Jan 15 - McClatchy-Tribune Regional News - Justin Hyde Detroit Free Press

From plug-in hybrids to biofueled supercars, automakers at the North American International Auto Show say they know how to build environmentally conscious vehicles.

What they don't know is how many customers will buy them, and at what price.

Every automaker has given a glimpse over the past two days of its strategies for dealing with tougher U.S. fuel economy regulations, rising oil prices and a surge of global warming rules around the globe. While Toyota Motor Corp. and Honda Motor Co. have pledged new hybrids, General Motors Corp. and Chrysler LLC have touted a variety of approaches. Ford Motor Co. has bet big on a single technology.

But in interviews with the Free Press, Detroit executives said the technical hurdles to meeting a 35-m.p.g. standard by 2020 were less difficult than getting customers to accept the changes and extra costs that come along with the goal.

GM Vice Chairman Bob Lutz told reporters at the show that the new U.S. rules would cost the industry $5,000 to $7,000 per vehicle, with much higher costs possible for some models.

"Technology is an easy thing to do. What's not easy is how you absorb the cost," Lutz said Monday. "I don't care if you're Toyota, Honda or anybody else, you're not going to do it without adding expensive technology to the automobile."

And while the classic American V8 engine isn't extinct, the new rules could sharply cull its numbers. GM killed plans for a new V8 last month, and Ford Chairman Bill Ford said such engines will be "more industrial than retail" in the future, limited mostly to high-end sports cars and commercial trucks.

"Will we turn our back on the Carroll Shelbys of the world? No," Ford said, referring to the sports car icon and the high-performance Mustangs that bear his name. "But will we sell them in big, big numbers? Not really."

While green cars have been a part of the Detroit show for years, the new U.S. fuel economy rules have given automakers a sense of urgency toward bringing them to market. Even luxury brands such as Mercedes, BMW and Ferrari noted the drive toward fuel efficiency and reducing carbon emissions from vehicles.

The two largest Japanese automakers recommitted themselves to gasoline-electric hybrids as their main tool for more efficient cars and trucks, despite hybrids' additional costs. Honda announced plans for three new hybrid models, two of which will be sold in the United States.

Toyota President Katsuaki Watanabe pledged Sunday to unveil two new hybrids at next year's auto show, and said he had challenged the company's engineers to meet the 2020 standard early.

Extra cost proves extra challenging

Toyota enjoys a sizable head start toward the goal because of its lead in hybrids, which produce high fuel economy numbers under the federal tests used to measure compliance. Toyota's U.S. hybrid sales rose 44% last year to 277,750, and Toyota wants to sell 1 million annually worldwide by 2010.

But Detroit executives at the show expressed less concern about lost sales and more concern about the added costs of a hybrid, which can easily run to thousands of dollars per vehicle, a serious matter for automakers with weak finances.

GM touted its hybrid portfolio, saying it would launch 16 new models over the next four years, but several of those models are so-called mild hybrids with modest fuel savings. GM officials pushed hard to paint biofuel-powered vehicles as a better environmental solution.

Tom Stephens, group vice president for GM Powertrain, said fuel economy standards were just one factor in reducing fuel usage, with cutting carbon emissions and replacing oil demand also in the mix. He said automakers had to solve a Rubik's Cube of technologies to meet environmental goals, but that the costs were substantial.

"Any advanced technology will not pay for itself in the first and second generation," Stephens said. "The electrification of the automobile is very expensive today, but we'll get it down in a couple of generations."

Room for improvement elsewhere

Robert Lee, Chrysler's vice president of powertrain product engineering, said automakers couldn't just focus on engines for improvements. For example, Chrysler's new $700-million axle plant under construction in Marysville was driven mostly by a need for more efficient parts in rear-wheel-drive vehicles.

Those kind of costs can be partially offset, but Lee said car buyers will have to absorb some of the burden.

"There's a piece of this that the customer has to help with," Lee said. "It can't be a tax on the manufacturer without some reimbursement. Certainly the industry's tenuous enough around the world."

Ford's strategy differs in key ways from not just the domestic automakers but the rest of the industry. It's backing a range of four- and six-cylinder engines with turbocharging and gasoline direct injection under the name EcoBoost, with plans to ramp up production to 500,000 annually by 2012.

Ford executives say because those engines will put out far more power than similar engines of the same size, they will be able to reduce fuel consumption by up to 20% over comparable models. The technology is far less expensive for consumers and for Ford than hybrid or diesel systems, and can be added quickly across the lineup, from small cars to the Ford F-150.

Ford may face skeptic buyers

Ford's plans come with risks, especially with persuading consumers to buy a smaller engine, even if it saves fuel while performing as well as a larger one. The technology isn't exclusive -- GM has a similar engine in production on the Sky and Pontiac Solstice roadsters today -- and other automakers could copy it quickly.

Bill Ford and other executives said the company would have to market the engines aggressively and persuade possible buyers to have an open mind.

"I think people will be skeptical until they drive the vehicle, but the performance is there," Ford said. "I needed to get in the car and see for myself if it's real."

While the company has two more hybrid models coming, along with plans for a small test fleet of plug-in hybrids, no other production hybrid models have been announced.

"I'm less enthusiastic that they're going to be the silver bullet," Ford said.

Contact JUSTIN HYDE at 202-906-8204 or jhyde@freepress.com.