

Purves said improving fuel efficiency and reducing emissions is  
expensive and technologically challenging. He said any tax breaks  
Congress enacts should include credits for diesel-powered cars. "You  
shouldn't discourage diesels here," Purves said. "You shouldn't have  
legislation that backs one horse."