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What's driving the US?

Americans' taste in motor vehicles are changing in response to high oil prices and climate change, writes Anne Feltus

AMERICANS love their cars. According to the UN, the US has more passenger cars per capita than any other country. In fact, the country has more cars than drivers who are licensed to operate them. Americans love their trucks, too. Since the start of the decade, sales of pick-up trucks have consistently outpaced those of passenger cars and, for more than 25 years, the Ford F-series full-size pick-up trucks have ranked as the top-selling vehicles in the nation by a significant margin.

But with gasoline prices close to their highest levels ever, the love affair is starting to turn sour. The number of cars and light trucks sold in the US fell from 16.5m in 2006 to about 15.9m in 2007. Sales of full-sized pick-up trucks dropped by 15% in the first quarter of 2008 compared with the first three months of 2007, while sales of full-size sports utility vehicles (SUVs) fell by 26%. But sales of sub-compact cars rose by almost a third during the first quarter, as Americans traded in gas-guzzlers for smaller, more fuel-efficient models.

Keen on green

To survive, US automakers increasingly are looking at vehicles that can operate, at least partially, on unconventional fuels. But high fuel prices are not the only incentive for these manufacturers to go green. The Energy Independence and Security Act, signed into law late last year, requires automakers to increase the average mileage of the cars and light trucks they produce to 35 miles per gallon (mpg) by 2020.

By comparison, the average fuel economy for both cars and light trucks in the US market peaked at 26.2 mpg in 1987, but has dropped since then, with the increasing weight of newer vehicles and the growing demand for SUVs and trucks. Federal fuel-economy standards today are 27.5 mpg for cars and 24 mpg for light trucks.

To generate more consumer interest in green vehicles, Congress already offers tax incentives to motorists who purchase alternative-fuel vehicles, such as hybrids – bi-fuelled vehicles that can switch at different speeds between a gasoline-burning internal-combustion engine and an electric motor powered by a rechargeable battery – and those that run on compressed natural gas (CNG). Purchasers of certain new electric vehicles were also entitled to a one-off federal tax credit until the end of 2006.

Another motivator has more patriotic roots. By using more vehicles powered by unconventional fuels, US consumers can reduce the country's dependence on imported oil. And then there is the growing threat of global warming: increasingly, US consumers are looking to environmentally friendly vehicles to provide a solution.

Hybrid hype

Although hybrid models represent only about 3% of US car sales, a recent survey by Cars.com showed 59% of automobile shoppers have purchased or would consider buying a hybrid as their next vehicle. US automakers are responding to that interest by adding hybrids to their line-up.

General Motors (GM), the country's largest car manufacturer, introduced the first full-size hybrid pick-up trucks – the first hybrids produced by a US manufacturer – in 2004, then the world's first full-sized hybrid SUVs in 2007. It intends to offer eight hybrid models by the end of this year.

Ford, the second-largest US automaker, introduced the first compact hybrid SUV to the market in 2004 and rolled out its fourth and fifth hybrids this year. And Chrysler, the smallest of Detroit's big three automakers, is also jumping on the hybrid bandwagon: gasoline-electric versions of the Chrysler Aspen and Dodge Durango full-size SUVs are scheduled to arrive this year.

But not all of the hybrids being marketed in the US are coming from domestic manufacturers. Toyota reported that sales of its Prius mid-sized sedan, the first hybrid available in the US market, reached a record 21,757 units in April, an increase of 53.8% over the same period in 2007. Honda plans to introduce a five-door sedan hybrid early next year that will cost only about $1,900 more than comparable gasoline-only models. Earlier, the Japanese manufacturer had discontinued production of its slow-selling Insight hybrid and a hybrid version of its Accord.

With this growing interest in dual-fuel vehicles, the US Department of Transportation estimates that by 2015, about 25% of the trucks and 15% of the cars offered by the largest automakers will be hybrids.

Going electric

According to the Electric Auto Association, in the late 1890s, all-electric cars outsold their gasoline powered counterparts by a 10-to-one margin before they were overshadowed by the popularity of mass produced gasoline-powered cars. Now these zero-emissions vehicles are making a comeback.

Earlier this year, California carmaker Tesla Motors delivered its first electric roadsters to US customers. With a sticker price of more than $100,000, this stylish model is beyond the budget of the average US motorist, but the company plans to introduce a less expensive version, either all-electric or hybrid, by 2010.

In fact, 2010 could be the watershed year for electric vehicles, when Toyota plans to put a plug-in version of its Prius on the market and GM and Nissan both intend to introduce electric models to US consumers.

Some smaller entrepreneurs have even earlier roll-out dates for their electric cars. Norway's ThinkGlobal plans to bring its two-seater ThinkCity car to the US, starting in 2009 in California, an ideal market for fuel-efficient vehicles because its gasoline prices traditionally are the highest in the country. Fisker Automotive, a privately owned Californian company, is expected to deliver its plug-in hybrid-electric (PHEV) premium Fisker Karma in the fourth quarter of next year; unlike regular hybrids, which are designed to switch back and forth from gasoline to electric, PHEVs run primarily on electric power, but have a gas tank as a back-up. But like Tesla's roadster the Karma carries a hefty price tag.

Hydrogen on the horizon

Cars and trucks that use hydrogen fuel and oxygen from the air to produce electricity could provide an emissions-free option for the future. Although hydrogen fuel-cell vehicles are not expected to enter the marketplace en masse for several more years, a number of automakers are getting a jump start by introducing versions on a limited basis in areas where hydrogen fuelling stations are already in place.

In late 2005, Ford delivered a handful of its Focus hydrogen-gasoline hybrids to Sacramento, California, as part of a 30-car worldwide exercise to conduct real-world testing of fuel-cell technology. Honda has a similar goal with a three-year pilot that starts this summer and involves leasing several dozen of its CFX Clarity fuel-cell four-door sedans in California for $600 a month each to evaluate the vehicle's feasibility.

As part of a three-year research effort, entitled Project Driveway, GM has already distributed about 100 Equinox SUVs, converted to fuel-cell power, to customers for three months at a time, at no charge, in Southern California, New York and Washington, DC, including employees at the Department of Energy (DOE). It is establishing a network of temporary hydrogen-fuelling stations to support the programme. The DOE is not the first government agency to test hydrogen-powered vehicles; the US Army received the first Equinoxes in 2006.

Ethanol: increasingly an option

Until cars and trucks that can run free of fossil fuels enter mainstream US life, flexible-fuel vehicles (FFVs) can provide a more environmentally friendly alternative that could even reduce motorists' fuel costs. Although most cars can operate on gasoline that is mixed with up to 10% ethanol, FFVs are equipped to handle not only unleaded gasoline, but also gasoline blended with up to 85% ethanol, a product known as E85.

According to the Environmental Protection Agency (EPA), the number of FFVs travelling the US' highways has grown from a few hundred in 1993 to more than 6m. As a result of federal mandates to replace increasingly higher volumes of gasoline with cleaner-burning ethanol, totalling 36bn gallons by 2022, FFVs are likely to continue to grow in popularity.

The number of fuelling facilities that offer E85 has grown dramatically to 1,420 nationwide, making FFVs much more enticing to eco-conscious consumers. So, too, has the number of FFVs on the market. According to the National Ethanol Vehicle Coalition, 31 2008 FFV models will be available from five automakers – Chrysler, Ford, GM, Nissan and Mercedes Benz – which are expected to produce about 0.75m of these vehicles next year.

A downside to E85 is that its fuel-economy rating is about 30% lower than conventional unleaded gasoline. But that difference is usually offset in whole or in part by E85's lower per-gallon price.

Expensive fuel and growing concerns about global warming have led to the development of some new technologies. An example is India-based Zero Pollution Motors, which has developed an automobile that operates on either fossil fuel or compressed air. The company is set to begin accepting orders from US customers for its six-seater MDI Air Car for delivery in 2009 or 2010.

While automakers continue to experiment with an ever-increasing slate of unconventional fuel options, one obvious choice appears to be missing: CNG. Although at least eight carmakers offer natural gas-powered vehicles to consumers in Europe, the Detroit three – GM, Ford and Chrysler – stopped selling them in the US several years ago, citing high production costs and a shortage of fuelling sites.

Honda is the only manufacturer that sells a factory-made model in the US, which has the world's sixth-largest gas reserves. The Honda Civic GX, which has been rated the cleanest-burning internal-combustion engine in the world by the EPA, is sold only in New York and California, the states with the largest number of CNG fuelling stations. Because of the limited fuelling infrastructure, most CNG-powered vehicles are used by fleet operators, especially the government. But a refuelling device is also available that enables Civic GX owners to refuel their cars directly from their home's natural gas supply.

Diesel: not so dirty

Also popular with European motorists, diesel-powered cars have traditionally been deemed too dirty to gain much traction in such highly populated areas as California, New York and New Jersey. But the government-mandated switch in 2006 to cleaner-burning ultra-low-sulphur diesel and advances in diesel technology have made diesel more attractive as an automotive fuel.

The problem is that most diesel-powered vehicles in the US are high-priced luxury cars; smaller cars that can operate on diesel tend to be less expensive than hybrids but more costly than their counterparts powered by conventional fuel. That will change when automakers' 2009 models enter the market. Volkswagen, BMW and Audi all intend to introduce cars with diesel engines. Although diesel cars and trucks are more fuel-efficient than gasoline-powered ones, how well these vehicles are received will depend in part on the price of diesel fuel, which is significantly higher than gasoline.

When it comes to their car choices, US motorists have a multitude of options, whether their goal is to keep fuel costs within their budget, reduce the country's dependence on foreign oil or minimise the environmental effect of the vehicles they drive. However, Americans not only love their cars, but tend to keep them an average of almost nine years. Although the trend is towards fuel-efficient, eco-friendly vehicles, it might be a while before they outnumber gas-guzzling pick-up trucks and SUVs on the road.

 

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