Park It and Plug It

Affordable plug-in cars that will rarely need gasoline in just two years? That's the automakers' goal.

By Jim Ostroff, Associate Editor, The Kiplinger Letter

February 1, 2008

Plug-ins -- autos with batteries that you can recharge nightly -- will likely hit showrooms in two years as manufacturers push to meet new mileage standards. The future plug-ins really are hybrids that average 80 to 100 miles per gallon of gasoline. But the new cars won't need gasoline for most daily commutes and errands. An overnight charge will keep cars running for up to 40 miles without having to tap the gas tank.

First cars off the line: General Motors' Chevy Volt and Saturn Vue Green Line. GM wants to quickly ramp up production to 100,000 plug-ins annually,and by 2015, grow it to a half million vehicles. Toyota also set 2010 as a rollout date for a plug-in Lexus. Others automakers are likely to follow suit.

Sticker prices on the Chevy Volt and Saturn Vue Green Line will be a bit below that of the Prius, which typically sells for $3,000 to $5,000 more than for a comparable gasoline-only powered vehicle, about $18,000.

The surge in the development of plug-ins is prompted by a new energy law requiring automakers' fleets to achieve an average of 35 miles per gallon by 2022. That's about a 40% increase from the current Corporate Average Fuel Economy (CAFE) mandate for cars, SUVs, pickup trucks and vans.

Plug-ins are a dramatic break from the automakers' long-running emphasis on muscle cars, SUVs and trucks. They'll continue to build such vehicles, of course, but those vehicles will be modified to be more fuel efficient. These changes along with new plug-in models will help meet new fleet standards. For example, new diesel engines with turbochargers that boost fuel efficiency by one-third will be standard on lumbering pickups and full size SUVs. Meanwhile, engines in smaller SUVs and large cars will be outfitted with direct injection systems that boost gasoline fuel efficiency by 20% to 30%.

"There's no silver bullet, so instead, each automaker will adopt a specific technology that's best suited to the vehicle based on its size, weight and performance consumers expect," says Paul Lacy, manager of technical research for the consulting firm, Global Insight.

GM is pushing to get its plug-ins on the road first in a bid throw its competitors off balance long enough for the automaker to reestablish itself as the industry's unquestioned technology whiz, and recoup its slumping market share. Plug-ins are sure to help GM's bottom line because the Volt and its siblings will have electric drive trains and other systems, letting the automaker slash costs and vehicle weight.

Meanwhile, GM is also looking down the road at the next generation of plug-ins -- hybrid vehicles that burn almost no gasoline. They would run on both battery power and E85 fuel -- a blend of 85% ethanol and 15% gasoline. For now, E85 is a nonstarter. Though there's enough ethanol being made to meet refiners' needs for blending into unleaded gasoline, it would be a huge stretch to ramp up ethanol production five-fold to fuel fleets of E85 cars and other vehicles that use regular gas.

GM is betting on a breakthrough that will make ethanol as plentiful as gasoline by investing in Costaka Inc., a company that says it has perfected technologies that will enable it to make large quantities of cellulosic ethanol -- fuel produced from grasses and other plants as well as agricultural waste -- starting in 2011 for around $1 per gallon. "Making ethanol for $1 per gallon isn't just a game changer. It's a whole new ballgame," says David Cole, chairman of the Center for Automotive Research, an auto industry consultancy. E85 fuel that retails for even $2 per gallon will steeply undercut gasoline's price and significantly reduce U.S. oil consumption.

Large scale production of E85-powered hybrids is at least a decade away. Auto engineers still have to surmount technical hurdles, including superefficient power and propulsion systems that can put these vehicles' electricity and fuel costs at least on a par with today's gasoline-powered ones. But odds are that the technological advances will come eventually, which is why GM, Toyota and other automakers are researching advanced plug-ins.

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