Lower gasoline prices could pose a roadblock for the green car revolution.
The U.S. auto industry, as it restructures, is pinning its hopes on a segment it once seemed to ignore: energy-efficient cars, led by the planned Chevrolet Volt.
In July, oil prices hit a record high. In the fall, the economy buckled, forcing
to seek bailouts to avoid bankruptcy. Among the conditions: their commitment to manufacture advanced technology vehicles.
In November, Barack Obama's election promised presidential support for green initiatives. Some are included in the pending stimulus package, including money for advanced auto battery development.
The Energy Independence and Security Act of 2007 requires automakers to boost fleetwide efficiency to 35 mpg by 2020. Its provisions include tax credits for hybrid car buyers. Additionally, the act's section 136 provides grants and loans to develop advanced technology vehicles, with at least $25 billion in loans contemplated. The Detroit Three all have sought those loans.
In December 2008, with the economy in shambles and auto sales crashing, the companies' CEOs appeared at four congressional hearings to seek aid. As a pre-condition, all three presented restructuring plans emphasizing not only cost-cutting but also a move to energy-efficient vehicles.
The bailout terms for GM and Chrysler require them to detail their ability to manufacture advanced technology vehicles and to comply with federal efficiency and emissions standards.
As for the stimulus package, it tentatively provides $2 billion for battery research, $300 million for the federal government to buy fuel-efficient vehicles, and tax credits for the manufacture of alternative energy equipment and income tax credits for interest and sales taxes on all new vehicle purchases.
Charles Territo, spokesman for the Alliance of Automobile Manufacturers, says government incentives to stimulate consumer sales of green vehicles may be needed.
"As gas prices have fallen, so have sales of the most fuel-efficient vehicles," he says. "One of the struggles automakers face is convincing consumers that fuel economy is (still) important."
Cheap gasoline is everywhere as crude oil prices collapsed from a record $147 a barrel in July to about $46 now.
"Consumers are looking at hybrids now and doing the cost-benefit analysis and saying it's not worth it to pay $3,000 or $4,000 more to save five miles per gallon," says Michigan economist Patrick Anderson.
"People in Washington constantly get it wrong," Anderson says. "Consumers are in charge of this game, not the auto companies and not regulators.
In January, consumers were buying heavier vehicles, pushing sales up from midsummer levels. Trucks, vans, SUVs and cross-overs accounted for 68% of
sales, up from 61% in June. At GM, truck and related sales represented 65% of total volume, up from 58% in June.
But GM has been working to transform its fleet for several years and it remains committed to do so despite fuel-price fluctuations, says spokesman Kerry Christopher. "When fuel prices were high, there was a shift in the market to more fuel-efficient vehicles," he says. "When fuel prices are low, there won't necessarily be the same market demand.
"But we have been working towards this all along," he says. "We are going to comply with the Energy Security Act. We are working with Volt and the hybrids we will bring to market. We will use lighter-weight materials, and eight cylinders will become six cylinders. But there is a price for doing all this, and right now it is a price we cannot necessarily pass on to the consumer."
The Volt, experts agree, has the potential to change the world. Scheduled for introduction late in 2010, the Volt would be the first widely available car powered by plug-in technology, using the electrical grid to charge a lithium battery. "That moves us toward a paradigm shift in vehicle technology," Anderson said.
The Volt will travel up to 40 miles without using any gasoline, which would be enough distance for more than 75% of Americans' daily commute. It will travel another 300 miles on electricity provided by a gasoline-powered engine. The target price is in the $40,000 range. A problem is that lithium -- which provides more power with less weight than existing battery technology -- is not widely available and may turn out to be in short supply.
But Ron Cogan, editor of
Green Car Journal
and Greencar.com, says: "If the demand is there, you're going to find a solution. All kinds of batteries have been tried for decades, and at present, lithium is the best hope, but who is to say it will always be that?"
Volt won't be the only green alternative. The
Fusion hybrid, available this spring, will be Ford's first hybrid sedan. "Under certain conditions, you will be able to drive 47 miles per hour on electric power only," says Cogan. "No other car does that." (Hybrid cars have two sources of power, generally gasoline and electric motors, either of which can power the engine.)
Jetta TDI, a clean diesel fuel vehicle, was the 2009
Green Car Journal
car of the year because it combines high mileage, quality handling environmental efficiency and a low price around $22,000. The Saturn VUE 2mode hybrid is an SUV developed by GM,
and the former DaimlerChrysler.
Prius shuts down its gasoline engine when the electric one suffices. The
Karma, a plug-in hybrid sports sedan from independent automaker Henrik Fisker, will sell for about $90,000. The Toyota Yaris is small and cheap, and the
Civic is an old reliable.
Given that cars take years to develop, it obviously is not recent events that inspired development of these models. But recent events may have created a climate that encourages production and sales, assuming the economy improves.
High gas prices "have opened the eyes of consumers everywhere," says Cogan. "People are starting to get it: They understand that they can no longer be assured of cheap gas."