Who's reviving the electric car?

globeandmail.com
December 7, 2006

JEREMY CATO

LOS ANGELES — If timing is everything, Rick Wagoner's could not have been sweeter.

Just hours after the justices of the U.S. Supreme Court in Washington heard global warming arguments for the first time in history, a continent away inside the Los Angeles Convention Centre, the General Motors chairman and CEO conceded that Thomas Edison was indeed right about electric cars.

Wagoner, sketching out GM's future strategy on “green technology” in a keynote address at the Los Angeles Auto Show, noted that in 1907 three technologies were competing to power the automobile — gasoline, steam and electricity. Edison, the inventor of the light bulb, backed electricity. Gasoline won out for the next 100 years, though that is about to change.

An explosion of interest in fuel-saving vehicles and the obvious link between oil and national security are having a profound effect on the auto industry, Wagoner said. Oil can no longer continue to be the fuel source, as it is now, for 99 per cent of the vehicles on the road.
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Rick Wagoner, chairman and CEO of General Motors, told reporters and industry representatives at the Los Angeles Auto Show that, as part of its overall turnaround strategy, the company has an ambitious plan to develop technologies for cleaner, more fuel-efficient vehicles.
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Rick Wagoner, chairman and CEO of General Motors, told reporters and industry representatives at the Los Angeles Auto Show that, as part of its overall turnaround strategy, the company has an ambitious plan to develop technologies for cleaner, more fuel-efficient vehicles. (Nick Ut/AP)
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“It looks like Edison might not have had a bad idea. It is highly unlikely oil alone will provide the energy for future automobiles,” said Wagoner.

Wagoner said GM now has in place, as part of its overall turnaround strategy, an ambitious plan to develop technologies for cleaner, more fuel-efficient vehicles.

Electric vehicles will ultimately form the core of the strategy, though in the near-term GM plans to develop and introduce vehicles that can be powered by a number of sources of energy.

“GM's commitment to improving fuel economy, reducing vehicle emissions and developing electrically driven vehicles is not a short-term strategy,” Wagoner said.

“We see energy and environmental leadership as a critical element of GM's ongoing turnaround plan.”

Wagoner added: “We must — as a business necessity — develop alternative sources of propulsion.”

One alternative: the plug-in hybrid. Wagoner said GM is the first auto maker to announce plans to build a plug-in hybrid vehicle. Plug-in gas-electric hybrids will significantly expand fuel economy through greater use of advanced batteries and less reliance on conventional gasoline engines.

Plug-ins, as envisaged by GM and others, would have larger, more sophisticated batteries able to store significantly more energy. The vehicles could go 35-60 km on electric power alone. A small on-board gas engine would be capable of recharging the batters, though ideally to recharge, the cars would be plugged into garage outlets.

Bottom line: plug-ins should provide greater range under electric power than current hybrid models, thus reducing fuel consumption and pollution.

Aside from hybrids, Wagoner pointed to GM's leadership in ethanol and E85 (gasoline and ethanol blend) fuelled vehicles. He, in fact, emphasized that while in the long-term Edison will prove correct about electric cars, in the near- and medium-term there will not be a single solution to weaning developed countries off their reliance on foreign oil. A variety of measures will be needed.

Wagoner was hardly alone. Many other auto industry executives also touted their environmental plans. They were unanimous is agreeing that the stakes are high in the scramble to develop energy-saving, earth-friendly technologies that meet consumer demands for no-compromises transportation, while also cutting the reliance on imported oil.

Wagoner, for his part, noted that the United States imports 64 per cent of its oil and Europe imports 79 per cent. China, with its exploding economy, now imports 49 per cent of its oil, though that number continues to rise. And Japan, he said, imports virtually 100 per cent of its oil. The need for change is obvious.

Executives at German car makers agreed on the need for better fuel efficiency. But reflecting their particular expertise and experience, they eschewed any discussion of hybrids, and instead focused on the fuel efficiency of diesel.

DaimlerChrysler and Volkswagen announced an agreement to jointly use a clean diesel technology developed by Mercedes-Benz. Under the agreement, both companies will use the term Bluetec to promote the technology of low-emission advanced diesel engines for passenger cars and trucks.

Their combined efforts would successfully produce a broad range of clean diesel-powered vehicles, they said.

The deal is significant in its breadth. Until now, the Bluetec name has been exclusive to the Mercedes brand. But with more widespread use, the Germans hope that Bluetec diesels will match hybrid gas-electric vehicles in terms of providing the sort of environmental glow now enjoyed by Japan's Toyota and Honda thanks to their hybrid push.

“We think the marketing needs more understanding and awareness of clean diesel,” said VW spokesman Steve Keyes, alluding to diesel's reputation for being noisy and smoky. “Working with other manufacturers, we have the power of the group.”

Power or not, it won't be easy to convince most car owners about the merits of diesel. Consumer research shows that to most Americans “diesel” is literally and figuratively a dirty word. Canadians appear to be more receptive, but the market here is small.

An even bigger challenge will be to sell diesel's merits to lawmakers and regulators in the U.S. At present, diesel cars aren't yet clean enough to be sold in California, New York, Vermont, Massachusetts or New Jersey. California's Los Angeles area alone is the 10th-largest new-vehicle market in the United States, so if Bluetec does not succeed there, it will be irrelevant in the U.S.

In any case, to promote its diesel plans, VW unveiled a concept for a new small SUV called the Tiguan. In doing so, VW made it clear that German makers hope new, low-sulphur fuel and their cleaner engines will make diesels common in the U.S. and Canada. The end goal is to have a wide range of diesels offered by Volkswagen, Audi, Mercedes and Chrysler Group vehicles.

Other developments on the green front: German luxury car maker BMW showed off the Hydrogen 7, a hybrid sedan powered by hydrogen or gasoline. Ford unveiled a new 2008 version of its Escape Hybrid SUV. And Honda showed its FCX Hydrogen car — the latter a cab-forward, next-generation fuel-cell vehicle.

The FCX is powered by a hydrogen fuel-cell stack that is 30-per-cent lighter and 20-per-cent smaller than the previous generation. Yet it's more powerful, with speeds up to 160 km/h . Honda plans to put a model in the hands of consumers for testing in 2008.

All these environmental initiatives come as the result not so much of internal motivation and good will by the various auto makers, but rather in response to external forces.

Wagoner, in his speech, cited rapid growth in China and India, which is putting severe strain on resources and the environment, and he also alluded to the uncertainly of oil supplies from places such as Iraq.

Tellingly, Wagoner and other car company bosses did not dwell on the global warming case in the U.S. Supreme Court. It could have a greater impact on the U.S. auto industry than any other single event.

The case pits 12 U.S. states, led by Massachusetts, the District of Columbia and environmental groups, against the Environmental Protection Agency in a dispute over whether the agency must regulate carbon dioxide emissions from vehicles.

The claim is that these emissions have been linked to global warming and that under the U.S. Clean Air Act the EPA must move to regulate CO{-2} emissions from all vehicles sold across the country.

In fact, U.S. automobiles account for 6 per cent of the world's carbon dioxide emissions.

Massachusetts, taking the lead in the case, argues that auto makers could reduce emissions by 40 per cent, eventually resulting in a 2.5-per-cent cut in global emissions.

For its part, the EPA says the act was passed in the 1970s to combat air pollution and does not govern carbon dioxide from vehicles.

And even as the auto makers were touting their “green” efforts here at the L.A. auto show, their lawyers were acting in ways that some might suggest are counter to being completely environmentally friendly.

That is, the auto makers, through the Alliance for Automotive Manufacturers, their trade group, filed a brief with the court siding with the EPA and against states who want the U.S. government to regulate carbon dioxide emissions.

The auto makers say mandated reductions could add $3,000 (U.S.) to the cost of every vehicle. Such a move could also prevent them from selling many larger, less-efficient vehicles, they say.

The Supreme Court has not indicated when a judgment might come down, but whatever the decision, it will only be the latest development in a long-running battle over CO{-2} emissions.

In fact, in 1999, several academic groups asked the EPA to regulate CO{-2} from automobiles, saying the increasing amount of the gas was contributing to global warming. The EPA rejected the petition in 2001.

The point is, while Wagoner and other car company executives now appear sincere about building vehicles that pollute less and use less fuel, they want to control the timeline of what they do. They do not want government regulators to get any more involved.

Regardless of the outcome of this court case, GM's belated attempt to create an image as a “green” car company is sure to have an impact on the sector as a whole, just as Toyota and Honda's successful efforts at marketing hybrids have changed the auto industry.

GM, still struggling to turn around a business that lost more than $10-billion (U.S.) last year, remains the world's largest auto maker. What GM does on the environmental front carries tremendous weight throughout the car business.

Perhaps it will come to be that GM will actually help to prove that Thomas Edison was right 100 years ago. jcato@globeandmail.com