Startups take the plunge
But the plug-in revolution does not stop at the major manufacturers. Startup companies smell blood in the water with the big manufacturers struggling. Tesla has already started selling its two-person Roadster, Fisker Automotive Inc. plans to introduce a four-door luxury car at the end of this year, and a number of other smaller companies are in the business of converting traditional gasoline-powered cars into plug-ins.
"The ideas is to start with a small niche segment, very often a high-price segment and after demonstrating success within that segment, to move to higher volumes and lower prices," said Diarmuid O'Connell, vice president of business development for Tesla, which plans to release its second all-electric car—a $50,000 sedan—late next year, thanks in part to the $465 million it received in DoE loans.
Still, the plug-in effort faces a variety of hurdles. In March, the president's auto task force questioned whether the Chevy Volt—which has carried the torch for the emerging technology since the prototype debuted in 2007—could be a short-term success for GM as the troubled company tried to survive in a depressed economy and car market.
Tony Posawatz, GM's vehicle line director for the Volt, admitted as much in an April briefing with lawmakers. "While the Volt holds promise, it certainly is a new technology that has not hit the optimum cost," he said.
In addition to the high cost of the lithium ion batteries that power most plug-ins, the cars face a high hurdle to acceptance by the American public. According to a Kelly Blue Book 2008 survey, 40 percent of Americans said hybrids were on their way to achieving mainstream status.
The biggest challenge facing the industry is not the economy, according to Ed Cohen, Honda Motor Co. vice president of government affairs. "Our biggest challenge is to reinvent the automobile, and that is a huge task," he told lawmakers earlier this year. "This industry has been built around the internal combustion engine, and that's not going to change quickly and it's not going to change easily."
Will the Rust Belt buy it?
While regular hybrids—which, unlike plug-ins, rely mostly on their gasoline engines—have gained toeholds in places like California, Oregon and Washington, they have so far fallen flat in the Rust Belt. According to a study by R. L. Polk and Co., hybrids accounted for 1.8 percent of all new car registrations in the Midwest last year, compared with 5.5 percent on the West Coast.
According to Lonnie Miller, Polk's director of industry analysis, hybrid sales are stronger in the West for a variety of reasons. "One is that the hybrid market is dominated by the Toyota Corporation, which has maintained an average 75 percent of the U.S. hybrid segment from 2003 to 2008," she said in a report. "The Great Lakes region has the strongest 'buy American' mindset when it comes to the purchase of vehicles, which makes Asian-branded hybrid vehicles less popular in that part of the country."
Even though hybrid vehicle sales fell from 2007 to 2008, they garnered a greater share of total light vehicle sales. According to a separate Polk report, hybrid sales accounted for 0.3 percent of the market in 2003. That number increased nearly nine-fold by 2008 but that still left the market share at 2.6 percent.
Neither the industry nor lawmakers know what to expect in the coming years in terms of how many new cars and trucks will be sold. But even if the numbers return to roughly 16 million a year, as they were for much of the decade, the success of any push toward hybrids—plug-in or not—may ultimately end up bumper to bumper with the price of gasoline and the sticker price on the new cars.
"It is important that we are realistic because there are two things that you cannot trump, politics aside," Cohen said. "One is technology and the second is cost."
Reprinted from Greenwire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500