Are 'green' vehicles more than a niche?

Dec 26 - Dan Gearino The Columbus Dispatch, Ohio

After adopting an ambitious fuel-economy standard this year, the government and environmental advocates now face the more-complicated challenge of meeting the goals.

A new report by the Consumer Federation of America says that demand for hybrid and alternative-fuel vehicles is growing and will be sufficient to meet expected changes in the auto industry, but some experts disagree with this outlook.

To reach the new federal standard, which is 54.5 miles per gallon by 2025, drivers will need to embrace new engine technology. Right now, hybrid or all-electric cars make up only 3 percent of the market, up from 0.2 percent a decade ago, Edmunds.com reports.

"I don't think plug-in hybrid vehicles and plug-in vehicles are a passing fad," said Giorgio Rizzoni, director of the Center for Automotive Research at Ohio State University.

He notes that it took about a decade for hybrids -- or engines that combine two energy sources such gasoline and battery power -- to become mainstream products, and he thinks the same is about to happen for plug-in hybrids such as the Chevrolet Volt.

Automakers will have a vested interest in producing and selling "green" cars to meet the mandates. And that's a good thing if you agree with the underlying goal, which is to reduce carbon emissions, he said.

"Our government is attempting to produce a set of incentives to force the auto industry to look beyond the next five years," he said.

But what do drivers want? Critics of the 54.5-mpg standard point to sluggish sales of plug-in models and say that subsidies and mandates cannot create a market. They warn that government intervention will lead to more-expensive vehicles for everyone.

The opponents include the National Automobile Dealers Association and a variety of right-leaning research groups. Their arguments didn't get far when the U.S. Department of Transportation adopted the new rules, but that could change if a future president or Congress was to take a fresh look.

Mark Cooper, director of research for the nonprofit Consumer Federation of America, disagrees with anyone who suggests that drivers do not want hybrids.

"The demand side of the market is not going to be a problem," he said.

This month, he made a presentation to the U.S. Environmental Protection Agency in which he said hybrid sales are on a rapid growth path. He based this conclusion on a series of independent forecasts.

He says the push to improve fuel economy is "the best of capitalism," with companies competing to develop new technologies. Ford has introduced the "EcoBoost" line of engines, which get V-6 power from four cylinders; Toyota developed the Prius family of hybrid vehicles; and General Motors sells the Volt.

This view is not shared by many analysts. A series of reports have cast doubt on whether green cars ever will be much more than a niche, and given ammunition to critics who one day might try to undo the fuel-economy rules.

"As long as gas is less than $4 per gallon, people are happy ... and don't want to pay more for hybrids or EVs," said Mike Omotoso, senior manager of global powertrain for LMC Automotive, a market-research firm.

His firm is projecting U.S. sales of 487,000 hybrid or all-electric vehicles this year, which is 3.4 percent of the market. His most-recent forecast shows sales of 1.25 million hybrids or all-electric vehicles in 2017, which would be 7.4 percent.

Rizzoni agrees that the price of gasoline is not high enough to create mass demand for electric vehicles.

But he sees this as evidence for, not against, the government taking action to improve fuel economy. He thinks the outcomes could be good for the economy and the environment, but he also expects some bumps along the way to 54.5 mpg.

"There is never a simple answer," he said. "These are complicated things."

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