Road to Fuel Efficiency Is Lined With Orange Cones

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By Kendra Marr
Washington Post Staff Writer
Monday, January 12, 2009

DETROIT, Jan. 11 Within the halls of the North American International Auto Show, the world's automakers were jockeying yesterday to promote their electric cars.

But outside, in the ever-changing marketplace, automakers could face a number of obstacles to selling hybrids and all-electric vehicles when they arrive in showrooms.

For one, gas prices have been falling. Over the summer, as oil prices spiked at an all-time high, consumers clamored for smaller, more fuel-efficient vehicles. Now that prices at the pump are under $2 a gallon, analysts say consumers are migrating back to trucks and sport-utility vehicles.

"When it was $4 a gallon, we couldn't make enough Cobalts," Bob Lutz, General Motors' vice chairman of global product development, said of the fuel-efficient Chevrolets that get 30 mpg on the highway. "Now we have trouble pushing the Cobalts out to the dealers."

With fuel prices declining, government mandates that automakers build highly fuel-efficient cars will be no more effective than combating obesity by forcing clothing manufacturers to make only small sizes, Lutz said.

"It put us in the industry in the position where we are at war with the customer," Lutz said. "Because the customer, given the gas prices, is going to want one thing. And we're going to be forced by regulation to produce something entirely different."

Also complicating the move toward electric cars is that individual states are pursuing different environmental agendas. Last month, Hawaii teamed up with Silicon Valley upstart Better Place to build electric-car recharging stations at parking spaces. But California Gov. Arnold Schwarzenegger has thrown his weight behind an approach centered on hydrogen fuel cells, launching a program to ensure that every Californian has access to hydrogen fuel along the state's major highways by 2010.

Moreover, the infrastructure for electric cars is missing. While plug-in vehicles like the Chevrolet Volt are ideal for urban drivers, few city apartment dwellers will have access to a plug to charge the car overnight. At the same time, utilities aren't about to invest in thousands of public plug-in stations until there are thousands of plug-in drivers on the road.

"It's a chicken-or-egg situation," said Aaron Bragman, an analyst with IHS Global Insight. "You can't have electric cars without places to charge them. But you can't have charging stations without the cars."

And then there's the battery dilemma. Automakers can't afford the batteries for these electric vehicles until they are manufactured in high volumes, said Susan M. Cischke, Ford's group vice president of sustainability, environment and safety engineering. But batteries can't be produced in such large quantities until automakers produce a high volume of electric cars, she said.

To hedge their bets, automakers are investing in a wide range of advanced technologies, from natural gas to flex fuels to diesel hybrids.

"I don't think anybody believes there's one answer right now," said Honda spokesman Todd Mittleman.

So while Honda is extremely bullish on its hydrogen fuel cell technology, the automaker hasn't given up its battery research, for instance in the redesigned 2009 Insight. This new Honda hybrid -- the first gasoline-electric car to reach the U.S. market -- debuted yesterday after going out of production a few years ago.

The case for plug-ins is gaining support. Lawmakers have championed the technology. GM and Toyota both have plans to produce plug-in hybrids that will run on lithium-ion batteries. Nissan, after being skeptical of the cost effectiveness of plug-in technology, recently began developing its own model. Yet even within this camp, there's heated disagreement over whose approach is best.

Some business leaders and industry analysts say there could be a market for all of the technologies.

"It always starts with the customer," said Nancy Gioia, Ford's director of sustainable mobility technologies and hybrid vehicle programs. "One size does not fit all."

The auto industry has faced similar obstacles before. When the 1970s gas crisis gave way to a period of cheaper fuel, Detroit's automakers jumped to produce profitable trucks and SUVs while neglecting smaller car lines. When oil prices spiked again, the companies were unprepared for consumer purchases to swing back to fuel-efficient vehicles.

So Chrysler chief executive Robert L. Nardelli said he intends to continue pursuing electric vehicles. In keeping with that, the company announced yesterday that it plans to add the Jeep Patriot small SUV to a proposed line of electric vehicles.


© 2009 The Washington Post Company

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