Alternative-Energy Vehicles Added Spark To Detroit Auto Show

January 29, 2008: 08:05 PM EST

Jan. 30, 2008 (Investor's Business Daily delivered by Newstex) --

When the North American International Auto Show opened in January 2000, a dozen alternative fuel cars were on display.

This
year, the big Detroit show featured some 75 such cars and trucks. And
dozens more are close to being road ready, says the Alliance of
Automobile Manufacturers, a trade group whose members include BMW
Group, Chrysler, Ford Motor (NYSE:F PRS) (NYSE:F PRA) (NYSE:F) F, General Motors GM, Mazda, Mitsubishi Motors, Porsche, Toyota TM and Volkswagen VLKAY.

Still,
cars that run on something other than gasoline remain a small portion
of the market. While consumer research firm J.D. Power estimates that
77% of car shoppers ask about alternative fuel vehicles, fewer than 2%
of them actually buy one. Fewer than 400,000 alternative vehicles are
on the road, about the same number of cars that cross New York's
Brooklyn Bridge every day.

Vehicles that operate on alternative
fuels are a tough sell, says Brett Smith, assistant director of
manufacturing technology for the Center for Automotive Research in Ann
Arbor, Mich. Buyers are hard to persuade because such vehicles
typically cost much more than gas-fueled vehicles -- and they don't
offset the higher price with lower operating costs, even with gas
prices above $3 per gallon. And refueling and locating repair shops
continue to be issues.

Here's a look at alternative fuel
vehicles. The evaluations come from Smith and Joe Wiesenfelder, senior
editor at Cars.com, a network of 200 Web sites that bring together
buyers and sellers:

Hybrids

Vehicles that combine gas-
and electric-powered engines have won the most plaudits and acceptance
in large part because of a steady stream of ads from sellers and
because U.S. government incentives hold down prices.

The pluses: Gas/electric hybrids can have better overall performance than gas alone and can increase fuel efficiency by 40%.

The
minuses: These vehicles have two drive trains, which makes them
costlier to build than any automaker dares sell them for, says Smith.
He estimates that while Toyota, which started research and development
earlier than its rivals, is close to crossing the profitability line,
U.S. carmakers are four or five years away from making money on these
models.

The cars: Chevrolet Silverado Hybrid, Dodge Ram Hybrid, Ford Escape Hybrid, GMC Sierra Hybrid.

Also: Honda Motors' HMC
Accord Hybrid, Civic Hybrid and Insight Hybrid; Lexus' GS450h Hybrid,
LS 600hL Hybrid and RX 400h Hybrid; Mercury's Mariner Hybrid; Nissan
Motor's NSANY Altima Hybrid; Saturn's Aura Green Line
Hybrid and Vue Green Line Hybrid; and Toyota's Camry Hybrid, Highlander
Hybrid and Prius.

E85 Compatible

Conventional cars capable of running on a mix of 85% ethanol and 15% gasoline are the most prevalent alternative-fuel vehicles.

They don't require much new technology to build.

The
pluses: Distilled alcohol -- used to make ethanol -- doesn't come from
foreign sources. For carmakers, they earn credits toward meeting
aggregate fuel economy and environment standards levied by the U.S.
government, and they're cheap enough to build that manufacturers find
them profitable.

General Motors CEO Rick Wagoner said at the car
show that GM has invested in ethanol maker Coskata, which expects by
2010 to be selling E85 made from garbage and old tires.

The
minuses: Burning alcohol creates carbon dioxide, which is a greenhouse
gas. So it's not clear that burning E85 is any better than burning
gasoline, Smith says. Plus, ethanol is produced from corn, and
diverting corn away from food drives up food costs.

While E85 looks cheaper at the pump, drivers get 15% to 20% less fuel efficiency than they'd get with just normal gas.

Also, E85 pumps can be hard to find. Many owners end up filling these cars with regular gas, Wiesenfelder says.

The
cars: Buick's Terraza and Chevrolet's Avalanche, Express, Impala, Monte
Carlo, Silverado, Suburban, Tahoe, Uplander, Aspen and Sebring all make
E85 models.

Also: Chrysler's Town & Country; Dodge's
Caravan/Grand Caravan, Durango, Dakota and Ram; Ford's Crown Victoria
and F-150 Pickup Truck; GMC's Savana, Sierra and Yukon; Jeep's Grand
Cherokee and Commander; Lincoln's Town Car; Mercedes-Benz's C-Class;
Mercury's Grand Marquis; and Nissan's Armada and Titan.

Clean Diesel

The
pluses: Clean diesel vehicles, which are widely available in Europe,
get about 30% more miles per gallon than all-gas vehicles.

Also,
they create less carbon dioxide, which puts them on par with hybrids in
their effect on the environment. They're cheaper to build than a
hybrid, needing only $1,000 to $2,000 in devices that clean emissions.
And diesel gives power-hungry drivers fast acceleration.

The
minuses: Low sulphur diesel is more expensive than gasoline -- mostly
because the U.S. government taxes it at a higher rate -- and it has a
bad reputation among U.S. drivers because cars that ran on it before
technological improvements had dirty, smelly exhausts.

The
cars with clean diesel: Chevrolet's Express; Dodge's Ram; Ford's
E-Series and F-Series Super Duty; GMC's Savana, Sierra 2500 HD and
Silverado 2500 HD; Jeep's Grand Cherokee; Mercedes-Benz E320 BluetecC,
Mercedes' R320 CDI (NYSE:CDI) , ML320 CDI and GL320 CDI; and
Volkswagen's Touareg TDI.

Hydrogen

The pluses: Hydrogen internal combustion engines -- as opposed to hydrogen fuel cells -- are ready for prime time.

The minuses: Except in California where makers have installed a network of hydrogen pumps for testing, no pumps are available.

Installing
such pumps is costly. "It's a chicken and egg problem," Smith said.
"You can't have infrastructure without hydrogen cars, and you can't
have hydrogen cars without infrastructure."

Just the BMW Hydrogen 7 is in this group, but Honda is testing one.

Electric

The
pluses: The best-designed models are small and light, but they can
survive a crash test and run reliably for more than 100,000 miles. They
are simple to make and clean.

Wiesenfelder predicts that by
2010, the same lithium ion batteries that run cell phones and computers
will be available in large-enough sizes to run bigger cars farther.

The
minuses: Most of the electricity made in the U.S. comes from burning
coal, which is no better environmentally than burning oil. Everything
depends on the battery, and what's now available at an affordable price
and weight won't hold enough power for even a munchkin-size vehicle to
run more than 40 miles without a recharge.

The cars: Fisker Automotive's Fisker Karma, Chrysler's GEM and AFS Trinity Power's Extreme Hybrid.

Newstex ID: IBD-0001-22622294

Originally published in the January 30, 2008 version of Investor's Business Daily.

Copyright (c) 2008, Investor's Business Daily,
Inc. All rights reserved. This article is protected by United States
copyright law and may not be reproduced, distributed, transmitted,
displayed, published or broadcast without the prior written permission
of Investor's Business Daily, Inc. You may not alter or remove any
trademark, copyright or other notice from copies of the content.

cnnad_createAd("820245","http://ads.cnn.com/html.ng/site=cnn_money&cnn_money_pagetype=article&cnn_money_position=628x215_bot&cnn_money_rollup=markets_and_stocks&cnn_money_section=quigo&params.styles=fs","215","628");

More Markets

Stocks volatile after Fed cut

Long-term bonds slip after Fed cuts rates

The Fed's stagflation fear

The Hot List

Hummer goes truckin'

Rocky market, smart strategies

13 ex-Googlers: Where are they now?